The H-1B visa is a non-immigrant visa that allows US companies to temporarily employ foreign workers in specialty occupations that require theoretical or technical expertise. Technology companies depend on it to hire tens of thousands of employees each year from countries like India and China.
The H-1B visa has an annual quota cap of 85,000 visas per fiscal year. Of these, 65,000 visas are available for foreign professionals with a bachelor’s degree or higher, while the remaining 20,000 visas are reserved for foreign professionals who have earned a master’s degree or higher from a US institution.
Due to high demand, the cap is often reached within the first few days of the application period. When this happens, a computerized lottery is used to randomly select which petitions will be processed. As a result, many qualified foreign workers who would otherwise be hired by US companies end up missing out on the chance to work in the US that year.
This lottery system has made the H-1B process unpredictable for both employers and employees. The random selection means that two equally qualified candidates may have drastically different outcomes based solely on luck. Companies are unable to reliably plan their hiring, while foreign workers can spend time and resources preparing an application that ultimately gets rejected.
The limited number of H-1B visas and the lottery system have made it difficult for US companies to recruit and retain top global talent. This threatens America’s competitive edge, especially in industries like technology and healthcare that rely heavily on high-skilled immigrants. Reform is needed to improve the system.
Why is there an H-1B visa cap?
The H-1B visa cap was instituted as part of the Immigration Act of 1990. This law established the current annual limit of 65,000 regular H-1B visas, while excluding universities and nonprofit research facilities from the cap.
The cap was a compromise between competing interests. Technology companies and other employers wanted more access to skilled foreign labor to fill shortages, especially amid the tech boom of the 1990s. Labor unions and some politicians, on the other hand, were concerned about potential job losses for American workers.
Setting a numeric limit was seen as a way to give American workers priority while still allowing employers to recruit foreign talent. The cap has remained at 65,000 regular visas for over 20 years, with only minor changes made by Congress.
Meanwhile, demand for H-1B visas has steadily risen over the past two decades, driven by rapid growth in the technology, healthcare, and education sectors. This has led to the current situation where demand dramatically outpaces supply under the 65,000 cap.
Some argue the cap is now unrealistic and outdated, failing to reflect the needs of the modern economy and labor market. Others maintain the limit is still necessary to protect American jobs and wages. The cap continues to be a source of debate as part of broader immigration reform efforts.
Why is there an H-1B lottery?
The H-1B lottery came about as a direct result of the visa cap being exceeded regularly in the early 2000s. Before the lottery, H-1B petitions were processed on a first-come, first-served basis.
In 2007, 150,000 H-1B petitions were received in the first two days of the application window for only 65,000 spots. It became impossible to process such a huge volume of applications in a fair and orderly manner.
In response, USCIS adopted a lottery system beginning in fiscal year 2009. Now, when the annual quota is met within the first five business days, USCIS randomly selects enough petitions to meet the 65,000 cap. Any unselected petitions are automatically rejected.
The lottery provides an equitable way to handle excess demand under the limited cap. But it also introduces an element of randomness that makes it difficult for companies and workers to plan. Qualified candidates may simply get unlucky and miss out in a given year through no fault of their own.
Critics argue the lottery causes uncertainty for employers, separations of families, and the loss of talent trained in the US. Supporters counter it is the fairest system possible under the visa cap and that lifting or increasing the cap would be preferable to scrapping the lottery.
What are the odds of being selected in the H-1B lottery?
The odds of being selected in the H-1B lottery have gotten lower over the past decade as demand has gone up. For fiscal year 2023, lottery odds were estimated at around 30% for regular cap petitions.
This 30% probability reflects nearly 275,000 H-1B registrations competing for only 65,000 spots. It is down from the nearly 50% odds just two years earlier in FY 2021.
Certain types of H-1B applicants have significantly higher chances in the lottery:
- H-1B master’s degree exemption petitions – These had estimated odds of over 55% for FY 2023 since only 20,000 applicants compete for 20,000 slots.
- Petitions for current H-1B visa holders – Their odds were also over 55% in FY 2023 based on prior USCIS data.
Meanwhile, the most competitive category is for overseas professionals seeking their first H-1B. First-time applicants with only a bachelor’s degree typically have lottery odds around 15-20% in recent years.
The takeaway is that lottery odds can fluctuate greatly from year to year based on overall applicant pools. But master’s degree holders and current H-1B workers have maintained consistently better chances.
H-1B Lottery Odds for FY 2023
| H-1B Applicant Type | Estimated Odds |
|---|---|
| Regular bachelor’s degree cap | 30% |
| Master’s degree exemption | 55% |
| Current H-1B visa holders | 55% |
| First-time bachelor’s degree applicants | 15-20% |
Why is there higher demand for H-1Bs than the cap?
There are several key reasons demand for H-1B visas consistently surpasses the congressionally mandated cap each year:
Rapid growth in key sectors needing high-skilled labor
The technology, healthcare, higher education, and consulting sectors have grown rapidly in recent decades. But the domestic supply of American workers with specialized skills has not kept up with labor needs. Hiring foreign professionals through the H-1B helps fill talent gaps.
Demand from technology companies
Top US technology firms hire a huge share of H-1B workers each year. In FY 2021, over 50% of H-1B approvals went to just four companies – Amazon, Google, Facebook, and Microsoft. The tech industry depends on the H-1B to secure world-class engineering and programming talent.
Salary advantages
H-1B workers will often work for lower salaries than similarly skilled American professionals, especially in entry-level roles. This makes hiring H-1Bs financially advantageous for many employers.
Lack of other visa options
The H-1B is one of the few visa categories that allows private sector companies to directly sponsor foreign skilled workers for US jobs. Options like the O-1 visa have more stringent eligibility requirements.
Increase in global talent pool
Rapid expansion of higher education worldwide, especially in India and China, has dramatically enlarged the global pool of highly educated professionals competing for opportunities in the US.
How does the H-1B lottery work?
USCIS uses a randomized computer selection process to conduct the H-1B lottery each year. Here are the key steps:
1. Cap-subject registration period
Companies or their authorized representatives first register prospective H-1B candidates electronically in March over a 2-4 week registration window. There is a $10 fee per registration.
2. Lottery selections
If enough registrations are received to exceed the cap, USCIS randomly selects registrations for further processing. First, master’s degree holders are selected. Then, bachelor’s degree holders are chosen to fill the remaining slots.
3. Full H-1B petition filing
Selected registrants have 90 days from April 1st to submit their full H-1B application with applicable fees and documentation. Petitions that pass validation then get approved until the cap is reached.
4. Rejections
Any registrations not randomly selected by the lottery are automatically rejected and can no longer apply in that fiscal year. Rejected registrants must try again the next year.
So in summary, the lottery provides an unbiased system for narrowing down applicants when demand exceeds supply for H-1B visas.
What are the main criticisms of the H-1B lottery?
While the lottery provides a neutral selection method, it has drawn criticism from employers, workers, and policymakers alike:
- Injects unpredictability into hiring for companies
- Splits up families by causing random worker rejections
- Disrupts projects and results in turnover costs for employers
- Causes loss of US-trained talent if students get rejected
- Prevents companies from retaining all desired global talent
- Leads to brain drain of skilled workers to other countries
There is a growing consensus the lottery causes unnecessary headaches for individuals and businesses. It makes it impossible to plan long-term investments around specific highly skilled workers.
Critics argue the lottery would not be necessary if Congress increased the unreasonable 65,000 annual cap that has remained static for over 20 years, despite increased demand.
What are proposed solutions to improve the H-1B visa system?
A number of solutions have been proposed to reform the H-1B program and selection process:
Increase the visa cap
Simply raising the H-1B quota would significantly relieve pressure on the lottery system. The cap could be gradually raised to 115,000-195,000 to better match current market needs.
Replace lottery with wage-based selection
H-1B petitions could be ranked and selected based on salary offered, prioritizing those paying highest wages. This would maximize benefits for US workers.
Exempt certain master’s degree holders
Expanding the current 20,000 exemption for US advanced degree holders would ensure more homegrown talent can remain in the country.
Revise degree equivalency requirements
The degree equivalence criteria for the H-1B master’s exemption could be relaxed so foreign degrees have a better chance of qualifying.
Set aside visas for small businesses
Reserving a portion of H-1B visas for small companies would help them better compete with large tech firms for top talent.
Reform prevailing wage levels
Updating prevailing wage formulas to better reflect real market salaries would help protect American wages.
Improve H-1B visa mobility
Making it easier for H-1B holders to switch jobs would reduce exploitation and improve market-based allocation of labor.
What are the benefits of the H-1B program?
While the H-1B lottery needs reform, the overall temporary visa program provides important benefits to the American economy:
- Allows companies to fill critical skill gaps and expand faster
- Provides access to the world’s top talent in certain specialized fields
- Brings in professionals with new perspectives and diversity
- Enables growth and innovation, especially in the technology sector
- Has complementary effects on employment and wages for US workers
- Supplies needed expertise in healthcare, education and other key areas
- Facilitates knowledge transfer and development of cutting-edge intellectual property
- Paves pathway to permanent residency for some immigrants
H-1B workers create major economic opportunities, often supporting roles for multiple additional US workers. They provide specialized skills that help American enterprises thrive and boost competitiveness.
Conclusion
The H-1B visa lottery is problematic for both employers and workers. It introduces an excess layer of chance and unpredictability to the system. But it is the inevitable outcome of outdated quotas. Most experts agree the solution is not scrapping the lottery, but reforming the underlying visa cap itself.
Raising or eliminating the limits would be preferable to the current situation. It would allow market forces to play a larger role while still safeguarding American jobs. With more availability of H-1B visas, companies could thrive, workers could build lives in America, and the economy and society could reap significant benefits from high-skilled immigration.
