MONTH 2023
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JOHN SPROVIERI // EDITOR IN CHIEF
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Higher Fee on H1-B Visas Could Adversely Affect Manufacturers
On Sept. 19, President Donald Trump signed a proclamation that adds a $100,000 fee for new applicants for H-1B visas, which allow foreign professional workers, such as software engineers, a chance to be employed in the United States.
The H-1B visa is intended to help companies fill openings for which American workers with similar abilities cannot be found. The visa is for professional-level jobs that require a minimum of a bachelor’s degree. The prospective employee must have the required degree or its equivalent through education and experience. In addition, the prospective job must pay wages that are at least equal to those paid by the employer to similarly qualified workers or the prevailing wage for such a position in the geographic region where the job is located.
That’s the rationale, at least. The Trump administration, however, argues that the H-1B visa program lets employers sideline American workers and suppress their wages. In fairness, employers have been using the program to hire people with routine skills that are not actually in short supply.
This is particularly true in computer-related fields. Though college-educated foreign nationals are a small portion of the overall labor force, they make up a substantial proportion of computer-related fields, about one in five of the roughly 2.3 million software developers in the country, according to census data. Almost two-thirds of H-1B applications approved in 2024 were in computer fields, according to federal data.
The Trump administration hopes the new fee will help counter that practice by encouraging employers to prioritize hiring domestic workers.
Let’s look at the numbers. The U.S. Citizenship and Immigration Services (USCIS) bureau approved 399,395 H-1B petitions last year, a 3 percent increase from 2023. Of those, 35 percent were for initial employment and 65 percent were for continuing employment.
Some 71 percent of H-1B recipients were from India; another 12 percent were from China. Sixty-four percent of H-1B visas last year were for computer-related occupations. The next largest major occupational group was “architecture, engineering and surveying” with 10 percent.
A newly imposed $100,000 fee on H1-B visas could adversely affect the ability of manufacturers to hire skilled workers. Photo courtesy Siemens
Almost half (48 percent) of H-1B visas were granted for jobs in the “professional, scientific and technical services” industry, a catch-all that mostly encompasses computer programming. Of importance to readers of ASSEMBLY, the next largest industry was manufacturing, with 11 percent of H1-B visas.
Although the median annual salary for H1-B visa recipients is $120,000, according to USCIS, critics of the program say employers are exploiting foreign workers at the expense of Americans. One software developer I spoke with compared the H1-B program to indentured servitude. He pointed out that visa-holders are not free to change jobs, and employers can use threats of returning foreign workers to their home countries to keep their noses to the grindstone.
Not everyone is pleased with the policy change. Tech start-ups, colleges and school districts have criticized the new fee, which they say will hurt their ability to fill critical roles, create innovation and stay competitive. Health care organizations say the fee would exacerbate physician shortages, too.
Opponents of the new, higher fee also warn that the policy could backfire. They point out that H-1B visa holders are bringing their skills and expertise into the United States, and many hope to stay here for a while, if not for life. While they’re here, they buy homes, go shopping, pay taxes and generally contribute to our economy and society. In many cases, these workers are leaving behind poor or authoritarian countries, and they embrace the freedom and opportunity this country represents.
If U.S. employers can’t bring the right workers here, critics argue, then they are more apt to go offshore to pursue talent. As a result, our country doesn’t benefit from their labor; only the corporations do.
Whether you support the fee or not, the fact remains that U.S. manufacturers need skilled workers, with and without college degrees. Most manufacturers don’t care where skilled workers come from, as long as they show up every day. Congress should get together to enact sensible immigration reform, something it hasn’t done in 40 years. Unfortunately, immigration has become yet another “third rail” that we can’t discuss or cooperate about. As a result, everyone loses.
The risk of China decoupling is an important consideration for companies sourcing there.
About the Author
Harry Moser is the president of the Reshoring Initiative. His column will appear every other month, alternating with Austin Weber’s “On Campus.” Has your company reshored production? Are you thinking about it? We’d like to hear of your success or help you achieve it. With your approval, we would love to report on your successes or opportunities in future issues. Contact harry.moser@reshorenow.org.
