When President Donald Trump proposed that American companies pay a $100,000 fee for each foreign employee they seek to hire, confusion and worry spread through the tech industry, which relies heavily on skilled worker visas.
Those visas, part of the H-1B program, allow U.S. employers to temporarily hire foreign employees in “specialty occupations,” according to the Department of Labor.
Business leaders — and Trump himself at one point — have supported the visas as a way to bring talent to the U.S. At the same time, there have been calls for reform from people who say the program allows companies to hire foreign workers at lower wages than they would pay Americans.
About 15% of H-1B visas are given to tech contractors, whom the public largely perceives as driving down wages for domestic workers, said Michael A. Clemens, a professor of economics at George Mason University who studies the causes and effects of global migration.
Economic, labor and immigration experts told PBS News that while the H-1B program may need an overhaul, Trump’s broad approach could hamper innovation and ultimately economic growth. They call Trump’s proclamation a reform “sledgehammer,” in an area where finesse is required.
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About 65% of the H-1B workers approved in fiscal year 2023 were in computer-related fields, and made a median salary of $123,600, according to a Pew report.
The government has set a cap on the number of H-1B visas that can be issued each year, limiting for-profit firms to a total of 65,000 workers. That number hasn’t changed much since it was codified in 1990, though in in the mid-aughts, the government began allowing an additional 20,000 visas for workers with advanced degrees. Nonprofits and universities are not subject to the cap, but are subject to the other regulations.
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Though H-1B visas were originally granted on a first-come, first-served basis, they’re now distributed through an annual lottery, because the number of petitions every year substantially exceeds the cap, said Britta Glennon, assistant professor of management at the University of Pennsylvania’s Wharton School of Business.
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During the COVID-19 pandemic and near the end of his first term, Trump suspended the H-1B visa program, saying he wanted Americans to be able to find jobs in a fragile labor market. Though he extended the suspension through March 2021, President Joe Biden revoked the order and restored the visa program that February.
Trump’s proclamation this month proposes a few major changes to the program. His administration would add a $100,000 fee to every new petition for an H-1B visa, including for nonprofits and universities. The plan would also change the structure of the visa lottery.
The lottery would now place heavier weight on petitioners in higher pay brackets, Clemens said. That will ultimately disadvantage entry-level foreign workers, he said, for whom companies may be hesitant to pay a $100,000 fee.
There is a loophole in Trump’s proclamation, Hunt said, that might change the calculus for some companies. The secretary of Homeland Security can waive the fee for workers whose hiring “is in the national interest.” That caveat applies to individual applicants, whole companies and even entire industries.
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The H-1B visa is used in two vastly different ways, and that’s part of what is causing larger problems, said Jennifer Hunt, an economics professor at Rutgers University and former chief economist at the Labor Department in the Obama administration.
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These changes may end up having far broader consequences than reducing or eliminating temporary, outsourced workers, Hunt said.
“It may, I fear, end up shutting down the entire program, because I’m not sure that even stars are worth $100,000,” she said. Companies may worry about paying huge fees for employees who may come for a short time, hate living in the U.S. and then return to their home country. {snip}
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“The $100,000 tax by itself would already sharply reduce demand for entry-level employment, because [an] entry-level worker, by definition, you don’t know them well. You haven’t tested them. You don’t have a relationship with them,” Clemens said.
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“It’s signaling sort of an unwelcoming environment, so that top talent may not be interested in coming to the U.S.,” Glennon said.
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