Trump's $100K H-1B Fee Targets Worker Displacement Crisis

Interactive Chart

Engineering Institute Says New Policy Addresses "Real Story" of Visa Abuse by Outsourcing Firms

President Donald Trump's announcement Friday of a $100,000 annual fee for H-1B visa applications represents a significant step toward addressing what the Institute of Electrical and Electronics Engineers (IEEE) has characterized as systematic abuse of America's largest guest worker program—abuse that has displaced domestic technology workers in favor of lower-paid foreign contractors.

The new fee structure, part of a broader immigration reform package that includes a "Trump Gold Card" program requiring $1-5 million contributions for high-net-worth immigrants, directly confronts what IEEE-USA has long argued is the "real story" behind H-1B visas: their use as a tool to avoid hiring American workers at American wages.

The Outsourcing Model That IEEE Says Undermines American Workers

For every visa used by Google to hire a talented non-American for $126,000, ten Americans are replaced by outsourcing companies paying their H-1B workers $65,000, according to IEEE-USA leadership in a 2017 analysis that presaged current reform efforts.

The numbers behind this assertion are stark. While major technology companies like Facebook, Microsoft, and Google pay competitive salaries to H-1B workers—often exceeding $120,000 annually—the majority of H-1B visas are actually used by outsourcing and consulting companies that pay dramatically less.

In 2016, Wipro paid its 104 program analysts in San Jose exactly $60,000 each, while Brocade paid their programmer analysts $130,000 in the same city. Similarly, Infosys, historically the largest user of H-1B visas, paid their 158 technology analysts in New York City an average of $67,832—"not enough to rent a closet in that city," IEEE noted.

Recent data confirms this pattern persists. According to 2024 Department of Labor statistics, Tesla had 742 approved H-1B visas, nearly doubling from 328 the previous year, while investigations have found Level 1 software engineers in Silicon Valley earning $85,000 annually—far below the $130,000 median for similar roles.

A Program Split Between Innovation and Exploitation

The current H-1B system suffers from what former U.S. Citizenship and Immigration Services director Doug Rand calls a "split personality disorder." Only about half of the 85,000 annual visas go to traditional companies offering long-term employment and paths to citizenship. The other half flow to staffing and consulting firms—some well-established, others mere one-person operations existing solely to exploit the lottery system.

"They're basically entering the lottery so they can hire people that they then rent out to other larger companies doing actual work," Rand explained. "And so there's a lot of misbehavior and chicanery in this part of the system."

Data from fiscal year 2024 bears this out: outsourcing giants Infosys, Cognizant, Wipro, and Tata Consultancy collectively used 21,695 visas—more than 25% of all private-sector H-1B visas—compared to just 1,763 visas used by Microsoft, Google, Facebook, and Uber combined.

The $60,000 Loophole That Enables Displacement

At the heart of the abuse lies a regulatory loophole: companies paying H-1B workers at least $60,000 are exempted from key regulations designed to prevent visa abuse. This threshold, set decades ago, falls far below current market rates for most technology positions.

This creates a perverse incentive structure where outsourcing companies can charge clients $80,000 to hire a developer while paying the H-1B worker only $65,000, pocketing the difference while undercutting American wages.

IEEE-USA's research shows that H-1B salaries cluster around the $65,000-$75,000 level once you move past major technology companies. This systematic wage suppression affects not just individual workers but entire labor markets, as American workers find themselves competing against artificially depressed wage scales.

Domestic STEM Workforce Contradicts "Shortage" Claims

Despite technology industry claims of worker shortages, data suggests American STEM graduates are increasingly available but struggling to find employment. According to National Center for Education Statistics data, the number of bachelor's, master's, and doctoral degrees in computer science and engineering reached their highest levels in 2020-21 and 2021-22 since 1970-71.

Yet recent graduates in several STEM fields now face unemployment rates exceeding 7%, with physics, computer engineering, and chemistry majors particularly affected. This represents a stark reversal from historical patterns where STEM degrees virtually guaranteed employment.

"Recent graduates who studied art history are more likely to be employed than peers from a handful of popular STEM programs," according to 2025 labor market analysis, highlighting the disconnect between claimed worker shortages and actual employment outcomes.

Simultaneously, the Federal Reserve Bank of New York reports that recent college graduate unemployment averaged 5.3% in the second quarter of 2025, with underemployment rates exceeding 41%.

IEEE's Reform Framework: Prioritizing High-Value Workers

IEEE-USA has consistently advocated for reforms that would transform H-1B from a tool for worker displacement into a genuine high-skill immigration program. The organization supports:

1. Wage-based visa allocation: Prioritizing applications from companies offering above-market wages, ensuring specialty skills are truly in short supply
2. Expanded green card programs: Creating pathways to permanent residency that would eliminate the employer dependency that makes H-1B workers vulnerable to exploitation
3. Closure of regulatory loopholes: Eliminating the $60,000 exemption threshold that enables visa abuse

"If the H-1B visa is for filling jobs with exceptional candidates when no American is available, what's wrong with expecting companies to pay good wages?" asked IEEE-USA President Jim Conrad in response to previous reform efforts.

The Lottery System's Corruption

The H-1B lottery system itself has become a target for gaming. In fiscal year 2024, USCIS received 780,884 registrations but found concerning patterns: for the first time since the electronic system began, multiple registrations (408,891) exceeded single registrations (350,103), with USCIS expressing "serious concerns" about system abuse.

The agency's efforts to combat fraud led to a nearly 40% drop in lottery applications in 2024, as measures against duplicate submissions and dubious applications took effect. This reduction suggests the scale of previous manipulation was substantial.

Economic Impact and Innovation Concerns

While IEEE supports skilled immigration, the organization argues the current H-1B system actually hampers innovation and economic growth. Unlike green card holders who can start businesses and change jobs freely, H-1B workers face restrictions that limit entrepreneurship and innovation.

"H-1B workers rarely innovate, because they have no long-term stake in the company. And they rarely start businesses, because H-1B rules state that they can't own a company in the United States," IEEE-USA explained. "Green card holders often do both."

The dependency relationship inherent in H-1B visas—where workers can remain only as long as their sponsoring employer permits—creates what IEEE describes as conditions ripe for exploitation.

Corporate Response and Industry Divisions

Major technology companies have not yet publicly responded to Trump's announcement, with representatives for Amazon, Apple, Google, and Meta declining immediate comment, while Microsoft declined to comment entirely. This silence contrasts with past industry advocacy for expanded H-1B programs.

The new $100,000 annual fee represents a dramatic increase from current costs and could fundamentally alter the economics that make H-1B workers attractive to outsourcing firms. At this price point, the wage arbitrage that drives the consulting company model becomes economically unsustainable.

Global Competition and National Security Implications

The reforms come as other nations compete for high-skilled workers through more attractive programs. Canada, Australia, and European countries offer direct pathways to permanent residency that the U.S. H-1B system lacks.

IEEE argues this puts America at a disadvantage in attracting genuine top talent while the current system primarily serves lower-skilled roles that Americans could fill. Data shows 73% of H-1B workers approved in fiscal 2023 were born in India, with China accounting for another 12%, raising questions about program diversity and national security implications.

Looking Forward: A "Winning Combination"

IEEE-USA describes the ideal framework as "a high-skill visa program built around prioritized H-1B visas and more EB green cards"—a combination that would serve both American workers and genuine global talent.

The Trump administration's reforms represent the most significant changes to the H-1B program in decades, potentially addressing long-standing concerns about worker displacement while creating space for legitimate high-skill immigration that benefits American innovation and economic competitiveness.

Whether these changes will achieve IEEE's vision of a program that "builds our nation's skilled labor pool and strengthens our economy" rather than undermining both will depend on implementation details and industry adaptation to the new economic realities.

For IEEE and its nearly 180,000 American technology professionals, the reforms represent vindication of more than a decade of advocacy for common-sense changes to a program that lost sight of its original mission to supplement, rather than substitute for, American technical talent.

---

SIDEBAR: The Hidden Cost of H-1B Dependency - Workers Trapped in a System of Control

While much attention focuses on how H-1B visas affect American workers, IEEE has also highlighted the exploitation faced by the foreign workers themselves—a situation that creates what labor economists call "captive labor" conditions that distort the entire technology employment market.

Visa Dependency Creates Employer Control

Unlike green cards, the visa belongs to the company and not the worker. Workers can stay in the country exactly as long as their employers let them, according to IEEE-USA's analysis. But if the company chooses to take the visa back, the worker has to leave unless he can find another employer to sponsor his visa.

This dependency relationship gives employers unprecedented control over their workforce. H-1B workers cannot easily negotiate for better wages, working conditions, or career advancement because their legal status depends entirely on their current employer's goodwill.

The Economics of Exploitation

The captive nature of H-1B employment creates economic incentives for abuse that IEEE argues harm both foreign workers and the broader labor market:

• Wage Suppression: Statistics reveal that these firms often pay salaries at or near the minimum prevailing wage levels. For example, a Level 1 software engineer in Silicon Valley might earn $85,000 annually, far below the $130,000 median for similar roles
• Limited Career Mobility: Unlike American workers or green card holders who can freely change jobs, H-1B workers face months-long visa transfer processes that discourage job switching
• Innovation Constraints: H-1B workers rarely innovate, because they have no long-term stake in the company. And they rarely start businesses, because H-1B rules state that they can't own a company in the United States

Training Their Own Replacements

Investigations including by 60 Minutes and The New York Times have found that some companies have laid off American workers and then replaced them with H-1B hires, sometimes even requiring displaced employees to train their replacements in order to receive their severance packages.

This practice creates a particularly cruel dynamic where both American and foreign workers become pawns in a system designed primarily to reduce labor costs rather than address genuine skill shortages.

The Consulting Company Pipeline

In addition to Big Tech companies, consulting firms like Cognizant, Tata and Infosys are also among the largest recipients of H-1B visas, providing tech companies with a steady pipeline of highly educated, well-trained employees willing to work on contract.

Major H-1B Exploiters by the Numbers

Top Outsourcing Companies and Their Wage Practices:

Infosys (Historically largest H-1B user)

• Paid 158 technology analysts in New York City an average of $67,832 in 2016
• Agreed to pay $34 million in 2014 settlement for "systemic visa fraud and abuse"

Wipro

• Paid 104 program analysts in San Jose exactly $60,000 each in 2016
• Wages set precisely at minimum threshold to avoid worker protection regulations

Tata Consultancy Services

• 5,509 H-1B approvals in 2025 (229 increase from previous year)
• Part of the "big four" outsourcing firms using over 25% of all private-sector H-1B visas

Cognizant

• Major recipient among consulting firms providing contract workers
• Pays significantly below market rates compared to direct tech company employment

HCL Technologies

• Indian outsourcing company specializing in H-1B contractor placement
• Focuses on basic programming and help desk tasks

Contrasted with Direct Tech Company Wages:

• Brocade: Paid programmer analysts $130,000 in San Jose (same market as Wipro's $60,000)
• Facebook: Average software engineer salary $138,294 in Menlo Park
• Google: H-1B workers average $126,000+ compared to outsourcing firms' $65,000-$75,000

The Pattern of Exploitation: IEEE research shows these outsourcing firms cluster around the $60,000 minimum wage threshold specifically because it exempts them from regulations requiring proof that no American workers are available and that foreign workers won't depress wages.

These consulting arrangements often create multiple layers of dependency:

1. The H-1B worker depends on the consulting company for visa sponsorship
2. The consulting company profits from the wage differential between what they charge clients and what they pay workers
3. Client companies benefit from reduced labor costs and legal distance from immigration compliance

Path to Permanent Residency: A Broken Promise

Many H-1B workers are promised eventual green card sponsorship, but the reality is far different. The employment-based green card system is limited to 140,000 people annually, creating backlogs that can last decades for workers from countries like India and China.

This creates what IEEE describes as a permanent underclass of technically skilled but legally vulnerable workers who cannot fully participate in the American economy or innovation ecosystem.

IEEE's Alternative Vision

IEEE-USA is working with Congress to speed up access to green cards for skilled non-Americans so they can fully participate in growing our economy. The organization argues that green card holders, unlike H-1B workers:

• Command market wages because they can freely change employers
• Drive innovation through entrepreneurship and long-term investment in their careers
• Strengthen the economy rather than creating artificial wage competition

The Human Cost of Reform

Trump's $100,000 annual fee could dramatically reduce the number of H-1B workers, but IEEE argues the focus should be on creating better pathways for skilled immigrants rather than simply restricting access.

Green cards and immigration, therefore, build our nation's skilled labor pool and strengthen our economy, while H-1Bs undermine both. America was built by green card holders, not guest workers, IEEE-USA leadership concluded.

The captive labor dynamics of the current H-1B system create a lose-lose situation where American workers face unfair wage competition while foreign workers face exploitation—a problem that IEEE argues can only be solved through fundamental reform that prioritizes permanent immigration pathways over temporary worker programs.

---

Sources and Citations

1. Ortutay, Barbara, and Seung Min Kim. "Trump signs proclamation imposing $100K annual fee for H-1B visa applications." San Diego Union-Tribune, September 19, 2025. https://www.sandiegouniontribune.com/2025/09/19/trump-signs-proclamation-imposing-100k-annual-fee-for-h-1b-visa-applications/
2. IEEE-USA Leadership. "Commentary: The H-1B Visa Problem as IEEE-USA Sees It." IEEE Spectrum, June 24, 2021. https://spectrum.ieee.org/commentary-the-h1b-problem-as-ieeeusa-sees-it
3. IEEE-USA. "IEEE-USA Supports Common Sense H-1B Reform." October 29, 2020. https://ieeeusa.org/ieee-usa-supports-common-sense-h-1b-reform/
4. IEEE-USA Staff. "IEEE-USA's Stance on the H-1B Visa Program." IEEE Spectrum, March 17, 2022. https://spectrum.ieee.org/ieeeusas-stance-on-the-h1b-visa-program
5. Lopez, Mark Hugo, et al. "What we know about the U.S. H-1B visa program." Pew Research Center, March 4, 2025. https://www.pewresearch.org/short-reads/2025/03/04/what-we-know-about-the-us-h-1b-visa-program/
6. National Science Foundation. "The STEM Labor Force: Scientists, Engineers, and Skilled Technical Workers." May 30, 2024. https://ncses.nsf.gov/pubs/nsb20245/u-s-stem-workforce-size-growth-and-employment
7. American Immigration Council. "The H-1B Visa Program and Its Impact on the U.S. Economy." February 13, 2025. https://www.americanimmigrationcouncil.org/research/h1b-visa-program-fact-sheet
8. Kodem Law. "The Impact of H-1B Visas on the U.S. Tech Industry: 2025 Insights." May 19, 2025. https://kodemlaw.com/non-immigration/the-impact-of-h-1b-visas-on-the-u-s-tech-industry-2025-insights/
9. CBS News. "H-1B visas power the tech industry. But experts say that's not necessarily because of a talent gap." January 13, 2025. https://www.cbsnews.com/news/h-1b-visa-technology-industry-elon-musk-donald-trump/
10. Money Magazine. "Recent Graduates in STEM Can't Find Jobs Like They Used To." May 30, 2025. https://money.com/college-grads-stem-degrees-unemployed/
11. Federal Reserve Bank of New York. "The Labor Market for Recent College Graduates." 2025. https://www.newyorkfed.org/research/college-labor-market
12. U.S. Census Bureau. "Census Bureau Reports Majority of STEM College Graduates Do Not Work in STEM Occupations." July 10, 2014. https://www.census.gov/newsroom/archives/2014-pr/cb14-130.html
13. Economic Policy Institute. "Tech and outsourcing companies continue to exploit the H-1B visa program at a time of mass layoffs." 2023. https://www.epi.org/blog/tech-and-outsourcing-companies-continue-to-exploit-the-h-1b-visa-program-at-a-time-of-mass-layoffs-the-top-30-h-1b-employers-hired-34000-new-h-1b-workers-in-2022-and-laid-off-at-least-85000-workers/
14. Arnesen, Paul. "H-1B Visa Exposed: Wage Suppression and Worker Displacement in the US." December 27, 2024. https://www.paularnesen.com/blog/the-h-1b-visa-corporate-americas-favorite-loophole-to-undermine-u-s-workers
15. Boundless Immigration. "Immigrant Workers in the United States: A Closer Look at the H-1B Visa Program." January 21, 2025. https://www.boundless.com/research/h-1b-work-visa-trends/
16. Trump to sign proclamation imposing $100K fee for H-1B visas: White House