As a professor at Berkeley, I see the impact of H-1B visas and artificial intelligence on student employability

The H-1B visa program it was intended to bring in specialized talent from abroad, but instead became a tool for employers to hire cheaper labor for menial jobs.

The result is a distorted labor market, where highly skilled workers are squeezed out of the H-1B visa program through unsolicited claims for non-skilled workers who then fill entry-level positions that are already in short supply. This abuse of H-1B visas has a negative synergy with growth the impact of artificial intelligence on the labor market and is part of a larger problem that urgently needs attention.

The impact of this visa farming problem is particularly acute among young people and recent college graduates, who face a bleak job market despite moderate overall unemployment rates. According to government figures, the unemployment ratio of students under 25 to those over 25 has reached an all-time high of more than four to one. This means that entry-level jobs are already four times rarer than jobs that require experience or advanced expertise.

I have seen firsthand the symptoms of declining demand for entry level technology jobs. These symptoms include fewer job postings from recruiters targeting fresh CS grads, job fairs with fewer companies, and worried consultants getting fewer lower-paying offers or, in some cases, no offers at all. Allocating H-1B visas to low-wage, non-specialized workers only exacerbates this shortage and does little to meet the real demand for workers with specialized skills.

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The problem here is not the number of visas issued, but how they are used. Applicants for the program should specifically be people with specialized skills, and those specialized skills should not be readily available from existing resident workers. However, the bureaucratic review process allows employers to exaggerate the requirements and hire workers with ordinary skills at low wages. There is an entire sub-profession of HR personnel and lawyers who specialize in grooming pigeons to look like peacocks.

This abuse of the application process has created a lottery system where workers with the necessary special skills often lose out to those without any specialized skills. As a result, recent graduates find it harder to get entry-level jobs, while at the same time companies that really need specific specialized skills are unable to get visas for these workers. Imagine a person who suffers from both malnutrition and diabetes because instead of vitamins, they swallow sugar pills.

I want to emphasize that I am not advocating island restrictions on H-1B visa number. The problem is making sure that people with real specialized skills that are really needed are welcomed through the H-1B program. When used properly, the H-1B visa brings in someone who complements the workforce with skills that are both necessary and specialized, which can benefit the entire country. Whether it’s retaining an international graduate student or bringing in someone from outside the country, the US has historically benefited tremendously from immigrants with the necessary skills.

Many people invested in visa farming insist unconvincingly that H-1B visas are already going to skilled workers as intended, but the statistics on H-1B visa recipients disagree.

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According to the US Citizenship and Immigration Services annual report, nearly 63,000 H-1B visa recipients in 2023 were in “computer-related occupations” and the median salary for this group was $99,000 per year with 25% earning less of 85,000 dollars. A salary of $99,000 or $85,000 a year is certainly a good amount to earn, but it is quite low for what I would expect someone with rare specialized skills in this field to earn.

One would think that people with specialized skills that are hard to find would earn extremely good salaries, but instead this data shows the opposite. In fact, the more I dig into the data in the agency’s annual report, the less it seems that applications for exceptional people for specialized jobs have been approved. It looks more like some specially qualified workers mixed in with a lot of permanent workers who are paid at a lower level than what I would expect.

These observations are consistent with my own experiences recruiting tech workers and advising CS students, what others have told me firsthand, and a number of recently published analyses. The only clear explanation I can see for these inconsistencies is that employers are applying for entry-level jobs, not those requiring specific rare skills, that even for entry-level jobs the wages are low, and that these inconsistent applications are not rejected.

Looking at the bigger picture, H-1B visa abuse is not the only obstacle facing US job seekers as AI automation is also eliminating jobs, increasing the shortage. Currently, the impact of AI is disproportionately on entry-level jobs, exacerbating the problems caused by the abuse of the H-1B program. However, AI will continue to improve, both in terms of capabilities and ease of use, and its impact on the job market will grow as the range of tasks AI can perform expands.

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While AI and H-1B visa abuse may seem like separate issues, they interact in a way that most people don’t appreciate. Even when it cannot completely replace the human worker, AI makes mobile work easier from regular employees to contractors or remote workers.

The explanation is that artificial intelligence often removes the need for advanced specialized skill or knowledge and replaces it with a smaller requirement that requires only the ability to review work for correctness. The result is that tasks that were previously relegated to contractors or remote workers are now becoming simpler thanks to artificial intelligence and more suitable for outsourcing.

As AI technology continues to improve, employers will find that more and more jobs can be performed by lower-skilled workers, and there will be an increased motivation to use H-1B visas to hire these lower-skilled workers cheaply.

The review process for the H-1B visa program needs to be reformed to prioritize applicants with genuine specialized talent and to ensure that recipients do not compete unfairly with workers already in the US. We also need to address the growing threat of artificial intelligence automation and its increasing impact on the labor market.

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About 90% of all US tax revenue it comes from taxing the income of working individuals, so if unemployment continues to spread then tax revenue will decrease dramatically. At the same time, the number of unemployed people who need public assistance will increase. That combination doesn’t work mathematically and is a clear recipe for disaster.

This situation requires radical changes to avoid a dystopian future. Overall unemployment numbers may appear strong, but high levels of initial unemployment and overall underemployment indicate a much larger problem is developing.

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Disclaimer: All opinions expressed in this article are solely those of the author as a private individual. Nothing in this article should be construed as a statement regarding the author’s professional standing at any institution.