On September 19, President Trump signed an executive order adding a $100,000 fee to applications for H‑1B visas, which allow US employers to hire foreign workers for specialty occupations. H‑1B applications previously cost about $1,500. While the White House has clarified that the fee will not apply to current visa holders or renewals, the policy still has significant economic implications.
The primary rationale for the fee is to protect skilled domestic workers. According to the White House, American workers are “being replaced.” Restricting foreign labor will, allegedly, push firms to hire more domestic workers at higher wages.
The practical effects of foreign workers, however, are unclear. Standard economics suggests that increased immigrant labor supply lowers wages for native workers. For example, this study found that highly educated domestic workers experienced smaller wage gains due to immigration.
But a different study concluded that “H‑1B visa holders do not adversely affect US workers” and that “the presence of H‑1B visa holders [is] associated with…faster earnings growth among college graduates.” This may reflect complementarity, where immigrant workers fill critical gaps in the labor market, inducing industry expansion and raising wages for all. A different study found “rising overall employment of skilled workers with increased skilled immigrant employment,” suggesting that H‑1B visas boost employment for US workers.
Additionally, even if wages decrease in high-skilled labor markets, immigrant workers boost firm productivity and competitiveness, resulting in lower prices for consumers and more investment, innovation, and economic growth. Even though some domestic workers lose out, the broader economy benefits.
Cross-posted from Substack. Eric Jin, a student at Southridge School, co-wrote this post.