President Donald Trump is reshaping the H-1B program in a way that tilts the system toward higher-paid tech workers and the big tech firms that can afford them. At the same time, he may be fueling legislative efforts to curb or end the program altogether.
There are two key differences in this new H-1B system: a $100,000 fee on new visas and a wage-ranking distribution system that favors higher salaries. Visa registration opens March 4.
The changes come after Trump previously described the original program as a machine designed to replace American workers “with lower-paid, lower-skilled labor.” Some elected officials are taking that to heart.
Last month, Texas Gov. Greg Abbott ordered state agencies and universities not to hire H-1B workers, saying they were taking jobs that would otherwise be filled by Texans. U.S. Rep. Greg Steube (R-Fla.) introduced a bill this month to end the H-1B program, citing displacement of U.S. workers.
Jimit Arora, CEO, Everest Group (Source: LinkedIn)
What the visa changes mean for employers
CIOs planning to sponsor H-1B workers may end up paying significantly more under the proposed changes, potentially reshaping their entire compensation strategy. Some IT services firms are pulling back on visa workers, hiring more domestic workers, and shifting work to nearshore locations in favorable time zones.
The wage ranking system may also raise costs for some employers, but not for the highest-paying employers such as Amazon, Microsoft and Google. Instead, Michelle Abeckjerr, an immigration attorney at Abeckjerr Immigration Law, said smaller companies with lower budgets are “not going to have a fair chance in the H-1B lottery this year.”
Steube’s effort to end the visa program isn’t expected to advance, but its introduction could still have repercussions. What the legislation does is add to the uncertainty around its use, said Jimit Arora, CEO of Everest Group, a research firm.
“It propagates uncertainty,” he said.
For CIOs, it doesn’t mean abandoning H-1B workers, but it may mean avoiding any increase in their use, Arora said.
I think [the new H-1b system] will also raise salaries for American workers who are in those same roles in order to prevent attrition.
— Miranda Zolot, general counsel at Oyster
Hiring tech workers in an AI-driven landscape
Arora said he sees “a very strange job environment” in tech, with AI-driven layoffs creating a near-term surplus of tech labor. That surplus, combined with visa policy uncertainty, could reduce new H-1B filings, although AI spending could create more hiring.
Divij Kishore, an immigration attorney at Flagship Law, said the likely outcome is not fewer visas overall — he still expects the 85,000 cap to be reached. However, he anticipates “a redistribution of visas toward higher-paying positions and well-capitalized employers,” he said.
Smaller firms, by contrast, will struggle to absorb the added cost, said Victor Janulaitis, CEO of labor market research firm Janco Associates. “If anything, larger companies like Microsoft will be able to afford the fees for critical AI talent.”
Prevailing wage levels — which vary by geography — play a central role in the ranking system. For example, the Level 1 salary for an entry-level software developer in the Miami area is $76,773, while a Level 4 wage reaches $125,694 — a difference of roughly 95%.
When employer-sponsored visa petitions are submitted, employers indicate the intended wage level of the new hire. The odds of winning the visa lottery at a level 4 wage are 61%, versus 15% at a level 1 wage, according to federal documents.
This system places upward pressure on compensation, said Miranda Zolot, general counsel at Oyster, a firm that helps firms manage overseas hiring.
“I think it will also raise salaries for American workers who are in those same roles in order to prevent attrition,” Zolot said.
The future of H-1B recruitment remains uncertain
Manish Daftari, a partner at Vialto Law, said he expects employers will respond cautiously. “This is the first year that this has happened,” Daftari said. “They’re going to see how it plays out.”
Kusum Mundra, an economics professor at Rutgers University, expects IT services firms to pivot toward hiring international students already in the U.S. on optional practical training to avoid the $100,000 fee. Big tech firms will pay a one-time fee to go after talent, but more workers might move to offices abroad, where no fee applies.
Mundra said employers could, in theory, offer higher wages on paper to improve their lottery odds, then pay workers lower wages once they are approved. H-1B-using firms can retain monopsony power, limiting workers’ mobility and bargaining leverage once they have obtained H-1B status.
She’s spoken with graduate students on OPT who were offered hourly wages below what they earned as research assistants, with employers citing future H-1B costs as justification for lower pay. Some students don’t know that F-1 and OPT users aren’t subject to the fee, she said.
For now, many enterprises are weighing their options. When India-based Wipro was asked on an earnings-related call last month whether it would apply for H-1B visas, Wipro Chief Human Resources Officer Saurabh Govil said it may not: “We are debating that.” The company submitted more than 2,400 visa petitions in 2023.
