In recent developments, former President Trump has introduced a $100,000 fee for H-1B visa applications, coinciding with the revocation of sanctions’ waivers for Iran’s Chabahar Port. These actions have had significant impacts on India, suggesting a broader strategy aimed at Pressuring New Delhi. This article explores how these hefty fees could lead to future negotiations, potentially reducing or eliminating them. Additionally, it examines how visa programs like H-1B not only influence immigration but also affect domestic wage structures, especially in industries that rely heavily on foreign talent.
By Pia Malaney, Co-Founder and Director of The Center for Innovation, Growth and Society and Senior Economist at the Institute for New Economic Thinking. The Center aims to create new methods for integrating the innovation economy with wider U.S. markets and to formulate policies that encourage innovation-driven growth for societal benefit. Originally published at the Institute for New Economic Thinking.
From September 19 to 21, 2025, the administration announced the new $100,000 fee that would apply to new H-1B visa petitions. Many of the major U.S. tech and consulting firms, which sponsor a substantial portion of these visas, argue that this fee hampers competitiveness and stifles innovation. Some companies are even considering transferring more work to India-based Global Capability Centers. Meanwhile, Indian industry leaders and officials express concerns about potential disruptions, as India accounts for nearly 70% of all approved H-1B visas. Local media reports have also connected market anxieties to the new fee, with even supportive voices within the tech sector declaring it “excessive” compared to the intended policy goals.
This reaction echoes a long-standing debate in the U.S. regarding high-skill immigration: Do such visas help bridge crucial talent shortages that drive innovation, or do they suppress wages for domestic STEM workers? Numerous studies and official reports have recognized the wage-dampening effect of these visa programs. For instance, analyses from the early 2000s characterized foreign IT immigration as a “moderating influence on wage increases.” Alan Greenspan later contended that tight skilled immigration quotas had entrenched a “privileged elite” and that lifting these restrictions would alleviate wage premiums for skilled labor.
However, a more significant interpretation of history reveals that, prior to contemporary headlines, an INET Working Paper indicated that advocates and employers behind the 1990 Immigration Act (IMMACT90)—which established the H-1B program—implicitly acknowledged the potential wage impacts. It was suggested that the primary goal of H-1B visas was to manipulate the wage dynamics that U.S. workers depend upon, diminishing the bargaining power of domestic STEM workers by increasing labor supply through demographic concerns. An internal NSF analysis encapsulated this logic:
“An increasing number of foreign PhDs entering U.S. labor markets will suppress PhD salaries as foreign students are drawn to U.S. doctoral programs as a means of immigrating.”
Although advocates often dismiss claims that wage mechanisms effectively clear STEM labor markets, the NSF economist responsible for the internal study credited market wages with resolving past shortages:
“Over the past 45 years, high-ranking national figures have repeatedly called for national efforts to boost the number of college students entering NSF fields… However, these shortages were rapidly alleviated without major focused policy initiatives, due to market forces and minor adjustments by employers.”
— Myles Boylan, Internal 1986 NSF/PRA study
This perspective suggests that the H-1B program was designed to disrupt the wage-clearing functions of the labor market—creating a parallel “compensation” pathway that favors foreign workers while undermining cash wages for U.S. STEM professionals. At a time when internal projections indicated that STEM PhD salaries could reach $100,000 by 2000, the NSF commissioned two studies for distinct public/private purposes. One was an intricate internal study (Boylan, 1986, NSF/PRA) with detailed demand analysis that incorporated potential wage increases, while the other was a public study void of market mechanisms. This public narrative, framed as a looming “shortage” due to the smaller Generation X cohort, effectively created urgency for legislative action while downplaying wage adjustments as a potential solution. By excluding wage-related factors from public discourse, the rationale for an expanded high-skill visa program became even more compelling.
Viewed from this angle, the current debate surrounding the $100,000 H-1B fee transcends the question of whether visas harm or benefit wages. Instead, it acknowledges that all parties involved privately recognized that increased foreign STEM supplies would suppress U.S. wage growth. Thus, the discussion centers not on the existence of wage pressure but on how openly policy should engage with and manage it.
What, then, has been the actual impact of this visa program? While assessing the precise effects on wages is challenging, rough exploratory calculations can provide insights into its magnitude within the tech labor market.
First, let’s examine how the current immigration pipeline operates. The U.S. does not solely rely on H-1B visas; it also utilizes various multi-year pathways. F1 and M1 visas enable foreign students to enroll in academic or vocational training programs. After graduation from a U.S. institution, these students can apply for an Optional Practical Training (OPT) visa, allowing them to work in the U.S. for up to 12 months post-degree, gaining essential experience. STEM students may qualify for a 24-month extension, enabling them to work for a total of 36 months. This can be considered the pre-H-1B phase of the pipeline. There is also a separate program for exceptionally skilled individuals.
According to U.S. government data, in 2024, around 381,140 people held work authorization through practical training, with roughly half positioned in computer science or engineering. Concurrently, despite the capped limit of 85,000 visas, U.S. Customs and Immigration Services approved almost 400,000 H-1B petitions during FY-2024, with 70 to 75% designated for roles in tech-related and engineering jobs. Collectively, these pathways account for nearly half a million positions. The Bureau of Labor Statistics estimates that the U.S. workforce in STEM vocations comprises around 10.7 million people, indicating that these channels represent about 5% of the U.S. STEM labor force. Regardless of one’s stance on the economic effects, it is difficult to argue that this constitutes a negligible movement within the labor supply curve. Assertions that this influx is “too small to affect wages” lose credibility—especially in areas heavily concentrated with software roles where competition for jobs is limited.
Despite clear implications for domestic labor markets, proponents of the H-1B program frequently assert that it allows U.S. employers to recruit “the best and brightest” talent. Many prominent figures in the tech industry, like Elon Musk, Satya Nadella, and Sundar Pichai, entered the U.S. on these visas. This claim warrants careful evaluation. Wages can be categorized into five levels, with Level 3 representing the median wage for a given occupation. Prevailing H-1B wage regulations permit employers to comply by meeting Level 1 or Level 2 wage standards, which are both below the local median. Research by the Economic Policy Institute reveals that a majority of approved positions are certified at these lower wage levels; consequently, the Department of Labor’s wage framework does not effectively ensure compensation above the median. While not all H-1B workers are undercompensated, the system allows for staffing models that contradict the narrative of attracting “star talent” used to promote the program.
For employers genuinely in need of exceptional talent, alternative pathways, such as the EB-2 National Interest Waiver, already exist. The USCIS’s January 2025 policy update redefined the Dhanasar test (national importance, well-positioned, and on-balance benefits) and clarified qualifications for EB-2 eligibility. For truly distinguished contributors, the NIW offers a more straightforward avenue. In contrast, the H-1B serves as a mass program designed for routine roles rather than extraordinary talent. This distinction should inform policy decisions moving forward.
Another often-overlooked consequence of the visa program’s structure is the potential for exploitative conditions. When visa status is linked to specific employers—especially while waiting in protracted employment-based green card queues that can extend for years—workplace negotiations are fundamentally altered. Workers might theoretically switch employers, but the per-country caps and extensive backlogs render such transitions burdensome and risky, particularly for Indian and Chinese nationals who dominate these queues. This structural dependency is why many practitioners draw parallels to indentured servitude, even when all legal protocols are adhered to.
Expanding the scope beyond wages and power dynamics to macroeconomic implications, the research presents a mixed but nuanced picture. Some studies suggest that increased H-1B numbers can lead to higher ethnic patenting and innovation spillovers, while others indicate a crowding-out effect on similarly qualified domestic workers or show distributional impacts that differ across cities, firms, and demographic groups. The literature does not provide a clear resolution to policy questions, revealing that immigration can simultaneously encourage innovation while reallocating income—often in ways obscured if we only assess overall GDP or patent figures. Significantly, while the innovation impact is frequently positive, the effects on wage distribution for closely substituted labor tend to be negative or less clear, highlighting the importance of local labor market conditions.
A comprehensive understanding of the political dynamics surrounding H-1B necessitates candid acknowledgment of the beneficiaries. The major beneficiaries extend beyond India-based IT firms, such as Tata Consultancy Services and Infosys, to encompass leading U.S. tech and financial giants that lead in sponsorship. For instance, in the first half of 2025, Amazon topped approvals, with TCS trailing closely behind. This pattern has raised concerns in Congress regarding the disparity between heavy visa program usage and domestic layoffs. Debating whether “foreign consulting firms” or “Big Tech” benefit more overlooks the broader reality that both sectors have optimized their operations around the same labor supply mechanism.
From India’s perspective, the country sending nearly two-thirds of all H-1B recipients, the situation is complex. Industry stakeholders and families who have structured plans around U.S. jobs are expressing concerns about immediate income loss and remittances, which are crucial for many households. However, a counter-narrative is emerging: as the U.S. transfers more work offshore, Indian firms and global capability centers can capture a larger share of high-value tasks domestically. This shift would counteract traditional brain-drain scenarios and enhance local industries in cities like Bengaluru, Hyderabad, and Pune—accelerating capacity-building over time. In this context, the fee is not merely an obstacle; it’s a potential catalyst for restructuring where value is generated, enabling India to take on more upstream design, data, and platform responsibilities rather than focusing solely on downstream implementation.
China’s response illustrates an additional lesson: global talent is now regarded as a strategic asset. Beijing has long sought to retain its top scientists and engineers and has recently expressed concern through commentary surrounding DeepSeek’s launch, which included reports and rumors of travel restrictions or temporary passport seizures for core engineers once the model emerged. Regardless of the particulars surrounding these episodes, the overarching message is clear—human capital is being prioritized alongside intellectual property. For the United States, this should prompt serious reflection: openness to outstanding global talent must be matched by effective policies aimed at cultivating and retaining our domestic workforce or risk engaging in a zero-sum game where other nations develop capabilities we choose not to.
A largely overlooked facet of the H-1B narrative concerns the extensive talent pipelines U.S. companies have established in India (and, previously, China)—spanning from university recruitment and endowed partnerships to comprehensive engineering and R&D centers—while the direct financial support of U.S. university research remains relatively modest. Currently, India hosts around 1,700–1,800 Global Capability Centers (GCCs) for multinationals, generating approximately $64–65 billion annually and employing about 1.9–2.0 million staff. These centers increasingly focus on knowledge-intensive engineering and R&D, rather than purely back-office functions. Moreover, U.S. and other multinational firms maintain longstanding R&D labs within India’s top academic institutions and often sign memoranda of understanding with IITs to facilitate joint research, internships, and hiring pipelines. Campus recruitment at IITs by leading global tech firms is commonplace, consistently featuring high-end offers and pre-placement agreements. Meanwhile, in the U.S., industry accounts for only about 6% of total U.S. university R&D funding (FY2023), with the federal government covering the bulk of it. This disparity makes the strategy of acquiring training where it is abundant and affordable more appealing, leading to hiring or transferring talent to U.S. teams instead of proportionately investing in U.S. graduate programs. Consequently, we see a cycle: developing talent on a global scale, importing a slice via H-1Bs, and maintaining U.S. university funding at a distance—a model that aligns with firms’ cost-control objectives and provides an explanation for why wage concerns continue to surface in discussions.
Conclusion
The historical records are crucial. If, as the concurrent analyses suggest, the very aim of the H-1B framework was to suppress the wages of domestic STEM workers by developing a parallel compensation channel inaccessible to natives, the recent fee is notable not so much for its magnitude but for its transparency. The new $100,000 charge does not resolve deeper design choices that adversely impact wages and alter bargaining dynamics, but it does publicly acknowledge that the program has price repercussions on the U.S. labor market.
Interpreted in this light, the fee represents an initial step rather than a complete solution. By adjusting the total costs associated with hiring a new H-1B employee to more closely align with local market demands, it bridges the gap between visa-based staffing and local hiring at appropriate rates. As companies begin to internalize these costs, wage offers for domestic candidates are likely to increase, creating a stronger incentive for American youth to pursue the extensive training that fields like computer science and engineering require. Now more than ever, it is essential that American universities receive support to provide this necessary education.
A comprehensive resolution will require alignments between immigration channels and established objectives. If the ultimate goal is to access top-tier global talent, employers can utilize EB-2 National Interest Waivers to quickly process genuinely exceptional contributors. The continued existence of the H-1B program necessitates a justification for the American public, particularly native technical STEM professionals, about why they should not reap the full rewards of bargaining power in a market economy.
At a minimum, if the H-1B visa program is to persist, it must be reserved for authentic specialty roles that offer compensation significantly above the local median, while the government must relieve the backlog of employment-based green cards that trap individuals in dependency. This must occur in conjunction with the expansion of domestic capacities—funded graduate programs, employer training consortiums, and regional apprenticeship initiatives—so that rising wages contribute to a stronger U.S. labor force rather than prompting a rush to offshore work.
Addressing the consequences of a policy designed to dampen wage signals cannot be accomplished overnight. Yet, this fee signals a long-overdue recognition of the importance of price dynamics. If policymakers couple this acknowledgment with standards for median-plus salaries, enhanced mobility, backlog resolution, and pathways for genuine stars, the United States can remain open to exceptional global talent while also bolstering its local training pipelines on equitable terms.
