How Trump’s H-1B visa fees will change the skilled worker job market

Nearly a month after the Trump administration’s surprise $100,000 payments to new H-1B visa recipients went into effect, the highly publicized change is disrupting the pipeline of high-tech talent in two distinct sectors of the U.S. economy: small businesses and venture-backed startups. In the short term, the regulations are already slowing hiring and shrinking the talent pool, recruiters and entrepreneurs say.

But there are signs that immigration restrictions are having the desired effect, as companies begin to look for ways to upskill existing employees and build new talent pipelines to U.S. universities and large companies.

Somak Chattopadhyay, founder of Armory Square Ventures, which runs a $60 million fund that invests in software companies and serves on New York State’s Emerging Technology Advisory Council, said his fund’s startups sometimes go to international talent markets to find top thinkers, and that, at least for now, there is no immediate alternative to sourcing unique talent. “For highly specialized talent in the AI ​​world, there are probably about 500 people in the country who understand how to build an LLM model from scratch. There just aren’t enough people in the country to fill some of those roles,” he said. But he added that in the future, “what we have to do is find a way to cast a wider net.”

On September 19, the Trump administration announced changes to the H-1B system by executive order. By requiring companies to pay $100,000 for each new visa application, the administration said it aims to give an advantage to American workers and end abuse of the H-1B system. Some of the largest users of H-1B are outsourcing companies. The executive order said these companies are paying below-market salaries to skilled foreign workers eager to enter the United States, hurting opportunities for American workers.

The new, higher H-1B fees come on top of new restrictions on foreign students at U.S. universities and other changes that increase the regulatory burden on employers. More than 60% of H-1B workers work in computer-related fields, with a median annual salary of $123,600, followed by architecture, engineering, and surveying.

Debate continues over visa reform for foreign workers

Some venture capitalists, including billionaire investor and LinkedIn founder Reid Hoffman, charge true startups much lower fees (perhaps tens of thousands of dollars) than large tech companies and charge much lower fees (perhaps tens of thousands of dollars) to They have begun publicly negotiating with the government to eliminate the 65,000 regular cap on H-1B visas mandated by Congress and the 20,000 H-1B visa exemption for U.S. advanced degrees, known as the fiscal year master’s cap. year 2026). Hoffman said on a recent episode of his podcast “Possible” that these are ideas for H-1B visa reform that he has supported for years.

Highly skilled immigrants are shifting their jobs to large companies, said Eva Yao, a former H-1B recipient and citizen herself and entrepreneur and founder of Boulder, Colorado-based Flurry Tech. She told CNBC that she had already advised one woman to find a job at a larger company that could pay.

Yao is currently looking for his first employee. Probably an optical engineer at her company. It is a spin-out company from the University of Colorado Boulder that is developing breath diagnostics based on quantum sensing for healthcare applications. “There are some American candidates, but when you look at postdoctoral and doctoral students, there are a lot of international students,” she said. “I’m in a very specialized field surveying scientists, researchers and engineers in cutting-edge fields. The first thing I ask is what is your status? It’s an unnecessary distraction,” she added.

She intends to help qualified candidates apply for green cards, but the $100,000 H-1B is a much bigger hurdle for her new company.

AI jobs across industries targeted by new policies

This limitation has an immediate impact on hiring for jobs related to artificial intelligence across economic sectors. Large companies that are still considered “small” – those with 500 or fewer employees – and are in the midst of searching for talent for AI roles have more questions than answers. “We didn’t come up with this budget from capital expenditures, IT expenses, HR expenses,” said Amy Dufresne, CEO of HRC, an Alexandria, Va.-based human resources education and learning company, about comments she heard during a recent webinar her company hosted for more than 3,000 human resources professionals. For many companies within the industry that are adapting to AI, “this is coming from the left field,” she said.

There are many positions to fill. Today, the number of H-1Bs approved is more than double what it was in 2000. However, new applicants represent a minority of the total number of H-1B workers. Nearly 400,000 H-1Bs were approved in fiscal year 2024, most of them for renewal of employment, the Pew Research Center reported in March. Since 2013, the annual ratio of new applications to renewals has averaged 35%/65%.

One way companies can start adapting without fighting over immigration policy is by upskilling their workforces, an effort that could be further intensified if they can’t attract talent from overseas. OpenAI recently released an API that links to Coursera to help people upskill. Employees working on AI applications can dig deeper into how to create prompts and use AI in spreadsheet and database programs. “It has the potential to augment talent over the long term,” Dufresne said.

Remote work, university recruitment, nearshoring of talent

The need to cast a wider net for skilled workers due to immigration restrictions could also spark a new boom in remote work, said Brad Bernthal, associate professor of law and director of the Silicon Flatirons Center for Law, Technology and Entrepreneurship. Changing global labor market dynamics are also leading more companies to explore the talent pipeline version of the supply chain concept known as “near-shoring,” or finding workers based in or subcontracting to companies in countries that align with the U.S. time zone. Specifically, Dufresne said Poland has successfully branded itself as a country capable of supplying an outsourced STEM workforce in a time zone not far from the continental United States.

“We believe there is an opportunity to rethink how startups build their talent pipelines in this environment,” said Angela Blevins, director of HR and talent at High Alpha, an Indianapolis venture firm that builds and funds B2B software-as-a-service companies. “One approach we have seen that works is to hire a small number of very senior[talents]and level up strong entry-level talent coming out of college. This not only builds skills quickly, but also helps companies scale sustainably without being overly reliant on international recruitment,” Blevins said.

Reaching out to local schools will also be a central part of recruitment efforts. Officials at the University of Colorado Boulder, where Mr. Yao is based, have seen a long-term increase in companies looking to build relationships with the university. The war for talent is already heating up, and talented American-born students and those with very strong immigration credentials are likely to be in high demand. Peter Petrella, president of TalentRise, a New York-based company that provides executive search, coaching and leadership development for companies in the U.S., Canada and India, said he is helping his clients build stronger connections locally, such as reaching out to upstate New York economic development authorities and the University at Buffalo’s alumni office to begin connecting with graduates of its computer engineering program.

Angie Vermillion, associate director of employer relations at Leeds School of Business, advises companies looking to build stronger connections with US universities to take the time to build relationships with careers teams, faculty and students through multiple “touchpoints” including career treks and fairs. He also said companies should focus on career growth and mentoring. “Students are attracted to clear advancement paths,” she said.

But the talent pipeline is one of experts’ biggest concerns, with no short-term workarounds or long-term solutions if immigrant visas for skilled workers become a much smaller part of the labor market. The H-1B system produces entrepreneurs who tend to spend time working for other companies before striking out on their own. Bernthal said his biggest concern is whether the United States can continue to innovate in areas such as climate technology, aerospace, quantum life sciences and national security. Foreign-born founders are also among the leaders in these areas, he said.

“If you look closely, the founders who built Silicon Valley were first- and second-generation immigrants,” Chattopadhyay said. “(Immigration) swings for the fences. There’s grit. At the end of the day, if we start limiting that talent, that’s going to be bad for innovation.”