For me, last week's H1B announcement hit very close to home. My cousin had flown to India from the US to renew her H1B visa just a couple of days before Trump’s surprise announcement of a $100,000 visa fee on H1B holders.

"It was a dreadful night," she says, describing the hours she spent glued to her phone, juggling calls with anxious colleagues and reading emails from her company's immigration lawyers. The confusion grew after news broke that Microsoft and Meta were asking their H1B employees abroad to return to the US within 24 hours.

"I thought—this is it. It’s over," she says. The possibility of her American life ending felt so real that she began browsing for apartments in Pune.

The White House later clarified that the H1B fee would be a one-time charge and would apply only to new visa applications, not renewals or current visa holders, so my cousin didn't have to find a Pune home after all. But the visa move is still a big shift in the US approach to skilled immigrants.

Journalist Menaka Doshi pointed out that the steep hike in H1B visa fees was something Elon Musk, a former H1B recipient himself,  pushed for.

Indian nationals account for the vast majority of H1B visas — 71% of those approved in 2024. So, many saw this move as part of a larger pattern of the US administration's moves against India, after Trump’s friendship with Modi soured.

But do H1B visas actually take jobs from Americans? If we look beyond Trump's claims and the fear-mongering from US right wingers, the numbers say the opposite. 

Let's kill some myths, shall we?

The software sector drove demand for H1B

The U.S. technology sector is a global magnet for talent, and for years the H1B visa program has been the bridge bringing in skilled workers into the US from across the world. Computer-related jobs have  accounted for more than half of all approved H1B petitions. Many leaders of top US tech companies, including the CEOs of Microsoft and Google, once held H1B visas themselves.

H1B has created American jobs, and driven up wages

The narrative — that H1B workers steal American jobs — is full of holes, if we look at the actual data. The National Foundation for American Policy’s (NFAP) research shows that a 1 percentage point increase in H-1B workers within an occupation actually leads to a 0.2 percentage point decrease in US unemployment.

H-1B workers don't just fill existing vacancies; they help create more jobs in the broader system for their American colleagues. They also increase the earnings of US workers by 0.1-0.26 percentage points. By bringing complementary skills, they make their American peers more productive. 

Multiple studies have confirmed this positive wage effect, showing that H-1B talent and U.S. workers are not in competition, but often part of the same growth engine.

Importing talent became an easy way to boost US innovation

Beyond jobs and wages, H-1B workers significantly improve US innovation and productivity. Researchers at Stanford University found that between 1976 and today, foreign nationals contributed 25–30% of all U.S. patents, and immigrant college graduates increased nationwide patenting by 12–21% from 1940 to 2000.

Below is a picture of the US physics team, that just won all five gold medals at the International Olympiad in Paris this week. All the contestants - Agastya Goel, Allen Li, Joshua Wang, Feodor Yevtushenko, Brian Zhang - are children of immigrants.

Increased H-1B visa levels are linked to more new products, which in turn leads to higher company revenue. Startups that hire H-1B workers are also more likely to attract funding from venture capital or IPOs: research found that companies with a 100% win rate in the H1B lottery were more likely to get external funding within three years, compared to companies that didn't win any visas. 

The startups hiring these workers could be tomorrow's large employers. Such access to world-class talent is a crucial factor for the long-term health of American tech companies.

The impact on the US government's revenues is nothing to sneeze at either. The 3 million H-1B visa holders in the US contribute over $85 billion annually in income taxes, along with $25 billion annually to Social Security and Medicare - programs that many of them will never benefit from. It would not be entirely wrong to say that, in effect, they’re subsidising the retirement and healthcare of American workers.

Finally, there’s the multiplier effect. H-1B professionals are not just workers — they’re also consumers. They spend on housing, transportation, education, and local businesses, injecting billions of dollars into communities across the US. This spending drives demand across multiple sectors, indirectly creating even more jobs for Americans.

Self-goal? The impact of the fee will be felt more in the US rather than India

The irony is that shutting the door on H-1Bs doesn’t necessarily mean more jobs for US citizens. A Wharton School study showed that for every 10 H-1B visas lost by top multinational firms, nine jobs are moved abroad. In practice, H1B is often a choice between keeping the foreign worker in the US or abroad.

With 66% of the US companies outsourcing at least one department, the US already sends about 300,000 jobs overseas every year. The H-1B program helped slow this trend by keeping skilled workers and those jobs in America.

Restrictive H-1B policies do more harm than good. The Federal Reserve Bank of Richmond estimates that even a 10% reduction in high-skilled immigrant workers would shrink the US economy by $86 billion. That’s a staggering cost for a policy aimed at "protecting American workers". Good politics is not necessarily good economics.

Some Indian firms have cut their H-1B filings by more than 50% in recent years. H-1B workers for the top 10 Indian and India-centric companies are less than 1% of their entire employee base. "Given this trajectory, we anticipate only a marginal impact for the sector," Nasscom says.

The visa fee may only encourage more offshoring. Global capability centres (GCCs), set up by multinationals in India already handle a lot of business processes, from basic data crunching to complex R&D. They include US tech firms, European pharma companies, and global automobile majors. The number of GCCs has grown from 700 in 2010 to more than 1,700 in 2024, employing nearly 2 million people.

Even industry veterans are calm. CP Gurnani, former MD & CEO of Tech Mahindra, called the fee hike a “temporary shock” and reassured that it would not affect customer deliveries in any way.

Focus ought to be on fixing fraud

That’s not to say the H-1B program is flawless. There are undeniable operational and governance-level issues that deserve attention.

Take wages, for example. A major case study of HCL Technologies revealed “widespread wage theft,” where the company systematically paid H-1B workers far less than comparable US employees — despite having attested to fair pay. The Economic Policy Institute estimates this practice alone costs workers about $95 million annually.

Fraudulent practices have also crept into the system. One such abuse is “multiple registration,” where staffing firms submit dozens of lottery entries for the same applicant to tilt the odds. Bloomberg estimates that 15,500 visas last year — one in six — were won this way. Over four years, a single operator used a dozen shell companies to enter candidates up to 15 times, securing hundreds of H-1Bs while genuine candidates lost out.

The White House’s 2025 fact sheet flagged that while tech firms demand more visas, unemployment among recent US computer science and engineering graduates has reached 6.1% and 7.5%, respectively — more than double the jobless rate for biology or art history majors. But this effect may have more to do with artificial intelligence hitting entry level jobs, and over-hiring during the Covid years. 

When countries start doing fear-based politics, it is usually a sign that the government in question has run out of ideas. Trump probably thinks he has played a great hand, but he may not be reading his cards right.

As always,

The Trendlyne team