President Donald Trump may be the toughest president the nation has ever had on the matter of illegal immigration. He has certainly been more effective than any other leader in a generation. But, at the same time, he has always valued limited, skilled immigration. “I’ve always liked the visas,” Trump said of H1B visas last December. “I have always been in favor of the visas. That’s why we have them.”
But he has also criticized the way the visas are issued and to whom. At the first Republican primary debate, he said the visas were used “for the explicit purpose of substituting for American workers at lower pay.” He has promised to eliminate or reform the program, and he delivered on that promise with a major improvement this Monday.
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“This program has been abused for too long,” the president said at the White House, “displacing American workers and suppressing wages. It’s time to fix it for our people.”
The executive order signed by Trump instructs the Department of Homeland Security to create a new $100,000 “restriction on entry” fee for each H1B visa, a 10,000% increase from the current $10 registration fee.
First created in 1990, the H1B visa was designed to help employers who could not find American workers to fill “specialty occupations,” defined as jobs that require at least a bachelor’s degree or higher and a “theoretical and practical application of a body of highly specialized knowledge.”
Congress capped such visas at 65,000, with 20,000 more for positions that require a master’s degree. These limits were expanded in the late 1990s and reduced again in the early 2000s.
Employers always want more visas than are allowed and DHS has dealt with this by instituting a lottery. This is a bad system, making no distinction between the needs of a firm applying for an entry-level programmer and a hospital hoping to hire a specialized surgeon. Lottery applicants have had to pay $2,000-$5,000 up front for each application, but they get their money back if they don’t win a H1B visa.
This all changed in 2021 when DHS created a $10 registration fee for each applicant, massively cutting the price for each H1B lottery ticket. Some firms responded by buying a lot more lottery tickets.
The worst offenders are so-called Business Process Outsourcing companies that help American firms outsource information technology, human resources, and claims processing services to cheap labor overseas. The BPOs need H1Bs so they can have onsite employees here in the United States that manage cheap foreign workers abroad.
So not only are H1Bs given to BPOs, taking away jobs from American workers, but they are also subsidizing an entire business model built on shipping American jobs overseas. When the H1B $10 visa registration fee was created, these BPO firms flooded the system with applications, and since the lottery is based on chance, not merit or need, these same firms now get the lion’s share of winning H1B lottery tickets.
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The $100,000 entrance fee will end this abuse. Those who use H1B visas to import cheap foreign labor will no longer be able to do so. Although the $100,000 is a one-time fee, and not a yearly one, only those firms that can produce a strong return with a H1B employee will get a visa.
Trump’s H1B executive order is no silver bullet. It is a blunt instrument that will curtail flagrant abuses while letting American firms compete for the world’s top talent. By raising the cost of entry, Trump has realigned the H1B program with its original purpose, which was to meet genuine, high-skill needs rather than fueling outsourcing schemes. His reforms protect American workers, curb abuse, and reward employers committed to innovation and growth with global talent.