H-1B visas have helped launch the careers of high-profile entrepreneurs and CEOs akin to Elon Musk (Tesla), Sundar Pichai (Google), Andrew Ng (DeepLearning.AI, Google Brain) and Eric Yuan (Zoom).
The Trump administration lately introduced a sweeping change to the visa program, growing the payment for brand new H-1B petitions to $100,000.
The transfer raises questions on the way forward for the U.S. tech business, which has lengthy relied on extremely expert foreign-born expertise.
Startups and mid-sized corporations can be hit hardest, say Northeastern University specialists, whereas giants like Amazon and Google would possibly soak up prices or shift jobs overseas.
The H-1B holders fill specialised STEM roles the place U.S. shortages persist. The coverage might harm U.S. competitiveness and weaken the nation’s world edge in science and expertise, they are saying.
“It’s hard to know what the objectives of the administration are,” says Mindy Marks, an affiliate professor of economics at Northeastern University.
A program rooted in shortages
Congress created the H-1B program in 1990 to permit U.S. employers to quickly rent overseas employees in “specialty occupations” requiring extremely specialised data and a minimum of a bachelor’s diploma. The program acknowledged that U.S. innovation, together with the invention of the web and the World Wide Web, was outpacing the home provide of STEM employees, says Annique Un, Northeastern affiliate professor of worldwide enterprise and technique.
“It would be great if we could source them domestically. But we do have a shortage,” Un says of these employees.
Congress capped new H-1B visas at 85,000 yearly, with 20,000 reserved for superior diploma holders. Since demand for these visas often exceeds the cap, they’re distributed by lottery.
However, there are cap-exempt establishments that obtain hundreds of extra approvals annually. For instance, about 400,000 functions had been authorised in 2024; 65% had been visa renewals and 141,207 had been new hires.
H-1B holders account for about 730,000 jobs — a small fraction of the 170 million civilian labor pressure and 36.8 million STEM jobs.
Foreign-born workers made up practically 19% of the U.S. STEM workforce in 2021, in keeping with the National Science Foundation, together with residents and non-citizens. But their share is dramatically larger on the doctoral degree — 58% for laptop and mathematical scientists and 56% for engineers.
In 2022, solely 38% of American adults had a school diploma, in keeping with the U.S. Census Bureau. Those with superior levels principally pursued doctoral levels in non-STEM fields, Un says, whereas international locations like India and China proceed to funnel massive numbers of scholars into technical disciplines.
India dominates the H-1B pipeline: in 2024, 71% of approved applicants had been Indian nationals, adopted by China at 12%.
A six-figure payment
Until now, H-1B visa charges had been properly under $10,000.
The new six-figure payment, Marks says, is unfair. She expects the general variety of visas to fall, leaving the market to find out which corporations worth overseas expertise most.
If authorised by Congress, Un says, the change will hit startups and mid-sized corporations the toughest. Giants like Amazon, IBM, Microsoft, Google or Meta might soak up the price.
“Especially if Americans don’t want to go to the regions of the country that need STEM workers,” she says.
Some overseas employees are prepared to begin in much less fashionable areas akin to Mississippi or South Carolina, she says, and apply for a inexperienced card sponsored by their employer later.
Larger companies may additionally sidestep the payment by hiring by their overseas subsidiaries and utilizing L visas for intracompany transfers, or by merely retaining jobs overseas.
Who will bear the price?
Economic idea suggests, Marks says, the brand new payment will probably be cut up between employers and employees. Some corporations might offset prices by decreasing salaries.
“How much of the cost gets split between the two parties depends on their elasticities,” she says. “It depends on how substitutable the immigrant worker is for a native worker.”
If native employees can be found, overseas wages would possibly fall by as a lot as $100,000. If not, corporations might soak up the expense to safe the most effective expertise.
Can the U.S. exchange overseas employees?
Efforts to develop the home STEM pipeline — from highschool internships to applications for women in STEM — are underway, Un says, however the scarcity persists.
“These are people working in very specialized areas, whom the company has deemed as the best fit for the job,” Marks says. “It would be like trying to staff a professional sports team and saying, ‘Well, yes, but you’re not allowed to have any athletes who were born in other countries.’ Your team will not be as good.”
The authorities can incentivize corporations to ramp up coaching and apprentice applications, she says, and younger individuals to pursue careers in STEM. But this answer takes time and could also be short-lived if demand for sure technical abilities shifts. In these instances, it makes extra sense to rely quickly on world expertise.
H-1B holders additionally deliver financial advantages. They have comparatively excessive salaries and pay comparatively excessive tax charges. The U.S. authorities doesn’t need to spend any cash on their training. They additionally make Social Security contributions that they most probably received’t find yourself amassing.
“They pay more taxes than the government has to spend providing them services,” Marks says.
Studies have proven that U.S. foreign-born residents invent extra merchandise and register extra patents, publish extra analysis papers and usually tend to begin new corporations.
Foreign-born employees additionally enhance workforce productiveness, Marks says, bringing new methods of pondering, variety coaching and cultural consciousness, which may be crucial when U.S. corporations broaden overseas.
Potential downsides
Credible research present, Marks says, that as a result of H-1B employees are tied to at least one employer, corporations typically have leverage to pay them lower than native employees.
“That is part of the reason companies like to hire them,” Marks says.
Shortage of high-skilled overseas employees would possibly elevate wages for the U.S. residents within the brief run, she says, however in the long term, corporations are probably to determine completely different options, like relocating jobs abroad. The U.S. will find yourself shedding any extra jobs, like directors and janitors associated to the enterprise.
A decline in worldwide college students who typically see H-1B as a path to remain within the U.S. might additionally harm American larger training revenues and jobs.
What is behind these adjustments?
Some speculate the administration might choose attracting European employees over Indian or Chinese nationals. But Un doubts this technique would work: Europeans can already transfer inside the EU, the place well being care entry and retirement advantages are sturdy.
Others say the coverage might be a leverage in commerce negotiations with India. Indian companies like Tata Consultancy Services and Infosys rely closely on H-1B visas. But, Un says, it’s unlikely that this may push India to make concessions.
“It’s a source of pride, and also India has a trade deficit in services with the U.S., although it enjoys a trade surplus in merchandise,” she says.