Every few years the regulations governing H1B visas pop up for a fight, typically between the tech industry and the administration in Washington. And so it is now. The difference is the fight this time is with a Republican administration, and it is suspending several employers from using the program, including all tech companies.

This is a little primer on what the issues are first with a guide to the many work visas. By my count there are at least 10 different types, and sometimes they are confused perhaps on purpose. There are visas for investors, media, special ones for Australians… it’s hard to keep them straight.

We often hear the argument that the U.S. has to attract the best and brightest people to give our economy a boost. A reasonable argument, but it is not relevant to the H1B program. Other visas target them. The first is 0-1 Visas for “Extraordinary Ability” and accomplished professionals who want to work temporarily. There are no limits on the number of these given out. EB-1 visas have the same definition but allow one to stay permanently. EB-2 is a step down, “exceptional ability” rather than “extraordinary,” and below that, EB-3 is for college grad jobs and some non-college skilled work in demand. All of these require a job offer and certification that the employer cannot find appropriate applicants here. The EBs offer the ability to remain here.

H-1B visas are closest to the EB-3 category, not necessarily for jobs requiring a college degree but professional or highly skilled work. They require a sponsoring employer, and they last six years. The employer also has to certify that they will pay the prevailing wage in their area for this job with similar working conditions. What is new since the last fight over these visas is that the recipients can change employers and still remain here through their visa period, although the U.S. Customs and Immigration Service has to approve the change. It looks less like the indentured servant model it was in the past. The number of visas is more restricted, allocated roughly by lottery, and—this is the big one—employers have to pay a $100,000 fee to get an H-1B worker. (This last issue is bouncing around the courts.)

Who are the big users? Indian outsourcing IT providers have always been the biggest users, which may seem strange in part because there are other visas (L-1s) that allow companies to transfer their employees across countries. But they want some employees here to connect with U.S. clients. They remain three of the top four users, but now the usual US tech giants fill in the rest of the ranks: Amazon #1, Google #5, Microsoft #6, Meta #7, Deloitte #8, and Apple #10. H-1B visas are overwhelmingly used by IT companies, the jobs are overwhelmingly for computer programmers, and the country from which they come is overwhelmingly India.

The context for bringing in these workers has certainly changed now that all of the above U.S. companies have had layoffs where they claim that AI is taking over many of their jobs, especially programming. The downside of that explanation for layoffs (which appears less and less true) for the companies is that it undercuts the idea that they need to bring in H-1B workers.

Why would any employer want to bring in H1-B workers in the first place if they have to go through all these hoops to get them and the wages are the same? The answer has to do with simple HR issues that we all understand. Wages in the U.S. are many multiples higher than in India. Even if we adjust by different living expenses in the two countries, the equivalent job in the U.S. pays at least three times what it does in India. You could get the very best people to come, and if I was one of them, I would be just delighted to come to the U.S. and would knock myself out to show my appreciation, knowing as well that my employer can send me back and get someone else if they are not happy with my work.

Of course, this is a huge benefit for the employers, albeit one that is lost on most policymakers. The fact that it is more than worth the $100,000 fee to get them for a maximum of six years suggests as much. The argument that there are not enough programmers in the U.S. to fill these jobs now is just not serious given the AI claims above. The last time the H1-B program was really debated, it became clear how little was required to make the claim that an employer needed them. Now it does not even pass a smile test.

So the H1-B program is largely a subsidy to IT companies, many of whom are also the AI-driven companies making money hand-over-fist. Is that a good thing? It seems to be too much for the current administration to swallow.

Peter Cappelli
George W. Taylor Professor of Management
Director – Center for Human Resources for the The Wharton School