Here’s why experts think Trump took ‘a sledgehammer’ to the H-1B visa worker program

When President Donald Trump proposed that American companies pay a $100,000 fee for each foreign employee they seek to hire, confusion and worry spread through the tech industry, which relies heavily on skilled worker visas.

Those visas, part of the H-1B program, allow U.S. employers to temporarily hire foreign employees in “specialty occupations,” according to the Department of Labor.

Business leaders — and Trump himself at one point — have supported the visas as a way to bring talent to the U.S. At the same time, there have been calls for reform from people who say the program allows companies to hire foreign workers at lower wages than they would pay Americans.

About 15% of H-1B visas are given to tech contractors, whom the public largely perceives as driving down wages for domestic workers, said Michael A. Clemens, a professor of economics at George Mason University who studies the causes and effects of global migration.

Economic, labor and immigration experts told PBS News that while the H-1B program may need an overhaul, Trump’s broad approach could hamper innovation and ultimately economic growth. They call Trump’s proclamation a reform “sledgehammer,” in an area where finesse is required.

Here’s what to know about the H-1B visa program and how Trump’s changes may ripple through the American labor market and economy.

What is an H-1B visa and who receives them?

The H-1B visa is one of many worker visas available to non-U.S. citizens. This one specifically allows entry and employment of people in fields that often require specialized knowledge or abilities. That can include employees in “sciences, medicine, health care, education, biotechnology, and business specialties, among other fields,” according to the Labor Department.

The visa also covers research and development project workers for the Defense Department, as well as fashion models “of prominence” and “distinguished merit and ability.” But the majority of H-1B workers are in tech.

WATCH: Trump signs order that adds $100K annual fee to H-1B visas for high-skilled workers

About 65% of the H-1B workers approved in fiscal year 2023 were in computer-related fields, and made a median salary of $123,600, according to a Pew report.

The government has set a cap on the number of H-1B visas that can be issued each year, limiting for-profit firms to a total of 65,000 workers. That number hasn’t changed much since it was codified in 1990, though in in the mid-aughts, the government began allowing an additional 20,000 visas for workers with advanced degrees. Nonprofits and universities are not subject to the cap, but are subject to the other regulations.

When a company finds a foreign job candidate they wish to hire, they file a visa petition for the candidate. Since 2020, Amazon has been the top U.S. employer of H-1B workers, the Pew report found. In 2023, more than 11,000 H-1B approvals went to the tech giant, representing about 3% of the total pool.

Though H-1B visas were originally granted on a first-come, first-served basis, they’re now distributed through an annual lottery, because the number of petitions every year substantially exceeds the cap, said Britta Glennon, assistant professor of management at the University of Pennsylvania’s Wharton School of Business.

Many H-1B visas are awarded to foreign graduates of U.S. universities. Visa holders can generally stay in the country for up to three years, with an additional three-year extension, and H-1Bs have the additional benefit of being able to be converted into a green card. That’s a common path foreign professionals use to establish permanent citizenship, Glennon said.

How does Trump want to change the H-1B program?

During the COVID-19 pandemic and near the end of his first term, Trump suspended the H-1B visa program, saying he wanted Americans to be able to find jobs in a fragile labor market. Though he extended the suspension through March 2021, President Joe Biden revoked the order and restored the visa program that February.

Trump’s proclamation this month proposes a few major changes to the program. His administration would add a $100,000 fee to every new petition for an H-1B visa, including for nonprofits and universities. The plan would also change the structure of the visa lottery.

The lottery would now place heavier weight on petitioners in higher pay brackets, Clemens said. That will ultimately disadvantage entry-level foreign workers, he said, for whom companies may be hesitant to pay a $100,000 fee.

There is a loophole in Trump’s proclamation, Hunt said, that might change the calculus for some companies. The secretary of Homeland Security can waive the fee for workers whose hiring “is in the national interest.” That caveat applies to individual applicants, whole companies and even entire industries.

What are the arguments for changing the H-1B program?

Calls for reforming the H-1B visa program generally cite a few main reasons, Glennon said.

One concern – that foreign workers are taking jobs from Americans – isn’t backed by substantial evidence, she said. That’s because immigrants with jobs in the U.S. have many of the same needs domestic workers do.

“When they consume goods and services, that’s creating more demand and that means that companies are going to expand and actually hire more,” she said.That could mean more need for grocery workers and Uber drivers, as well as for computer programmers and AI researchers.

There is legitimate worry about companies that abuse the H-1B visa system, Glennon said. While the program is designed for a company to identify a candidate to hire and then apply for their visa, some outsourcing firms “flood the lottery with tons and tons of petitions” without regard for the candidates themselves. They then contract out the IT workers to other companies, some of which might have applied themselves for a visa candidate but lost the lottery. IT contractor firms flourished as demand for visas increased, but the number of visas stayed the same, she said.

That can distort the labor market, Ronil Hira, associate professor of political science at Howard University, told William Brangham on the PBS News Hour.

“It’s bad for those guest workers who are being underpaid, but it’s also bad for the U.S. economy and for U.S. workers who are competing with them, because it drives down the wages for U.S. workers and it also eliminates many job opportunities for those workers,” Hira said.

WATCH: How H-1B visa changes could impact American businesses and workers

Those outsourcing companies account for a small percentage of H-1B visas, Clemens said. But they also generally pay slightly more than entry-level positions, meaning their petitions will be weighted more in the lottery than those of recent college grads.

A third concern – that the program can be exploitative since employees are tied to the firm that petitioned for their visa – is unlikely to be among the main reasons the Trump administration added its new requirements, according to Glennon.

“An H-1B worker is kind of trapped,” Glennon said. There’s “this imbalance of power, because the worker can’t just leave and go to another firm” or their visa will be revoked. That dynamic could make the firm feel comfortable paying a worker lower wages, she added.

The H-1B visa is used in two vastly different ways, and that’s part of what is causing larger problems, said Jennifer Hunt, an economics professor at Rutgers University and former chief economist at the Labor Department in the Obama administration.

In some cases, the visas are used to bring over very talented people whom companies hope to keep long-term. Other times, the visas are for truly temporary employees.Both types of workers are valuable to the U.S. economy, Hunt said. But she believes there’s a widespread misconception that temporary IT professionals bring no value.

“The more charitable interpretation” of the Trump administration’s proposed changes is that they are “trying to keep the stars and eliminate the computer programmers,” Hunt said, even though the computer programmers “have been shown to be complementary with American workers, not substitutes.”

How would Trump’s changes affect the economy more broadly?

These changes may end up having far broader consequences than reducing or eliminating temporary, outsourced workers, Hunt said.

“It may, I fear, end up shutting down the entire program, because I’m not sure that even stars are worth $100,000,” she said. Companies may worry about paying huge fees for employees who may come for a short time, hate living in the U.S. and then return to their home country. In the worst case scenario, she said, fewer talented workers in the U.S. would “mean less innovation, less patenting, and therefore less economic growth.”

Generally, experts worry that the Trump administration’s changes to the H-1B visa program will throttle the flow of young talent.

“The $100,000 tax by itself would already sharply reduce demand for entry-level employment, because [an] entry-level worker, by definition, you don’t know them well. You haven’t tested them. You don’t have a relationship with them,” Clemens said.

But it might also discourage more experienced and highly sought workers from pursuing opportunities.

“It’s signaling sort of an unwelcoming environment, so that top talent may not be interested in coming to the U.S.,” Glennon said.

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Glennon predicted that instead of bringing foreign workers to the U.S., large tech firms with offices abroad may just employ more people in other countries. “Firms have done this in the past in response to H-1B restrictions,” she said. “And so I’m sure that that is a big part of what will happen.”

She also worries that startups, which are less likely to be able to afford the fee, will be more likely to fail.

Ultimately, Glennon said, “if talent also stops coming to the U.S. in the same quantities, then firms will more and more look abroad for it.”

Meanwhile, China is launching a new type of visa that will be designed to make it easier for top STEM talent to study or work there. The K visa program will start Wednesday, less than two weeks after Trump’s proclamation.