President Trump announced a new policy that would require companies applying for an H1B visa to pay a $100,000 application fee on Friday, September 19. The fee would apply to existing H1B visa holders only if they wanted to renew their visa. His administration claims that the move would force companies to issue H1B visas only to the most talented foreign workers, thereby compelling them to recruit and hire Americans for jobs, especially in the tech sector. But the real question is what the impact of his new policy will be on job prospects for Americans? Will it make American candidates more appealing to companies, or will it just accelerate nearshoring, offshoring, and outsourcing?

What Does the New H1B Policy Say?

Companies would have to pay a one-time fee of $100,000 to file an H1B visa application with the U.S. government. The move is designed to encourage companies to sponsor only genuinely qualified candidates for H1B visa applications. Many American workers, especially tech graduates and experienced workers, complain that they are often rejected in favor of lower-cost Chinese and Indian workers.

Still other American workers fume because they say that they have had to train their H1B visa replacements (companies have long had a practice of replacing (firing) American workers and replacing them with cheaper H1B slave labor).

Interestingly enough, the policy will not affect current H1B visa holders living in another country.

Explanation of the H1B Visa

If you were wondering, an H1B visa is issued by a legal immigration program allowing skilled workers to hire temporary workers in skilled professions: healthcare, tech, finance, and other STEM fields. The applicant must have at least a bachelor’s degree to qualify. The applicant must also know a great deal–both in terms of theory and practical application–about the particular profession.

The Immigration Act of 1990 created the H1B visa program. The intent was to fill in-demand positions with workers when it was difficult or impossible to find American workers willing to work at the stated wages and in the stated conditions and work environments.

What Will the New H1B Visa Mean For Companies?

Companies will need to provide receipts or other documentation that they have paid the $100,000 H1B fee before applying. The candidate will not be considered for an H1B visa until the sponsor pays the fee. The ‘restriction’ period will last for up to a year. The U.S. government will make exceptions for foreigners who are valuable to the American government and don’t pose any national security threats.

Many who support the program argue that the new policy will make America less competitive and innovative in the short and long run by turning valuable talent away. They argue that those who come in on the H1B visa program are very productive and ambitious. They cite numerous studies that state that H1B visa STEM holders have been the main driver of entrepreneurship and innovation in America. Both have driven the American economy forward.

America likely wouldn’t have Google or Microsoft’s innovation were it not for the H1B visa program because it allowed brilliant leaders like Satya Nadella and Sundar Pichai to come over. A 2021 study found that states with more H1B visa holders tended to have more patents issued, especially in computer science and optoelectronics.

Many tech leaders liked the new fee hike, stating that they felt it would help them find the best and most talented/educated workers more easily. However, there is a consensus (and fear) that many not-so-talented Indian workers will be effectively ‘priced out’ of the market and be forced to return to India where they will contribute to economic growth and innovation in their own country.

Other Indians who don’t want to return to India may seek sponsorship in other developed nations. Still others may take up jobs in Canada and Mexico, as many companies that can’t afford the hefty fee, but don’t want to hire American workers, seek to offshore work. Smaller firms may implement hiring freezes or embrace AI more heartily.

If the American government wants to help American workers find better jobs, it will have to do a better job of improving the educational and other infrastructure needed to adequately train these workers.

Is America at a Crossroads

You could say that the new H1B policy has put America at a crossroads because it could create new opportunities for Americans, but only if the government is proactive in training the next generation of workers. Conversely, it could hamper and handicap America by starving its companies of the innovation and manpower needed to push the national economy forward.