Speaking as someone who has hired H1-B's in the past, there really do seem to be two tiers. There's the companies/organizations that are truly abusing the system and then there are the traditional tech companies who are happy to hire anyone qualified, no matter where they are from, and pay and promote them the same as other employees. They also sponsor green cards. Competition between these employers has gotten to the point where they mostly all do the sponsorship immediately, too, reducing the time the person is "stuck" in the job to around a year (not great, but not horrible -- most people are "stuck" in their job that long so that they will at least vest some of their stock-based compensation).

One example: I hired an engineer who I'm going to anonymously name Bob. Bob was at Yahoo and on an H1-B. Yahoo was his first employer in SV, he had gone to CMU. He interviewed reasonably well, not amazingly, but had experience and interest in a specialty that many people aren't interested in. At the time we were trying to take a team of these people from 2 or 3 engineers to 20, so we were pretty excited. Bob also got an offer from Netflix. Netflix, if you don't know, gives offers that are basically "all-in" -- you can take the entire offer as cash, or you can parse it out and use some of it for health care, stock, etc -- your choice. The end result is that matching Netflix offers is very expensive. We mostly matched the Netflix offer (we felt our stock was going to have more upside -- which ended up being very true). I had to do extra work for this person to get them hired above and beyond what I'd have to do for an American. Then I had to do even more work to get the employer part of the green card process started. I had to help them navigate getting required documentation from Yahoo. Bob got promoted on a similar schedule to other people and as far as I know is still happily employed, now with a green card application that will transfer with them to any other employer they move to.

I would have _happily_ hired locally, and in fact most of the people I hired for that team were US citizens, Bob was one of 3 H1-Bs. He was from India, another was from Singapore, and the third was from France. They were all very talented engineers and any company would hire them in their specialty in a heartbeat.

I find it hard to say the workers in either of the two camps are particularly exploited (at least once they're in the country -- I've read ugly things about how they go into debt to be able to get these positions in the first placed). They are being paid fair market value for the work they are doing. The money they're making is far in excess of what they earn elsewhere -- that's why they go through the lengths they go through to get these jobs in the first place. If they have the ability to get hired at a more traditional tech company, that company will take over sponsorship of their H1-B with very little complication -- demand is effectively infinite for good engineers who are happy to work.