Trump’s $100,000 H1B Visa Fee to
Favour High Income Entrants, Offshore and Near Shoring to Thrive
For years, proposals have circulated to
stop abuse of the H-1B program. The Trump administration’s big changes largely
ignored them.
The
Trump administration has overhauled the H-1B visa program, introducing a $100,000 application fee
and a new lottery
weighting system favoring higher-paid jobs.
While aimed at reducing abuse by outsourcing firms and prioritizing valuable
workers, experts warn the changes won’t fix core flaws. Outsourcing companies
may still exploit loopholes, while startups, universities, and research
organizations could lose access to talent.
The
H-1B cap, unchanged since 1990, remains oversubscribed, with visas allocated
mostly at random. Economists note the program boosts U.S. productivity, but
reforms are long overdue. Proposed fixes include ranking applications by
salary, adopting a points-based system (like Canada’s), offering more green
cards, and curbing wage suppression.
Critics
argue the $100,000 fee favors big tech and multinational corporations
while excluding small businesses, since over half of H-1Bs already go to
workers inside the U.S., who can bypass the fee. The new wage-tiered lottery
may also distort priorities by favoring current pay
over long-term potential. Overall, experts across the spectrum say the reforms
are incoherent, legally vulnerable, and unlikely to address the visa program’s
biggest problems.
After
the White House’s startling changes to the nation’s high-skilled visa program,
employers have moved from shock to acceptance.
Some
are strategizing how to work with the new rules. Others are making plans to
litigate. And many wish the Trump administration had heeded the piles of ideas
to fix the program’s central, widely acknowledged failing.
Since
the early 2000s, demand for specialized workers has far outstripped a cap that
remains where it stood when the H-1B program started in 1990. The government
allocates the visas randomly, and outsourcing companies have learned to flood
the system with applications for relatively low-paid positions.
The
Trump administration said it wanted to stop that practice and reserve the
coveted visas for the most valuable workers so they do not displace American
software programmers, researchers and engineers. The solutions the
administration chose — a $100,000 fee for new visas and a complex weighting
system to favor higher-paid jobs — are unlikely to
accomplish that.
Instead,
loopholes appear likely to allow outsourcing companies to adapt while
start-ups, universities and research organizations lose out, according to
experts from across the political spectrum.
“Something
that addresses the right problem and sounds good on paper can still lead you
down the exactly same problematic road,” said John Lettieri, president of the
Economic Innovation Group, a think tank that has studied the H-1B program.
‘A really high barrier’
Any
comfort that might have come from certainty about the administration’s
long-awaited action was erased by the likelihood of legal challenges to the new
rules. A provision for exemptions based on the “national interest” — which the
White House suggested it might grant to doctors, for example — has kept workers
and employers hoping for clemency.
“They
want to create a really high barrier that gives them discretion to bring people
to them to make a deal,” Mr. Lettieri said.
Immigration
officials aggressively denied H-1B applications in Mr. Trump’s first term, but
the support of tech leaders including Elon Musk raised hopes that Mr. Trump
might look more favorably on foreign talent now.
The
H-1B is America’s largest visa category for workers with specialized skills.
The annual limit is 85,000, and employers that aren’t subject to the cap —
including nonprofit universities and hospitals — usually expand the total by at
least 50 percent. The visa can be extended for up to six years, or longer if
the worker has a pending green card application. In 2019, the last year the
Department of Homeland Security provided data, there were about 583,420 H-1B
visa holders in the United States.
Almost
since its inception, the program has been plagued with instances of employers
who substituted foreign visa holders for American workers and paid them less.
In the early 2000s, the federal government embraced a lottery to allocate
scarce visas, with no mechanism to elevate exceptional talents over more
run-of-the-mill workers.
Despite
the program’s shortcomings, economists have generally found that H-1B visa
holders boost American productivity and raise wages even for American workers.
Politicians and policy experts on both sides of the aisle have called for
changes to maximize the program's value.
“It’s
all random chance, which is insane for a program that should be our flagship
high-skilled immigration program,” said Jeremy Neufeld, director of immigration
policy at the Institute for Progress.
Some possible fixes
To
squeeze more benefits from the system, Mr. Neufeld has proposed ranking
applications by compensation, so that only the highest-paid workers would be
assured visas. Alternatively, the government could devise a points system —
similar to Canada’s — that would capture other desirable characteristics such
as youth and language skills that aren’t reflected in compensation.
Policymakers could also reduce abuse by awarding more green cards, which allow
workers to switch jobs for better offers.
Some
solutions would require congressional action. Lawmakers have proposed fixes
like requiring employers to look harder for domestic applicants before
recruiting outside the country, or banning layoffs of workers who are replaced
by visa holders. They have also considered more targeted measures to crack down
on wage suppression by outsourcing companies. The Biden administration
finalized a rule in its last days allowing for tougher oversight.
The
$100,000 fee, however, came out of nowhere.
“Up
until this weekend, business felt aligned with the Trump administration on the
need to modernize the H-1B program,” said Jennie Murray, president of the
National Immigration Forum, which helps companies integrate their foreign-born
workforces and pushes for immigrant-friendly policies.
The
White House said the fee would ensure that employers only submit petitions for
workers they need so much that they’re willing to pay an extra $100,000 to get
them. But the employers that profit the most from H-1B workers — including
workers who are relatively low-paid — would still have an incentive to request
visas.
“If
they keep the H-1B worker for six years, it’s a worthwhile investment,” said
Daniel Costa, director of immigration law and policy research at the labor-aligned Economic Policy Institute.
The
largest tech companies could afford the fees, improving their chances in a
crapshoot that right now gives them only one in five odds. And the fee is only
required for people applying from outside the United States. It is easier for
multinational corporations to bring their desired workers into the country on
other visa types before transferring them to an H-1B, allowing them to skip the
fee. More than half of H-1Bs are granted to people who are already in the
United States.
“Primarily,
we’ll see small businesses being locked out of the program,” said Cecilia
Esterline, a senior immigration policy analyst at the Niskanen Center, a think tank. “It’s kind of incoherent.”
A small edge for
higher-paid jobs
The
other major element of the changes to the H-1B program comes from a proposed
rule that would take effect after several months of comment and review. It is
intended to give higher-paid positions an edge in the lottery. But rather than
ranking them by compensation, it would tie the lottery to four wage thresholds
based on occupation and region, giving additional weight to the higher wage
levels.
That
means a relatively well-compensated worker in a less lucrative profession —
like journalism or nursing — could have a better shot than a recent college
graduate entering a highly paid field with the potential to earn much more in
the future. Employers would still be able to bring people in at the lowest wage
levels, which an earlier version of the rule proposed in 2020 would have
effectively prevented.
“The
whole point — which I emphatically agree with — is to select high-wage H-1B
workers,” said George Fishman, senior legal fellow at the Center
for Immigration Studies, which pushes for more restrictive immigration policy.
“This would undermine the basis for the entire rule.”
Todd
Schulte, the president of the pro-immigration group FWD.us, favors
a simple wage floor that would ensure that the visas go only to the
highest-paid workers. The median annual compensation of H-1B holders is
$120,000. One approach would be to cut out everyone below that level.
“There are things we can do to reform and
improve these visa categories,” Mr. Schulte said. “But that is absolutely not
what we’re seeing in any aspect of what is being thrown out now.”