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-grabbling 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, the restrictions are already slowing hiring and shrinking the talent pool, according to recruiters and entrepreneurs.

However, there are also signs that the restrictions on immigration are having the desired effect, as companies start to seek ways to upskill their existing workforces, and build new talent pipelines to American universities and large companies.

Somak Chattopadhyay, founder of Armory Square Ventures, which runs a $60 million fund that invests in software companies and also serves on New York State’s Emerging Technology Advisory Board, said the fund’s startups have at times gone to international talent markets to find the top thinkers, and at least for now, there is no immediate alternative to where unique talent can be sourced. “For the highly specialized talent in the world of AI,  there’s probably like 500 people in the country that understand how to build an LLM model from the ground up. 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 to find ways to cast a wider net.”

The Trump administration announced changes to the H-1B system by executive order, on Sept. 19. The administration said it aimed to give American workers the advantage and end abuse of the H-1B system by requiring companies to pay $100,000 for each new visa application. Some large users of the H-1B are outsourcing companies; the executive order said those companies pay below-market salaries to skilled foreign workers desperate to get to the United States, harming the chances for American workers.

The new hefty H-1B fee is coming on top of new restrictions for foreign students at American universities and other changes that increase the regulatory burden on employers. More than 60% of the H-1B workers are in computer-related fields at a median annual salary of $123,600, with architecture, engineering and surveying a distant second.

Debate continues over foreign worker visa reform

Some venture capitalists, including billionaire investor and LinkedIn founder Reid Hoffman, have begun publicly negotiating for the administration to charge true startups a much lower fee than larger tech enterprises, perhaps in the tens of thousands of dollars, and remove the cap on visas (a congressionally mandated 65,000 H-1B visa regular cap and 20,000 H-1B visa U.S. advanced degree exemption, known as the master’s cap, for fiscal year 2026). Hoffman noted in a recent episode of his “Possible” podcast that these are H-1B visa reform ideas he has supported for years.

Highly skilled immigrants are shifting their job focus to large companies, according to entrepreneur Eva Yao, the founder of Boulder, Colo.-based Flari Tech, a former H-1B recipient herself, now a citizen. She tells CNBC that she already advised one woman to seek a role at a large company that might be able to pay the fee.

Yao is now seeking her first employee, probably an optical engineer for her company, a University of Colorado Boulder spinout developing breath diagnostics based on quantum sensing for health care applications. “I do have American candidates but when I look at post docs and PhD students, so many are foreign students,” she said. “I am in a very specialized field where we look at scientists, researchers and engineers in cutting edge areas. The first thing I’ll ask is what is your status. It’s an unnecessary distraction,” she added.

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

AI jobs across industries in the crosshairs of new policy

The restrictions are having an immediate impact on hiring for positions related to artificial intelligence across sectors of the economy. Among larger businesses that are still considered “small” – those with 500 employees or less – companies that were in the midst of looking for workers to fill AI roles have more questions than answers. “I didn’t have this budget from capex expense, IT expense or HR expense,” Amy Dufrane, CEO of HRC, an Alexandria, Va.-based HR education and learning company, said of the comments she heard during a recent webinar her company hosted for more than 3,000 human resources professionals. For many of the companies attempting to adapt to AI in their industries, “this came out of left field,” she said.

It is a lot of positions to fill — there are now more than twice as many H-1B approvals as in 2000. But in terms of the total pool of H-1B workers, new applications are the minority. Nearly 400,000 H-1Bs were approved in fiscal year 2024, most of which were applications to renew employment, the Pew Research Center reported in March. Since 2013, the annual split between new applications and renewals has averaged 35%/65%.

One way companies can begin to adapt without having to battle over immigration policy is to upskill their workforces, an effort that’s likely to intensify if they can’t bring in talent from overseas. OpenAI recently released APIs to link to Coursera to help people upskill. Employees working on AI applications can go deeper to find out how to craft prompts or use AI for spreadsheets and database programs. “That can be a long-term augmentation of talent,” Dufrane said.

Remote work, university recruiting, talent nearshoring

The need to cast a wider net for skilled workers due to immigration restrictions also may usher in another boom in remote work, according to Brad Bernthal, associate professor of law and director of Silicon Flatirons Center for Law Technology and Entrepreneurship. The shifting global labor market dynamics are also leading more businesses to explore a human talent pipeline version of the supply chain concept of “near-shoring”: finding workers or subcontracting to companies based in countries that are aligned with the United States by time zone. Specifically, Poland has successfully branded itself as a country that can supply outsourced STEM labor, in a time zone not too distant from the continental United States, according to Dufrane.

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

Outreach to local schools will also become more central to recruiting efforts. At University of Colorado- Boulder, where Yao is based, officials say they have been seeing a long-term uptick in companies trying to build ties with the university. The talent war was already heating up, making talented American-born students or those with very firm immigration statuses likely to be in high demand. Peter Petrella, president of New York State-based TalentRise, which does executive search, coaching and leadership development for companies based in the United States, Canada and India, say he is helping clients establish stronger local connections, reaching out to economic development officials in upstate New York and the alumni office at the University of Buffalo to begin setting up connections with the alumni of its programs in computer engineering.

Angie Vermillion, associate director, employer relations at the Leeds School of Business, advises companies that want to establish stronger connections with American universities to develop relationships with career teams, faculty and students over time and through multiple “touchpoints” including career treks and fairs. She also said that companies should emphasize career growth and the availability of mentors. “Students are drawn to clear advancement pathways,” she said.

But one talent pipeline that experts are most worried about has no short-term workaround, or long-term fix 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 they venture out on their own. Bernthal said he’s most concerned about whether the United States can continue to innovate in areas including climate technology, aerospace, quantum life science and national security. Foreign-born founders are among the leaders in those arenas, he said.

“The founders that built Silicon Valley — if you look at it, they were both first and second generation immigrants,” said Chattopadhyay. “(Immigrants) swing for the fences; there’s a grit there. At the end of the day, if we start restricting that talent, that would be a bad thing for innovation.”