$100,000 H-1B visa is a gamble that could protect US jobs

By Patricia Lopez,

President Donald Trump is taking yet another gamble on immigration, betting that he can force companies to compete for skilled American engineers and tech workers rather than hire foreign workers through the popular H-1B visa program. Employers won’t like it — but reform of the program is long overdue.

The overhaul, signed by the president Friday night, escalates the price of entry to $100,000 per worker, to be paid by the company. And the costs don’t stop there. Trump also wants a revision of prevailing wage rules to ensure that visa-holders get paid the same as Americans — a change that should further discourage companies from importing foreign labor.

The plan — which may face legal challenges — preserves H-1B visas as a last resort in fields where talent is scarce, but tilts the playing field toward American workers, answering critics in and out of MAGA who complain that companies are addicted to hiring cheaper foreign workers.

Tech companies, which have relied on H-1Bs for years, could be the biggest losers under the new rules. Some tech titans are already complaining that “if the US ceases to attract the best talent, it drastically reduces its ability to innovate and grow the economy,” as Deedy Das, a partner at Menlo Ventures, put it on X. (An earlier White House discussion of reforming H-1Bs faltered after criticism from, among others, tech billionaires Elon Musk and Vivek Ramaswamy. Notably, they’ve now departed the administration.)

Nevertheless, Trump is correct, as he said in his proclamation, that H-1Bs had been “deliberately exploited” and that “systemic abuses” have created large-scale replacement of skilled American labor with lower-paid workers. American STEM graduates, led to believe their degrees would result in plentiful opportunities and well-paid jobs, are instead scrounging for work. The unemployment rates for physics, computer science and chemistry majors are far worse than those of college graduates overall — and nearly double those of “what are you going to do with that degree?” graduates of art history and performing arts programs.

Enough H-1B abuses have been documented to demonstrate the need for change. The system is supposed to help companies find specialized talent. But investigations by Bloomberg News have detailed how technology, finance and telecom companies game the system to hire IT workers at lower pay and with lower attrition rates (workers on visas find it much harder to change jobs).

Loopholes abound. Middlemen flood the program with applications and scoop up as many visas as possible, then contract out those workers to a handful of large companies. In 2023, there were 446,000 applications in a program limited to 85,000 private sector slots.

In a system that relies on a lottery to fill those slots, more than 70% of H-1B visas go to a single country: India. That may be due less to having the “world’s smartest talent” than to the ferociously efficient network of outsourcing and staffing firms that specialize in placing Indian talent at artificially low wages.

According to the White House, by 2000 — 10 years after the program was created — H-1Bs accounted for 1.2 million foreign workers. That figure more than doubled to 2.4 million by 2019, outpacing the rise in STEM jobs. More than 26% of all computer and math occupations were filled by H-1Bs. Universities also rely on the program, and in 2021, one study estimated that more than a fifth of college faculty members were foreign-born.

Whether Trump’s solution is the right fix remains to be seen. The $100,000 fees, along with new prevailing wage rules, may be prohibitive enough to tank the whole program. In another era, such details would have been worked out in Congress, with testimony from experts, economists and executives and competing proposals from lawmakers. We are not in that era. Wisely, the Trump administration has given this overhaul a year-long window, at which point it will be re-evaluated.

In any case, dramatic changes appear inevitable. Republican Senator Jim Banks of Indiana is proposing his own version which, unlike Trump’s proclamation, would have the force of law should it pass. The issue is not one that falls along neat, partisan lines. Democrats, too, have a stake in ensuring that American college grads and workers have first pick of such jobs, which can start at six figures.

Yes, Trump’s policy carries risk. The H-1B overhaul dramatically escalates costs at a time when companies are already struggling to find the skilled labor they need. If companies can’t find competitive labor sources, expansion plans may slow, resulting in fewer jobs overall. Frustrated companies could move such jobs overseas.

And Trump’s “damn the torpedoes” approach to policy often comes with glitches and contradictions that might have been avoided with a more careful, collaborative model. Court challenges are almost certain to follow. But there is little question that he has planted a stake in the ground, daring others to do better.

There are no easy answers on immigration. The US has a legitimate need for foreign workers, but there also is a balance that must be struck. Companies’ desire for skilled workers at lower wages can become a race to the bottom. Americans deserve the kind of level playing field that sometimes only government can provide.

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.