The Trump administration’s decision to impose a $100,000 fee on new H-1B visa applications stems from legitimate concerns about wage suppression and job displacement.
Critics have long argued that some companies abuse the program by using it to replace U.S. workers with cheaper foreign labor. These concerns have merit. Studies have documented consulting and other firms paying foreign H-1B workers less than their U.S. peers in similar roles and even engaging in wage theft.
Yet the U.S. government’s sledgehammer approach to these real problems will likely produce consequences far worse than the abuses it seeks to address. Rather than encouraging companies to hire more Americans, the dramatic fee increase—from roughly $1,000 to $100,000—will drive high-skilled work overseas and accelerate the decline of U.S. technological leadership. In addition to the fee, Washington will replace the current H-1B lottery with a new system that strongly benefits the largest employers instead of favoring startups and universities, where foreign workers would contribute more to innovation and future job growth.
When we first wrote The Immigrant Exodus in 2012, we detailed how unfriendly and irrational immigration policies were preventing the best and brightest from staying in the United States. Since then, the rationale for building a U.S. career has steadily eroded. Not only has it become much harder to legally bring your expertise to the United States, but other countries have grown far more attractive for talented individuals. Many offer essentially a free ticket to foreign researchers, including a clear path to citizenship. China has offered massive subsidies to leading researchers. There has also been an acceleration in the formation of so-called unicorns—start-up companies valued at $1 billion or more—outside the United States, indicating that entrepreneurs can now build these businesses anywhere. According to the 2024 Hurun Global Unicorn Index, 52 percent of today’s unicorns are located outside the United States.
The $100,000 H-1B policy operates under a retrograde and flawed assumption: Make foreign workers prohibitively expensive, and companies will hire Americans instead. This logic might hold in a closed economy, but it fails in today’s globalized world, where talent and jobs move freely across borders.
Multiple economic studies demonstrate what happens when H-1B access becomes restricted. Research analyzing comprehensive visa microdata and multinational firm activity shows that companies respond to H-1B limitations not by hiring more Americans but by expanding operations overseas. When faced with artificial constraints on skilled immigration, firms increase foreign affiliate employment, particularly in Canada, China, and India. The positions most affected are precisely those that the United States can least afford to lose: research and development roles that drive technological innovation.
Reducing the number of tech jobs in the economy reduces other forms of employment. The evidence consistently shows that skilled foreign workers complement rather than substitute for U.S. talent in high-value roles. The relationship is positive and measurable. Skilled immigration expands entire industries rather than merely redistributing existing opportunities. This multiplier effect reveals the fundamental flaw in the new policy’s logic.
The H-1B program does have genuine shortcomings. Companies exploit the system’s lottery structure by flooding it with applications for positions that may not require specialized skills. For example, investigations have shown cases where workers were brought in to replace U.S. staff at firms such as Disney and Southern California Edison. Staffing giants such as Tata Consultancy Services, Infosys, and Cognizant have used H-1B workers to undercut prevailing wages in information technology services. These IT services companies are also among the lowest-paying for technology positions in industry, offering salaries on average that are about half those of cutting-edge firms such as Nvidia.
The concentration of H-1B use among a small number of firms underscores this. In fiscal year 2025, Amazon alone secured more than 10,000 approvals, while Tata Consultancy obtained 5,505, Microsoft 5,189, Meta 5,123, Apple 4,202, Google 4,181, and Cognizant 2,493. A handful of companies thus account for a disproportionate share of visas, many of them for entry-level IT services roles. This raises legitimate questions about whether the program serves its intended purpose of addressing genuine skill shortages—or whether it has become a subsidy for cheap labor at the expense of U.S. workers.
These abuses have real consequences for U.S. workers, particularly those in mid-level technology roles where wage competition is most direct. The frustration of U.S. engineers and programmers who see their wages stagnate while companies import foreign workers is understandable and should not be dismissed. But upping the H-1B fee to $100,000 will not save their jobs. It will just move them somewhere else and further weaken the economy in which they work.
There are better ways to fix the system. They include clearing the green card backlog so that workers can escape servitude to their visa employer, raising H-1B wage requirements so visas cannot be used to undercut Americans, shutting out the outsourcing companies that game the lottery, and prioritizing genuine talent. Imagine if U.S. President Donald Trump told the million-plus skilled immigrants stuck in limbo that their paperwork would be processed immediately if they bought or built a home. Even if only half of them took up the offer, it would trigger more than $600 billion in economic activity—hundreds of thousands of homes sold, construction jobs created, and local tax revenues generated. The immediate economic boost could be larger than any other that Trump administration policy can deliver, including economic stimulus from tax breaks.
To improve U.S. competitiveness and ensure that the best talent can fill the best opportunities, the system should be changed. Startups and universities should receive higher weight in the H-1B allocations, because they are more likely to produce innovation. Larger firms and consulting companies should be limited to critical, high-wage positions. Furthermore, the administration should tighten the enforcement of prevailing wage requirements and implement mandatory audits of companies with high H-1B use. Companies found to be systematically underpaying workers could face high penalties or temporary bans from the program. This would limit abuse while maintaining access to exceptional talent for organizations that truly need it.
To promote visa allocation based on actual skills, the current pure lottery system could be replaced by evaluations based on educational credentials, work experience, and the specific skills shortage being addressed. This would ensure that visas go to workers who genuinely fill gaps in the labor market.
Finally, there should be strict caps on H-1B use by consulting firms. Limiting the number of visas that any single company can receive would prevent the concentration that has enabled some firms to game the system while ensuring broader access across industries. Needless to say, each company cap should include all subsidiaries and related parties to prevent further abuse.
These reforms represent surgical solutions to specific problems rather than the current scorched-earth approach. They would address legitimate concerns about wage suppression and job displacement while preserving America’s ability to attract the world’s best talent, on which the country’s competitive position increasingly depends. This is particularly true in emerging technologies such as artificial intelligence, quantum computing, and biotechnology, where the talent pool is inherently global and competition for the best people is fierce.
The data on this competition is sobering. China has overtaken the United States in the Nature Index for contributions to high-quality natural science research, marking a historic shift in global scientific leadership. Chinese institutions now hold eight of the top 10 positions in the index, reflecting years of strategic investment in talent attraction and retention.
The international competition for skilled workers has intensified dramatically in recent years. Australia, Britain, Canada, many European Union countries, and Singapore all offer more predictable immigration processes and clearer pathways to permanent residency than the United States. Hardly a week goes by without the announcement of a new program to lure foreign talent, often explicitly aimed at the United States. China offers large subsidies and lab setup stipends to lure back Chinese STEM talent from abroad. These countries understand that attracting global talent is fundamental to economic growth in knowledge-intensive industries.
Foreign-born professionals comprise 43 percent of Ph.D.-level scientists and engineers in the United States. Immigrants have been instrumental in building the recent wave of U.S. technology companies, including Zoom, OpenAI, Anthropic, Cerebras, and Nvidia. Look at the ranks of founders and top executives of every U.S. unicorn, and the majority will include an immigrant. Ditto for the faculty of the leading schools of computer science, mathematics, biology, and medicine. The $100,000 fee will make it too expensive for all but the largest corporations to sponsor such talent on H-1Bs. Small, innovative firms building tomorrow’s innovations will be locked out of the global talent war.
Economic research consistently shows that H-1B workers generate more innovation and job creation than they potentially displace. Studies show that higher H-1B admissions correlate directly with increased patent filings, venture capital funding, and successful technology start-ups. Workers in the program file patents at higher rates than the general population and are more likely to start companies that employ U.S. workers.
The positive spillover effects extend beyond technology. Research shows that skilled immigration benefits both college-educated and non-college-educated U.S. workers through complementary effects and industry expansion. The fear that foreign workers systematically displace Americans finds little support in careful economic analysis, particularly for high-skilled positions where collaboration and specialization create mutual benefits.
Even studies that find some negative effects on wages and employment show that these are typically small and concentrated in specific circumstances. The broader economic impact remains strongly positive, with immigration-driven innovation and entrepreneurship creating far more opportunities than direct competition eliminates.
The pathway from research universities to H-1B employment represents a critical talent pipeline that the new fee structure will severely damage. International students typically arrive for graduate studies in STEM fields, often funded by research assistantships that contribute directly to cutting-edge research. After completing their degrees, many commonly go on to work in advanced roles on an H-1B.
At least 20,000 H-1B registrants now hold advanced degrees from U.S. universities. This clearly indicates how intertwined the university system has become with the high-skilled workforce pipeline in the United States. These graduates represent U.S. investment in training the world’s best minds. The $100,000 fee will degrade that investment by making it economically impossible for most employers to retain these workers after their training is complete.
The disruption extends beyond individual careers to the research enterprise itself. International students comprise more than half of all graduate enrollments in engineering and computer science programs at U.S. universities. They serve as research assistants, contribute to breakthrough discoveries, and often spin off their research into start-ups. They are the future of AI research, to name one example. When the pathway from graduation to employment becomes blocked, fewer top students will choose U.S. universities, weakening the entire research ecosystem that underpins technological leadership. With fewer brilliant students, U.S. university programs will wither.
The need to fix the H-1B program is real. However, rather than taking a scorched-earth approach, the United States would be better off pursuing targeted reforms that address genuine concerns while preserving America’s competitive advantages in attracting the best and brightest. The stakes have never been higher, and the competition has never been greater.
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