How Trump H-1B visa fee is changing job market for skilled workers

Nearly a month after the Trump administration’s surprise $100,000 payment for new H-1B visa recipients went into effect, the headline-grabbing change is disrupting high-tech talent pipelines in two distinct parts of the U.S. economy: small businesses and venture-backed startups. In the short term, restrictions are already slowing hiring and narrowing the talent pool, according to employers and entrepreneurs.

However, there are also signs that restrictions on immigration are having the desired effect, as companies begin to look for ways to upskill their existing workforce and build new talent pipelines into American universities and large corporations.

Somak Chattopadhyay, founder of Armory Square Ventures, which manages a $60 million fund that invests in software companies and also serves on New York State’s Emerging Technology Advisory Board, said startups in the fund occasionally go to international talent markets to find the best thinkers, and at least for now, there is no immediate alternative to where to source unique talent. “For highly specialized talent in the AI ​​world, there are probably about 500 people in the country who understand how to build the master’s model from scratch. We don’t have enough talent domestically to fill some of those roles,” he said. But he added that in the future, “What we need to do is find ways to cast a wider net.”

Trump administration announced changes to the H-1B system by executive orderThe administration has said it aims to give benefits to American workers and end abuse of the H-1B system by requiring companies to pay $100,000 for each new visa application. Some major users of H-1B are outsourcing companies; The decree states that these companies are harming the chances of American workers by paying below-market wages to skilled foreign workers who want to go to the United States.

The new higher H-1B fee comes in addition to new restrictions on foreign students at American universities. Other changes that increase the regulatory burden on employers. More than 60 percent of H-1B workers work in computer-related fields with an average annual salary of $123,600; architecture, engineering and research are a distant second.

Discussions continue over foreign worker visa reform

Some venture capitalists, including billionaire investor and LinkedIn founder Reid Hoffman, have begun launching new ventures. public debate The administration is likely to charge true start-ups a much lower fee than large tech ventures (perhaps tens of thousands of dollars) and lift the cap on visas (the congressionally mandated 65,000 H-1B visa normal limit and the 20,000 H-1B visa U.S. advanced degree exemption, known as the graduate limit for fiscal year 2026). Hoffman stated. Latest episode of the “Possible” podcast He said these are H-1B visa reform ideas he has supported for years.

Boulder, Colo., himself a former H-1B recipient and now a citizen. Highly skilled immigrants are shifting business focus to large companies, according to entrepreneur Eva Yao, founder of Flari Tech. She told CNBC that she already advises a woman to look for a role at a large company that can pay the wage.

Yao is now looking for his first employee, an optical engineer for his company at the University of Colorado Boulder, which is developing quantum sensing-based breath diagnostics, possibly for healthcare applications. “I have American candidates, but when I look at PhD and PhD students, I see that most of them are foreign students,” he said. “I’m in a very specialized field where we look at scientists, researchers and engineers in cutting-edge fields. The first thing I would ask is what your situation is. It’s an unnecessary distraction,” he added.

He’s willing to help the right candidate apply for a green card, but $100,000 H-1Bs are a much bigger hurdle for his new company.

Cross-sector AI jobs at the focus of new policies

The restrictions have an immediate impact on hiring for AI-related positions in various sectors of the economy. Among larger businesses with 500 or fewer employees, which are still considered “small,” companies looking for workers to fill AI roles have more questions than answers. Alexandria, Va. “I didn’t have that budget for capex, IT expenses, or HR expenses,” Amy Dufrane, CEO of HRCI, an HR education and training company based in California, said of comments she heard during a recent webinar her company hosted more than 3,000 human resources professionals. For most companies trying to adapt to AI in their industries, “this came out of left field,” he said.

There are so many positions to fill; There are now more than twice as many H-1B approvals as there were in 2000. But new applications are in the minority in terms of the total H-1B worker pool. Approximately 400,000 H-1Bs were approved in fiscal year 2024, most of which were applications to renew employment. Pew Research Center reported In March. Since 2013, the annual difference between new applications and renewals has averaged 35%/65%.

One way companies can begin to adapt without having to fight over immigration policy is by upskilling their workforce; This effort is likely to intensify if they cannot bring in talent from abroad. OpenAI recently released APIs to connect to Coursera to help people improve their skills. Employees working on AI applications can dig deeper to learn how to prepare prompts or use AI for spreadsheets and database programs. “This could be a long-term talent boost,” Dufrane said.

Remote work, university recruiting, offshore talent

The need to cast a wider net for skilled workers due to immigration restrictions could also lead to another boom in remote work, according to Brad Bernthal, associate professor of law and director of the Silicon Flatirons Center for Legal Technology and Entrepreneurship. Changing global labor market dynamics are also leading more businesses to explore the human talent pipeline version of the supply chain concept of “close support”: finding workers or subcontracting to companies located in countries aligned with the United States by time zone. According to Dufrane, Poland has successfully branded itself as a country that can provide outsourced STEM labor, especially not far from the continental United States.

“I believe there is an opportunity to rethink how startups build their talent pipelines in this environment,” said Angela Blevins, principal of HR and Talent for High Alpha, an Indianapolis startup that creates and funds business-to-business software-as-a-service companies. “One approach we’ve seen works is to hire a smaller number of very senior people who can then level up strong entry-level talent coming out of university. This not only develops skills quickly, but also helps companies scale sustainably without being overly reliant on international hiring,” Blevins said.

Access to local schools will also become more central to recruiting efforts. Officials at the University of Colorado-Boulder, where Yao is based, say they’ve seen a long-term increase in the number of companies trying to affiliate with the university. The war for talent was already heating up, putting talented American-born students or those with rock-solid immigration status in high demand. Peter Petrella, president of New York State-based TalentRise, which provides executive search, coaching and leadership development for companies based in the United States, Canada and India, says he helps his clients build stronger local connections, reaching out to upstate New York economic development officials and the alumni office at the University at Buffalo to begin connecting with graduates of computer engineering programs.

Angie Vermillion, associate director of employer relations at Leeds Business School, advises companies looking to build stronger connections with American universities to develop relationships with careers teams, faculty and students over time and through multiple “touch points,” including career tours and fairs. He also said companies should emphasize career development and the presence of mentors. “Students are interested in clearing their path to advancement,” he said.

But there is no short-term solution to the talent pipeline that experts are most concerned about, or a long-term solution if immigration visas for skilled workers become a much smaller part of the labor market. The H-1B system has produced entrepreneurs who tend to spend time working for other companies before venturing out on their own. Bernthal said he is most concerned about whether the United States can continue to innovate in areas such as climate technology, aerospace, quantum life science and national security. Foreign-born founders are among the leaders in these fields, he said.

“The founders who built Silicon Valley were, if you look, both first- and second-generation immigrants,” Chattopadhyay said. “(Immigrants) are swinging for the fences; there’s a grain of sand there. At the end of the day, if we start restricting that talent, that’s a bad thing for innovation.”