The Tech Worker Crisis: H1-B Visas, Contract Work, and the Gig Economy
The Tech Worker Crisis: How H1-B Visas, Contract Work, and Gig Economy Platforms are Eroding American Careers
In recent years, the American technology sector, historically a beacon of innovation and well-compensated employment, has quietly entered a period of crisis. This reflection was developed as a musing with ChatGPT to examine the systemic challenges reshaping the industry. Beneath shiny headlines of AI breakthroughs and record-breaking corporate profits lies an unsettling reality: the erosion of wages and benefits driven by three intertwined forces: the H1-B visa program, the rise of the gig economy, and the increasing reliance on contract work. As Thomas L. Friedman wrote in The World Is Flat, “more people in more places can now compete, connect and collaborate with equal power and equal tools than ever before.” While this vision of global collaboration opened doors for innovation and opportunity, it also brought significant drawbacks. Workers in high-cost regions now find themselves competing against global counterparts with vastly different economic expectations, driving down wages and job security.
The Hidden Cost of Cheap Labor
The H1-B visa program was originally conceived to attract specialized foreign talent to fill critical gaps in the U.S. workforce. Yet, it has increasingly become a tool leveraged by corporations to access cheaper labor at the direct expense of domestic workers. Tech firms have systematically replaced experienced American employees with younger, less expensive international talent under the guise of skill shortages. The stark reality is that these companies aren’t typically chasing unavailable expertise; they’re chasing lower costs.
This has created downward pressure on wages. Highly skilled American tech professionals, burdened with student loans, mortgages, and local cost-of-living expenses, find themselves unable to compete financially with workers whose salary expectations align with significantly lower living costs in their home countries.
Gig Work and Contract Labor: Two Paths to Instability
Simultaneously, gig economy platforms like Upwork, Fiverr, and Codementor promise freedom and flexibility yet deliver economic precarity. These platforms pit tech professionals against each other globally in a ruthless race to the bottom. Freelancers often must pay for the privilege of applying to projects, frequently receiving lowball offers that fail to account for even modest U.S. living expenses. As platforms monetize desperation, seasoned professionals become indistinguishable from entry-level gig seekers.
On CodeMentor, I once refunded a client after a 1.5-hour session. Her Anaconda setup was broken and required a full reinstall. I explained this would erase configurations and confirmed she had backups of her notebooks and Python files. She agreed to proceed.
After the reinstall, her environment worked, but she was upset about losing some settings, even though she had been warned. To avoid a negative review, I issued a refund.
CodeMentor penalizes lower-rated mentors by increasing their commission cut. They already take 22% from lower-earning users, and that cut increases further if your rating drops.
Parallel to this, contract work has become another mechanism companies use to reduce long-term commitments and obligations to employees. While marketed as flexible or entrepreneurial, contract roles increasingly replace full-time jobs. These positions typically come with significantly lower pay, few or no benefits, and little job security. For workers, this translates into greater instability, more difficult financial planning, and an absence of protections that full-time employment once guaranteed.
The result is stark: wages plummet, benefits vanish, and stable employment becomes an increasingly rare privilege.
The Unlivable Wage
It should also be noted that while the workforce is being gutted, tech companies are more profitable than ever. Executive compensation packages now range from tens to hundreds of millions of dollars annually, often hundreds of times greater than the wages of midlevel employees.
When wages and benefits disregard regional living costs, the impact is catastrophic. Professionals accustomed to middle-class stability face severe financial stress, pushing many toward burnout, poverty, or abandonment of the industry altogether. Home ownership, healthcare, and retirement savings, formerly attainable hallmarks of professional tech employment, drift out of reach, even for seasoned workers.
This economic erosion doesn’t stop at individual hardship. Local economies suffer as disposable incomes diminish. Small businesses lose customers, tax revenues decline, and communities weaken. This cycle perpetuates socioeconomic stratification, increasing dependence on public services, and placing additional burdens on taxpayers.
Predicting the Future: A Hollowed-Out Sector
If current trends persist, the U.S. tech sector faces grim consequences. Talented professionals, recognizing the diminishing returns of investing in technology careers, will exit or avoid the industry altogether. Over time, this exodus will create genuine skill shortages, undermining America’s competitive technological advantage.
Tech companies reliant on transient, undervalued labor pools may find innovation stagnating as motivated, experienced professionals migrate to industries offering better stability or exit the workforce completely.
Economic and Human Costs
The human toll of this trajectory is profound: families destabilized, mental health declining, and middle-class aspirations destroyed. A shrinking middle class intensifies economic inequality, leading to increased societal instability and decreased economic mobility.
Economically, as fewer Americans engage meaningfully with the tech economy, innovation and entrepreneurship decline, weakening long-term economic growth.
A Wake-Up Call
We must acknowledge and correct the destructive trajectory established by exploitative employment practices and shortsighted corporate strategies. Protecting domestic wages, enforcing fair practices, and ensuring immigration programs fulfill their intended purposes, not as tools of labor arbitrage but genuine skill supplementation, are critical steps forward.
The crisis in tech employment isn’t merely an economic or political challenge; it is fundamentally a moral and social one, testing our commitment to the equitable treatment of workers and the integrity of our economic foundations.
The American technology sector stands at a crossroads. Will we correct course toward sustainability, innovation, and dignity, or will we continue on a path that erodes the very foundations upon which prosperity has long been built?
A Personal Perspective
I entered the tech sector in Portland, Oregon in 2004, a city with limited market opportunities and a job landscape still recovering from the dot-com crash of 2000 to 2001. Just as momentum began to build, the 2008 financial crisis struck, leading to widespread economic fallout and stalled career growth. Then came the COVID-19 pandemic in 2020, which brought mass layoffs and major workplace shifts. Most recently, the AI boom has rapidly transformed how labor is valued, further reshaping the workforce.
Throughout this journey, I found myself labeled as a contract worker. Once that label is applied, it becomes extremely difficult to break out of. Full-time roles grow scarce, and companies begin to see you only as a stopgap: temporary, replaceable. Despite extensive experience, dozens of certifications, and a degree in engineering, the contract cycle reinforced instability.
I also turned to gig work through platforms like CodeMentor, hoping to supplement income or rebuild momentum. But like many others, I encountered diminishing returns: lowball offers, an oversaturated market, and clients unwilling to pay wages commensurate with U.S. living costs. Instead of opportunity, it became another race to the bottom.
That’s not to say one cannot succeed. Many do. But as countless articles and employment statistics have made clear, the pathway is narrowing. Just look at the rolling waves of layoffs sweeping through the tech sector. It can be difficult to steer your own ship when you’re not actually in control, and when companies are actively working to undermine your path.
This isn’t just about my story. It’s a snapshot of what many in this sector are enduring. Talent is wasted, energy burned, and careers destabilized not by lack of skill or drive, but by an industry incentivized to undervalue the very people who built it.. Will we correct course toward sustainability, innovation, and dignity, or will we continue on a path that erodes the very foundations upon which prosperity has long been built?
Receipts from the Collapse: Sources Worth Reading
Google’s Reliance on Contract Workers: An internal document reviewed by The New York Times in 2019 revealed that Google employed approximately 121,000 temporary, vendor, and contract workers globally, surpassing its 102,000 full-time employees at that time. Source
Rolling Layoffs in the Tech Sector: According to Layoffs.fyi, as of late June 2023, 810 tech companies had laid off more than 210,000 employees, compared to nearly 165,000 employees laid off by 1,058 tech companies in all of 2022. Source
Repeat Rounds of Job Cuts: An article from Forbes in March 2023 discusses how the traditional approach of “cut once and cut deep” is being replaced by multiple rounds of layoffs within a short period, leading to a new reality of “rolling layoffs” in the tech industry. Source
Dell’s Workforce Reduction: Business Insider reported in March 2025 that Dell’s staff numbers had fallen by 25,000 over the past two years, marking a 19% reduction. This decline occurred amid layoffs and return-to-office mandates, particularly affecting the sales division as the company adjusted for AI advancements. Source
Block’s Recent Layoffs: SFGate reported that Block, a prominent Bay Area tech firm known for Square, Cash App, and Afterpay, laid off 931 employees, including more than 200 in California. CEO Jack Dorsey announced the decision via email, citing strategic realignment and performance issues. Source
These articles provide a comprehensive overview of the increasing reliance on contract workers by major tech companies and the ongoing trend of layoffs within the tech sector.
Platformed and Undervalued: Sources on the Gig Economy’s Impact on Tech Workers
How Gig Work Pits Customers Against Workers: This Harvard Business Review article examines how gig platforms, including Upwork, create environments where freelancers compete globally, often leading to undercutting and reduced earnings. Source
Is Upwork a Race to the Bottom?: Coachlancer discusses concerns about Upwork fostering a “race to the bottom,” where freelancers lower their rates to remain competitive, potentially compromising the quality of work and earnings. Source
Gig Workers Are Getting Crushed by the Review Mill: WIRED highlights how gig workers are subjected to fluctuating user reviews and opaque algorithms, impacting their job stability and income. Source
The Downside of Upwork: How Online Freelance Platforms Hurt Workers: This LinkedIn article critiques how platforms like Upwork may prioritize client interests over freelancers, leading to potential exploitation and reduced job security. Source
The Risks and Side Effects of the Gig Economy: Bitkollegen.de explores the constant price wars on platforms like Upwork and Fiverr, leading to undervaluation and poor compensation for high-quality work. Source
These sources reflect the growing concern that online freelance platforms, while enabling global access to work, are also driving a race to the bottom in compensation and long-term opportunity for skilled tech professionals.
Outsourced at Home: Sources on H-1B Displacement of U.S. Tech Workers
Wage Suppression and Worker Displacement: An article by Paul Arnesen discusses how the H-1B visa program, initially intended to fill specialized skill gaps, has been used by corporations to access cheaper labor, leading to wage suppression and displacement of U.S. tech workers. Source
Job Displacement in High-Tech Industries: The Colorado Alliance for Immigration Reform highlights that the H-1B visa program has resulted in the permanent displacement of American workers in the high-tech labor force, with U.S. STEM workers unable to compete with lower-wage foreign workers. Source
Widespread Wage Theft in H-1B Program: The Economic Policy Institute reports that many H-1B employers, including major tech firms, use the program to pay migrant workers below-market wages, contributing to the underpayment and displacement of U.S. workers. Source
American Workers Replaced by H-1B Visa Holders: The Center for Immigration Studies presents accounts of American workers being forced to train their H-1B replacements before being laid off, illustrating direct displacement in the tech industry. Source
Impact on U.S. Economy: The American Immigration Council discusses the broader economic implications of the H-1B visa program, noting that while it fills critical needs, it also raises concerns about its effect on domestic employment and wages. Source
These sources capture the growing concern around the use of H-1B visas as a cost-cutting measure and its consequences for American tech professionals striving to compete in a globalized labor market.
Augment or Eliminate? Sources on AI and Tech Worker Displacement
While this article doesn’t directly address tech work displacement resulting from AI, it’s an increasingly critical topic. AI should be implemented to help the workforce become more efficient and innovative. It should not replace it for the benefit of corporate margins, CEOs, or shareholders alone.
“Companies That Replace People with AI Will Get Left Behind”: This Harvard Business Review article discusses how companies integrating AI rapidly may experience short-term job losses but emphasizes that those focusing on augmenting human capabilities with AI, rather than outright replacement, are more likely to succeed. Source
“Research: How Gen AI Is Already Impacting the Labor Market”: This Harvard Business Review article analyzes over a million job postings for online gig workers to assess the effects of tools like ChatGPT and image-generating AI on job quantity, requirements, and pay, highlighting the professions most impacted. Source
“New MIT Sloan Research Suggests that AI is More Likely to Complement, Not Replace, Human Workers”: This MIT Sloan study presents findings that, contrary to popular belief, AI developments are more likely to complement human labor by enhancing productivity and creating new roles, rather than causing widespread job displacement. Source
“Musk Replacing Workers with AI: Should You Be Worried?”: A Forbes article analyzing the implications of Elon Musk’s initiatives to replace human labor with AI, discussing the potential benefits and significant risks associated with such moves, including the challenges of maintaining a skilled workforce. Source
“How Will Artificial Intelligence Affect Jobs 2024-2030”: This insight from Nexford University examines predictions that AI could replace a significant number of full-time jobs by 2030, while also highlighting the potential for new job creation and productivity booms resulting from AI integration. Source
These sources provide a foundational understanding of how AI may reshape the tech workforce. It serves both as a tool for enhancement and as a potential catalyst for displacement.