The Trump administration has recently announced a significant increase in the fee for foreign employees seeking an H-1B visa, now set at $100,000. This decision aims to encourage U.S. companies to prioritize hiring American workers over foreign labor. However, many economists predict that the real-world effects of this policy will be more nuanced. While it may lead to increased domestic hiring in certain industries, it could also hinder long-term economic growth and overall employment opportunities.
According to Kirk Doran, an associate professor of economics at the University of Notre Dame, the new visa policy might create a scenario where American workers experience a rise in labor demand. He notes that there is evidence suggesting an abundance of available workers in the U.S. who can fill the roles typically occupied by H-1B employees. Jennifer Hunt, a labor economist at Rutgers University, also pointed out that technology industry workers could benefit significantly in the short term as companies adjust to the higher costs associated with hiring foreign talent. She emphasized that U.S. native-born computer programmers are likely to see job gains as companies shift their hiring strategies.
While some sectors may see immediate benefits, the broader economic implications of restricting H-1B visas are more complicated. Research indicates that hiring immigrant workers often provides companies with access to a skilled labor pool that may not be readily available domestically. A 2024 study from the IZA Institute of Labor Economics found that H-1B workers can contribute to increased company employment, higher revenues, and improved survival rates for businesses. Notably, the study revealed no evidence that hiring foreign labor through the H-1B program displaces native-born workers.
The study's authors highlighted that companies hiring H-1B workers tend to expand, creating additional job opportunities for U.S. workers, particularly in high-wage, high-productivity firms. Michael Clemens, an economics professor at George Mason University, noted that H-1B workers with specialized skills could boost a company's revenue, potentially leading to the creation of new jobs in various sectors, including sales and marketing. However, Clemens warned that the policy changes could ultimately restrict job opportunities for American workers in the long run, stating, "It is going to choke off job opportunities for the people it is supposed to help."
To qualify for an H-1B visa, applicants must possess a minimum of a bachelor's degree in their field and have received a temporary job offer from a U.S. employer. Congress has set an annual cap of 85,000 H-1B visas, which are valid for three years and can be extended for an additional three years. Currently, approximately 700,000 workers in the U.S. hold H-1B visas, according to Capital Economics.
Gaurav Khanna, a professor of economics at the University of California San Diego, emphasized that the costs of restricting immigration extend broadly. He argued that, on balance, such restrictions tend to benefit U.S. workers more than they harm them, with the advantages outweighing the drawbacks. The presence of H-1B workers allows IT companies to expand rapidly, which in turn leads to job growth in management and HR within these firms.
The White House, however, has dismissed claims that hiring foreign workers benefits American employees. White House spokeswoman Taylor Rogers stated, "President Trump continues to prove to so-called 'experts' wrong time and time again," asserting that no economic study can alter the reality faced by many Americans who have experienced job displacement due to the H-1B program. Rogers further contended that this fee increase aims to protect American workers from being undercut by cheaper foreign labor.
Research from The Heritage Foundation has raised concerns about the earnings of H-1B workers compared to their American counterparts. The analysis found that many employers might be using the H-1B program to fill positions at below-median wage levels, raising doubts about the program's alignment with its intended objectives. Furthermore, the Trump administration has proposed changes to the H-1B program, aiming to prioritize higher-skilled and better-paid foreign workers.
Another significant issue with the H-1B program is its restriction on worker mobility, as visa holders are tied to a specific employer. This situation can make H-1B workers more appealing to companies than native workers, who have the flexibility to change jobs. Alexander Frei, the author of the Heritage report, noted that this dynamic creates an uneven playing field, as employers may favor visa-bound workers who are willing to accept lower wages and fewer demands. Consequently, this can undermine the bargaining power and wage growth of equally qualified U.S. workers.
As the Trump administration continues to modify the H-1B visa program, the implications for American employment remain complex and multifaceted. While the intention is to protect U.S. workers, the potential long-term economic consequences could be detrimental, affecting job growth and wage dynamics in the broader labor market.
