The Trump Administration recently announced a $100,000 yearly fee for H-1B visas, the program that allows highly skilled foreign professionals to live and work in the United States. Commerce Secretary Howard Lutnick said this fee was created, in part, to stop U.S. companies from “bringing in people to take our jobs.”
As the founder of a U.S.-based tech company that has proudly sponsored many H-1B visas, I’ve seen how vital this program is to the success of American businesses. The proposed policy would only undermine this, instead pushing American jobs overseas and weakening our global competitiveness.
I recently hired a foreign employee to work at my company as a machine learning engineer, supporting the development of our AI-driven software. Her starting salary was $85,000/year. The proposed annual fee would be more than the cost of her salary. Despite being an excellent engineer, paying $100,000 to sponsor her visa would not have been viable or realistic.
Those who support the new H-1B visa policy would say that instead of employing a foreign worker, we could have instead hired a U.S. citizen to fill the job.
Unfortunately, this would be impossible. There are not enough Americans with the highly specialized technical skills we need to grow as a company. The domestic labor market has been shrinking since 2010, only propped up by migrant workers needed to keep our economy growing. This is especially true in technical fields that require higher education. Without the H-1B program, our company’s growth will be severely limited. This reality is shared by thousands of American businesses throughout the country.
The demand factor of immigrant labor
My support of H-1B visa employees is not only because of their contributions to my company—though they are a great asset—but because the program itself helps strengthen the American economy and create more jobs for everyone in this country.
Most pundits, when considering the influence of immigration on the labor markets, only think about migrant workers as increasing the supply of labor, rather than also affecting demand. To economists, this is known as the “lump of labor fallacy.” The argument is that when migrant workers come to work in the U.S., it expands the supply of labor and crowds out opportunities for domestic workers.
Yet that argument ignores the fact that labor markets are a function of both supply and demand, both of which are positively affected by people. Our economy does not have a fixed number of jobs, but a demand for labor that is a function of innovation, growth, and entrepreneurship. All of these factors are bolstered by people who contribute to the creation of new businesses and the growth of existing ones.
Immigrant labor—especially immigrant labor that comes to the U.S. on an H-1B visa—influences labor demand more than labor supply. A domestic American worker is more likely to be hired by an immigrant than to have their job “taken” by an immigrant.
TIME recently reported on the positive influences of immigrants on our economy, particularly in tech fields like my own. Giovanni Peri, an economics professor at the University of California, Davis, told TIME that, “Foreign STEM workers have been an incredible engine of growth.” More patents are filed in states with more H-1B visa holders, which can lead to the creation of more businesses and, in turn, job opportunities.
Studies have also shown that high-skilled immigrants lead to more productivity without job displacement. One study quantified the specific gains to American workers’ salaries from better tech support as a result of the increased productivity of Indian immigrants on the H-1B program: over $400 million.
The visa fee could also lead to a decline in our overall workforce, which will have far-reaching implications that will be difficult to predict. Almost 90% of our labor workforce growth since 2019 came from immigrants. Without more people, and particularly the highly skilled people that the H-1B visa offers, we will not be able to support an aging American population. Using current projections, our labor force growth will be completely dependent on immigration starting in 2052.
The H-1B program helps bring the best talent in the world to America. These individuals are young, highly skilled, and employable by definition. Their primary impact on our economy is to make it more productive; they contribute to local economies and the tax base, further spurring economic growth that can lead to more jobs. Any disruption in the operation of the H1-B program will significantly reduce growth and harm the American economy.
A choice we don’t want to make
A few years ago, I had an exceptional employee named Praxal Patel. He was building an incredible career here in the US, but when his girlfriend, Anjali Agrawal, who was working at IBM, didn’t win the H-1B lottery, he made the difficult decision to return to India with her. Together, Praxal and Anjali founded Routed AI, a company that has quickly become one of India’s hottest AI startups. They are hiring people and raising money.
Patel would have loved to stay and build his company here, and the U.S. economy would have benefited immensely from his innovation and drive. Instead, that engine of growth now powers another country.
Because remote work is easier than ever, the visa fee will likely lead to the exact opposite effect that the government wants: Increased flows of American dollars to other countries. When companies are forced to choose between hiring someone remotely in a foreign country for lower amounts than domestically, they will make the obvious business choice of investing in workers abroad.
My company will be forced to do the same if the policy does not change. We will have to start seeking out foreign workers in foreign countries, rather than bringing them here to contribute to America’s tax base and local economies.
Many qualified workers will choose to move offshore and work from there to avoid the visa fee. Employees like our new machine learning engineer will be able to keep working productively, but their salary will benefit another country. I do not expect their productivity or ability to contribute to the company to meaningfully decrease. The only thing that will suffer is the community where they currently live, which will lose a productive worker with a high-paying job.
There are too few programs in the U.S. like the H-1B visa, where prime-age productive workers can contribute to the economy effectively and legally. Immigration reform that targets the most productive and successful programs is misguided and devoid of economic sense. Prohibitive fees on sponsoring H-1B workers will lead us to a less productive, less innovative, and weaker country.
The post American Workers Will Pay the Price for New H-1B Visa Fees appeared first on TIME.
