The Trump administration’s decision to impose a $100,000 fee on new H-1B visa applications could sharply cut the number of immigrant work authorisations issued in the United States. Economists at JPMorgan Chase & Co estimate that the move could reduce approvals by more than 66,000 annually, Bloomberg reported.
The executive order, signed by President Donald Trump last week, marks a dramatic increase from the previous H-1B application fees that ranged between $215 and $5,000 depending on company size. The administration says the hike is intended to curb “program misuse,” ensure that only highly skilled foreign workers are selected, and encourage companies to prioritise American hires.
Indian workers likely to bear the brunt
Indian professionals, who account for the majority of H-1B visa recipients, are expected to be hit the hardest. About 71 percent of H-1B approvals in fiscal year 2024 were granted to Indian nationals, primarily in technology-related fields.
Although the cut may appear small relative to the size of the US labour market, the impact will be disproportionately felt by technology companies and Indian professionals who dominate the H-1B talent pool, according to the Bloomberg report.
Visa approvals could drop by 5,500 per month
JPMorgan economists Abiel Reinhart and Michael Feroli said the most immediate effect will be on the roughly 65,000 H-1B visas processed abroad each year. These applications are mainly for new employment and therefore most exposed to the new fee.
“If all of them were to stop, it would reduce work authorisation for immigrants by up to 5,500 per month, unless immigrants are able to use other visa categories to get employment,” Reinhart and Feroli wrote, according to the report.
In total, of the 141,000 H-1B petitions for new employment approved last fiscal year, 65,000 were processed abroad.
Expert warns of ‘dismantling’ the H-1B system
Loujaina Abdelwahed, senior economist at Revelio Labs, warned that the fee hike could have even deeper consequences. She said it is “effectively equivalent to dismantling the H-1B system, potentially eliminating up to 140,000 new jobs per year -- about 10,000 per month -- in US companies that depend on skilled foreign talent,” Bloomberg reported.
The timing of the policy shift comes as the US labour market cools, with job growth slowing to just 29,000 payroll additions per month over the past quarter. Federal Reserve Chair Jerome Powell recently described the slowdown as a “marked slowing” in both the supply and demand for workers, partly driven by reduced immigration.
Shift towards higher-paying roles
Bloomberg Economics noted that while the total number of visas may not fall dramatically due to continued high demand, the new fee could lead to a reallocation of visas toward higher-paying roles in sectors such as finance, health care, and tech. Lower-paid jobs in fields such as education could be squeezed out.
In the short term, the current H-1B workforce is unlikely to be affected because the fee applies only to initial visa applications and not renewals. However, analysts Chris G Collins and Stuart Paul warned that over time, the policy could encourage companies to offshore roles that are no longer cost-effective to fill domestically.
“The broader impact is less certain,” they said. “The policy may create some opportunities for US workers and channel visas toward employers who value them most. But it also risks encouraging offshoring of roles no longer viable domestically,” they added, according to Bloomberg.
Plan to revamp H-1B selection process
The fee hike is part of a wider plan to overhaul the H-1B programme. According to a Federal Register notice published Tuesday, the Trump administration is proposing changes to the current lottery-based system. The new system would give preference to workers with higher skills and salaries.
Reuters reported that under the planned regulation, if visa demand exceeds supply in a given year, applicants would be placed into wage tiers, giving higher-paying jobs a better chance of being selected.
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