The Trump administration’s decision to impose a $100,000 fee on H-1B visas has reignited one of the most heated debates in US labor and immigration policy:
should foreign talent be restricted to protect American jobs, or welcomed to spur innovation? While the White House frames the move as a victory for US workers, economists, tech executives, and immigration experts caution that the measure could deliver a shock to the US economy, harm competitiveness, and even accelerate offshoring. A High-Stakes Policy Shift On September 19, President Trump announced the new annual fee on H-1B applications, calling it a necessary reform to prevent “abuse” of the system. The H-1B program, created in 1990, allows US employers to hire skilled foreign workers, particularly in science, technology, engineering, and mathematics (STEM). Currently, applicants pay a nominal lottery entry fee and, if selected, a filing fee in the low thousands. Under the new rules, companies must pay $100,000 per worker per year—a sum many observers believe will fundamentally reshape how US firms recruit talent. “This will make sure only the very best people are brought in,” Trump said at the Oval Office, insisting the change would “give American workers a fair shot.” Who Uses H-1Bs—and Why H-1B visas have long been concentrated in technology and higher education. A Pew Research Center analysis found that in 2023, nearly three-quarters of visas went to Indian workers, with China a distant second. Tech giants dominate the list of sponsors, with Amazon, Google, Microsoft, and Meta among the top employers. Beyond Silicon Valley, universities and nonprofits also depend on H-1Bs to hire professors, medical researchers, and scientists. For international students, the visa is often a pathway to remain in the US after graduation. The new fee, however, could change that landscape dramatically. “It essentially prices out all but the largest companies,” said one immigration attorney. “Universities, startups, nonprofits—they can’t compete at that level.” The Case for Protectionism Supporters of the policy argue that US companies have leaned too heavily on foreign labor, suppressing wages for domestic workers. Critics of the H-1B system point to cases where outsourcing firms allegedly flood the lottery with applications, then contract workers out to American employers at lower cost. Notre Dame economist Kirk Doran said some US workers may benefit. “The typical H-1B visa employee working for the typical for-profit company is doing work for which otherwise available workers exist,” he said. Reducing foreign competition could lift wages for certain programmers and IT workers. This argument resonates politically, especially amid widespread tech layoffs and anxiety over artificial intelligence reshaping employment. Economists Sound the Alarm But a broad coalition of economists warns the policy is short-sighted. George Mason University’s Michael Clemens stresses that H-1B workers don’t displace Americans—they create new opportunities. “H-1B visas cause innovation, they cause entrepreneurship, they cause more R&D investment,” he said. “They cause higher productivity in the whole US economy, which generates job opportunities and higher earnings for native workers across the skill spectrum.” A large body of research backs him up. A 2015 study by economists Giovanni Peri, Kevin Shih, and Chad Sparber found foreign workers boosted wages for US -born peers in complementary fields. A 2023 paper by Britta Glennon found that when H-1B visas are restricted, US multinationals don’t hire more Americans—they shift work overseas. Rutgers economist Jennifer Hunt was more blunt: “This misguided measure could shut down the H-1B program entirely. And if that happens, it’ll have a very detrimental effect on the economy as a whole.” The Global Talent Race The stakes go beyond wages. In a world where countries compete for high-skilled immigrants, the US risks falling behind. Canada, Singapore, and the U.K. have all introduced fast-track visas for AI and STEM workers, actively courting talent that might now skip the US altogether. The Wall Street Journal has reported on how previous US immigration restrictions led companies to build out operations in Toronto, London, and Bangalore. A $100,000 H-1B fee could turbocharge that trend, economists say, by making America the least accessible major economy for foreign talent. “If you want to attract the world’s best minds, you don’t put a toll booth in front of them,” said a former US immigration official. “You roll out the red carpet. Right now, Canada is rolling out the red carpet.” A Blow to Universities and Startups The consequences could extend far beyond Silicon Valley. American universities rely on H-1Bs to retain foreign-born PhDs in science and engineering. Without affordable visa options, those graduates may take their skills—and research funding—elsewhere. Startups, meanwhile, could be among the hardest hit. Unlike tech giants, early-stage companies often lack the cash to absorb a six-figure annual visa fee. “This risks cutting off the next Google or Tesla before it starts,” said one venture capitalist. Short-Term Gains vs. Long-Term Losses Proponents argue the new fee will give US workers more opportunities in the near term. Economists concede some programmers and IT specialists could see rising demand and better pay. But the bigger risk, they warn, is that restricting H-1B visas will slow the pace of innovation and weaken entire industries. “Trauma happens in labor markets when a large shock occurs and there’s not enough time to adjust,” said Doran. Companies may face widespread vacancies in mission-critical areas like chip design and AI development. A Politically Popular, Economically Risky Gamble The H-1B debate has always mixed politics with economics. For years, critics have cast the visa program as a loophole that hurts American workers, while supporters highlight its role in keeping US firms globally competitive. By setting the fee at $100,000, the Trump administration has chosen the most aggressive reform yet—effectively a near-ban for all but the wealthiest employers. WSJ analysts note that even if the labor market adjusts, the US risks long-term damage to its reputation as the world’s innovation hub. The more that companies and workers view America as hostile to talent, the more they will look elsewhere. The new H-1B fee may deliver political points in an election year and short-term gains for some US workers. But economists say the bigger picture is clear: foreign talent doesn’t weaken the American workforce—it strengthens it. If history is any guide, pushing that talent away won’t create more jobs for US workers. Instead, it could shift entire industries overseas, reduce innovation, and leave the US economy less competitive in the long run. As Clemens put it: “When you zoom out, US-born workers as a whole experience net benefits from H-1B workers. This policy risks throwing that away.”
