President Trump sent shockwaves through the tech industry over the weekend by announcing a $100,000 payment for new employer-filed H-1B visa applications submitted after September 21, 2025. Since 1990, hundreds of thousands of foreigners have come to work for U.S. tech companies via the visa system. But in a proclamation, Trump wrote that the system had been “deliberately exploited to replace, rather than supplement, American workers with lower-paid, lower-skilled labor.”
Many experts agree that the H-1B system is flawed and needs amending. But TIME spoke with three professors in economics or business who believe that Trump’s new fee system could be counterproductive: that it might push talent overseas; render universities and nonprofits unable to recruit foreign experts; and harm American tech innovation, including in the rapidly emerging field of AI.
The idea that the H-1B visa program has on net taken jobs from U.S. workers is “empirically opposite to the truth,” says Giovanni Peri, an economics professor at the University of California, Davis. “Foreign STEM workers have been an incredible engine of growth,” he says, noting that multiple studies have found that their presence tends to increase job creation and wealth for America writ large.
The new H-1B fee will “hurt the innovation and competitiveness of the U.S. industry,” says Subodha Kumar, a professor at the Fox School of Business at Temple University. “A lot of the innovation and R&D work being done in the U.S. involves people on H-1B visas.”
Read More: H-1B Visas Have Been Transformed. Here’s What You Need to Know About the Changes
H-1Bs and the tech industry
H-1B visas are designed to allow experts in specialized fields to come work in the U.S. on a non-immigration basis. There are more than half a million U.S. residents on H-1B visas, the U.S. government estimated in 2020. And many of those residents work for tech companies as engineers and IT specialists. A report from the Department of Homeland Security found that 64% of approved H-1B petitions in the 2024 financial year were computer-related.
Tech leaders who came to the U.S. with the help of H-1B visas include Microsoft’s Satya Nadella, Google’s Sundar Pichai, and Zoom’s Eric Yuan. One 2021 study found that the number of H-1B visa holders in a state was highly correlated with the number of issued patents, especially in computer science and optoelectronics. Another report found that the top beneficiaries of the program include Amazon (which employed nearly 15,000 workers utilizing H-1B visas in 2024), IBM, Microsoft, Google, and Meta.
In December, Elon Musk wrote on X that “the reason I’m in America along with so many critical people who built SpaceX, Tesla and hundreds of other companies that made America strong is because of H-1B.”
A “broken” system
But Musk, the same week, also called the H-1B system “broken,” and advocated for major reform. The system has faced intense scrutiny from across the political spectrum, as well as from those inside of it.
Demand for H-1B visas far outstrips the available supply. To address this, a lottery system for applicants was put in place, which critics say is manifestly inefficient. Many workers have to wait for years for a green card—and once in the program, they have limited ability to change companies or found their own start-ups.
Meanwhile, leaders on the left, like Bernie Sanders, have voiced concerns that the system is exploitative. A 2020 study by the Economic Policy Institute (EPI) found that most H-1B employers pay migrant workers less than market rate salaries. And on the right, leaders like Steve Bannon fear that the system takes jobs from Americans.
During his first term, Trump imposed restrictions on the program, with rejection rates of applications spiking. He also tried to ban H-1B visas, but was unsuccessful in federal court.
Trump is now trying a different tactic: A $100,000 payment for new applicants. The announcement caused a panic in Silicon Valley, with tech companies advising their H-1B employees not to leave the country lest they not be allowed back in. However, White House officials said on Saturday that the changes would only apply to new applications, not renewals.
The decision will be met with legal challenges. It is unclear whether Trump has the authority to amend the fee in this way, and it may or may not hold up in court.
But even those who advocate for reform of the program are skeptical that Trump’s $100,000 fee will fix things. “I don’t think this is the solution to the disruptions we’ve seen in the job market,” says Madeline Zavodny, an economics professor at the University of North Florida.
She says a better approach would be to institute an auction system at the federal level, letting employers bid for the right to hire foreign workers via the H-1B program, while exempting nonprofits, universities, and the like from this process.
Peri adds that raising the cap from 85,000 would enable a more efficient system. He argues that the reason tech companies turn to foreign labor is because the supply of high-skilled workers is simply insufficient to meet demand. “It’s already way easier to hire an American than a foreign-born worker,” he says. Some researchers, however, dispute the idea that there is a shortage of high-skilled workers in STEM roles more broadly.
Impact on the labor and tech sector
Several tech executives have responded positively to the new fee. OpenAI’s Sam Altman said on CNBC: “We need to get the smartest people in the country, and streamlining that process and also sort of outlining financial incentives seems good to me.” Reed Hastings, Netflix’s chairman, called the tax a “great solution.” “It will mean H-1B is used just for very high value jobs, which will mean no lottery needed,” he says.
Coreweave CEO Michael Intrator, in contrast, described the new fee as “sand in the gears” for his company.
The impacts of the fee may be most acutely felt by the Indian I.T. ecosystem. About 70 percent of H-1B holders are Indian citizens. Critics now worry that the fee could price out Indian engineers from joining American companies. Dileep Krishna, an Indian entrepreneur, wrote on LinkedIn that the changes might cause Indian tech workers to return home. “Here’s to the next generation of Indian talent with global exposure and coming back to India and building for the global markets,” he wrote.
Many more Indian tech workers may go to other countries abroad with flourishing industries, like the U.K. According to Zavodny, research shows that when large companies are unable to hire employees on an H-1B, they end up offshoring the work instead. “It goes to Canada, the U.K., or India,” she says. Small firms, meanwhile, may simply be unable to hire the talent necessary for them to grow.
Peri adds that the academic and nonprofit spaces could also be hit especially hard. While the number of visas for private sector workers is capped at 85,000 per year—a limit which has been unchanged since 2005—certain employers, including those at certain universities, nonprofits, and governmental agencies, are exempt. In 2024, over 141,000 new visas were approved.
For many employers of workers on H-1Bs at those types of organizations—who also contribute significantly to America’s technological lead by conducting cutting-edge research, says Peri—the new $100,000 payment will be prohibitive. Harvard, for example, typically sponsors 125 new H-1B visa petitions every year, which would amount to more than $10 million in annual fees.
Kumar, at Temple, says the move could help the domestic tech job market in the long term—but that a lot of infrastructure will need to be built to make that happen. “In the long run, there will be a push to create the domestic workforce to meet some of these needs,” he says. “But that is not an easy task at all. Right now, it will just create more confusion, and tech companies really have to work hard on reducing their losses.”
For Peri, there is an irreconcilable tension between the administration’s twin goals: protecting American jobs and maintaining the U.S.’ position as a global leader in STEM. “I think in the administration there are two types of people,” he says. “The ones who are very clear about the negative consequences—the Elon Musk types, business people—and the people who want to cut immigration for ideological reasons,” such as Stephen Miller, the White House Deputy Chief of Staff for policy. “We will see who prevails in the long-run,” he says.
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