Will the $100,000 visa fee create more US jobs? Economists aren’t so sure

Economists agree that it could indeed benefit some U.S. workers. But they worry that for the bulk of workers it could do just the opposite.

“H-1B visas cause innovation, they cause entrepreneurship, they cause more R&D investment," said George Mason University economist Michael Clemens. “They cause higher productivity in the whole U.S. economy, which generates job opportunities and higher earnings for native workers across the skill spectrum."

Clemens and other economists cite a body of research suggesting that the program has benefited U.S. workers, and the U.S. economy, far more than it has hurt.

The H-1B program, created by Congress in 1990, is the main pathway to the U.S. for highly skilled foreign workers. It has long generated controversy, with critics contending that it gives jobs to foreigners at the expense of native workers.

Workers born in India accounted for nearly three-quarters of these visas in 2023, a Pew Research Center analysis found. China-born workers were a distant second, accounting for a bit more than one in 10 visas.

A large number of the H-1B visas issued to workers at for-profit companies are in science, technology, engineering and mathematics—the so-called STEM professions. Many go into computer-related jobs at some of the largest U.S. tech companies: Pew found that in 2023 Amazon.com had by far the most H-1B approvals of any company.

Universities and nonprofits also use the H-1B program to hire foreign-born professors and other workers. The H-1B visa additionally helps attract foreign STEM students to American universities, since it gives them a pathway to living and working in the U.S. after graduation.

The tech industry has shed thousands of employees in recent years, and critics of the H-1B system say it has benefited foreign workers at the expense of domestic tech workers. The turmoil comes at a time when advances in artificial intelligence have upended the landscape for tech workers.

The new $100,000 fee is meant to revamp a system the Trump administration says has been exploited by tech companies. Currently, applicants for the H-1B visa must pay a small fee to enter into a lottery system, and the winners of that lottery pay a larger fee alongside their applications for vetting.

Under the new system, the administration argues, only the best high-skilled workers will be worth the price, leaving more opportunities for U.S. based labor. “We’re having people come in, people that in many cases are very successful or whatever, as opposed to walking over the borders," Trump said in the Oval Office Friday.

A slice of native-born workers, such as some computer programmers, would likely benefit from the reduction in new workers on H-1B visas the fee would spark.

“The typical H-1B visa employee working for the typical for-profit company that’s hired them is doing work for whom otherwise available workers exist," said Notre Dame economist Kirk Doran.

Their employment prospects could improve as companies scrambled to fill positions, and their wages could rise.

But other workers could be hurt. A 2015 paper by economists Giovanni Peri, Kevin Shih and Chad Sparber found influxes of foreign-born workers boosted wages for native-born workers. And a 2023 paper by economist Britta Glennon found that when H-1B immigration is restricted, U.S. multinationals tend to shift work to other countries.

The new fee could do lasting damage, according to Rutgers University economist Jennifer Hunt.

“This misguided measure could shut down the H-1B program entirely," she said. “And if that happens, it’ll have a very detrimental effect on the economy as a whole." Overall, Hunt said H-1B workers don’t substitute for U.S. workers, but complement them instead, helping them do their jobs and making them more productive.

In its announcement Friday, the White House cited 2017 research by economists John Bound, Gaurav Khanna and Nicolas Morales showing that the influx of foreigners entering the U.S. high-skill workforce over the 1990s dampened the wages of native-born computer scientists.

The announcement didn’t include the economists’ other findings, such as that other information-technology workers see wage benefits, and that U.S. workers and consumers more broadly benefit from the innovation and efficiency created by immigrant-driven software production.

“When we consider the broader picture, U.S.-born workers as a whole experience net benefits," Khanna said in an email.

Over time, the U.S. labor market would likely be able to adjust to the sharp reduction in H-1B visas potentially caused by the $100,000 fee, said Notre Dame’s Doran. The problem is that a sudden implementation could cause big dislocations, triggering large numbers of vacancies at companies that relied on H-1B workers. Even if there are enough native-born workers to fill those positions, they might not immediately live where the jobs are.

“Trauma happens in labor markets when a large shock occurs and there’s not enough time to adjust for it," he said.

Write to Justin Lahart at Justin.Lahart@wsj.com