H-1B Prevailing Wage Claims vs. Reality:
What They Say, Versus What They Pay

By Robert Hill, CUNY, Murphy Institute for Worker Education

Brief History and Overview of the

H-1B Visa Program

The predecessor to the H-1B program was the H-1 program. The H-1 nonimmigrant category was created under the Immigration and Nationality Act of 1952, also known as the McCarran-Walter Act. Created during the so-called Cold War Era, this act continued the national origins quota system established by the Immigration Act of 1924, but it augmented the system in two important ways. First, it extended immigration limitations on citizens from countries that had been or were at war with the United States, such as Japan, Germany, and the Soviet Union. Second, it established a new precedent of giving immigration priority to “individuals with special skills.” (1)

One of the first widespread applications of this new “special skills” provision was observed in the sheep herding industry in the western U.S. Michael Yatsko (1997) describes how the shortage of sheep herders in the American West during World War II fueled the illegal immigration of thousands of Basque sheep herders during the war. 

“The migration of Basques to the United States continued due largely to the shortage of herders in the American West during the Second World War. The labor shortage became so acute that representatives from several western states introduced a series of bills, aptly called the Sheepherder Laws, which granted permanent residency to those Basques who had entered the country illegally to become sheep herders. Despite the Sheepherder Laws remaining in effect after World War II, the shortage of herders continued which prompted a number of American sheep organizations, such as the Western Range Association and the California Woolgrowers Association, to pressure the federal government for relief. The response of the federal government was the passage of the McCarran-Walter Act to allow these sheep organizations to recruit foreign herders, exempted from the immigration quotas, for three-year contracts. While the McCarran-Walter Act, specifically, did not cite the Basques as the only ethnic group eligible for this program, the principal applicants were Basques. Nearly 5,500 Basques applied to the program between 1957 and 1970.  (2)”

This new practice of identifying a class of workers “of distinguished merit and ability” was to become a significant feature of the next major revision of immigration law. According to a study published by the United States General Accounting Office in 2000, this shift of attention away from the national origin quota system toward the needs of employers was a primary motivator behind the Immigration Act of 1990.  (3)

The Immigration Act of 1990 ((4) Immigration Act of 1990, Pub. L. No. 101-649, 104 Stat. 4978 (1990)), commonly known as “IMMACT90,” was designed to greatly increase the number of foreign technology workers working in the United States for U.S.-based businesses. Its passage was urged by the National Science Foundation (NSF), among others, which had predicted that there would be a sustained and debilitating shortage of skilled technology workers in the United States unless guest workers were attracted into the country.

The IMMACT90 replaced the H-1 visa system with the revised H-1B system. The H-1B visa program was designed to correct some perceived shortcomings of the previous H-1 visa program in three ways. First, it was widely believed that while the old H-1 visa program was intended to attract the world’s “best and brightest” workers, termed “Aliens of Distinguished Merit and Ability,” in actuality it had devolved into simply requiring that H-1 workers hold a Bachelor’s degree or higher. Second, in response to concerns over the misuse of the H-1 program to favor foreign workers over domestic ones, the H-1B system was designed to make conditions for granting the visas more precise, add some protections for domestic workers, and allow “dual-intent” status so that guest workers could pursue standard immigration pathways while they worked in the U.S. using their H-1B visas. (5)  Third, it imposed limits to the number of visas that could be awarded each year to further protect the domestic workforce from loss of domestic jobs.

According to a report published by the United States General Accounting Office in 2000, the H-1B visas are available to people in so-called “specialty occupations.”

“Under the H-1B program specialty occupations are those requiring theoretical and practical application of a body of specialized knowledge and the attainment of a bachelor’s or higher degree (or its equivalent) in the specific specialty. These can be in a range of fields from architecture, engineering, and mathematics to medicine, education, theology, and the arts. (6)

While the IMMACT90 placed a limit of 65,000 H-1B visas annually, this number is subject to Congressional adjustment every year. The initial limit was not reached until fiscal year 1996, but demand for H-1Bs has exceeded that limit every year since. Accordingly, Congress has increased the number several times in successive years. For instance, the limit was increased to 115,000 in FY 1999 and 2000 and 107,500 in FY 2001. It was further increased to 195,000 for FY2001 through FY2003, and has remained at 65,000 every year since FY2004. (7)

Competition among international workers who are seeking to secure one of the 65,000 annual H-1B visas is fierce. For FY2011, The Office of U.S. Citizenship and Immigration Services (USCIS) announced on January 26, 2011, that so many applications had already been received that additional applications after that date would be rejected. (8) Those H-1B applications that were received were to be subjected to a computer-generated random selection process until the 65,000 limit was reached. Those applications not selected were to be returned, along with the filing fees.