OPINION:
President Trump is radically altering the nation’s employment-based immigration system by imposing a $100,000 fee for H-1B visas and creating a $1 million “Trump Gold Card” to cut the line for other visas.
New H1-Bs are limited to 85,000 a year. They are distributed by lottery to people with at least a college degree and job offers and are used mostly by technology, manufacturing, finance and consulting businesses.
H-1Bs are good for three years with one renewal. Often, these lead to workers obtaining green cards and staying permanently.
Universities and nonprofits engaged in scientific research are exempt from the cap.
Many entrepreneurs, such as Elon Musk, entered the country through the program; however, it needs reform.
Although many new arrivals possess exceptional skills in short supply, a good number are employed through worker contracting companies that provide banks and other businesses with cheap labor to perform mundane tasks.
The net effect is that while big Silicon Valley companies engaged in artificial intelligence and other cutting-edge research access a vital pool of talent, many H-1B workers are just a means for large banks to pay less for ordinary information technology functions.
Often, IT outsourcing firms discriminate against U.S. workers. With workforces sometimes dominated by foreign nationals, it’s tough to enforce the law’s requirement that H-1B workers be paid the prevailing U.S. wage.
IT employment is declining as AI agents take on more routine tasks in areas such as coding, and it’s hard to say that foreign workers in those positions are adding to a needed skill base.
When advocates of the H-1B program, such as economist Samuel Gregg, say that imposing a high, arbitrary fee will deprive the country of an important source of talent, they are correct.
However, the president’s executive order empowers the homeland security secretary to exempt individuals, companies and industries from the H-1B fee for occupations in the national interest.
Similarly, when analysts such as Patricia Lopez say the $100,000 fee is an attempt to fix a broken system that subjects American workers to unfair competition and discrimination, they are right too.
Worker contracting companies flood the lottery with multiple applications for people with a single job offer. This disadvantages those applying independently, who wouldn’t have a portion of their salaries skimmed by contractors.
Businesses can purchase Gold Cards for $2 million.
Gold Card immigrants will come in through EB-1 and EB-2 visas, which permit immigration by people with extraordinary skills, but Mr. Trump is cutting their combined annual quotas to 80,000 from 140,000.
American workers in technology, engineering and other scientific activities will have less competition for employment and higher wages, but the overall U.S. economy would be impaired.
As this column has previously noted, the indigenous population generates only enough young workers to support annual nonfarm employment growth of perhaps 300,000. This severely limits the potential growth of gross domestic product without more rather than fewer immigrants.
Therefore, arbitrary fees for visas and cutting immigration quotas are unnecessary gambles with American prosperity.
The system needs reform for sure, but selling access in this manner won’t properly ration visas or ensure that we attract the best and the brightest promising young people.
Instead, we need to move to a skills-based point system like Canada’s and curtail the abused family reunification program and eliminate the discriminatory diversity lottery that are significant sources of legal immigrants.
Family unification should be limited to immediate family members to end chain migration, whereby new permanent residents sponsor distant relatives, who in turn sponsor others.
We should set a strict limit related to the number of new immigrants the country needs to sustain 2.5% GDP growth and unemployment no higher than 4.2% — the level the Federal Reserve estimates corresponds with full employment — prioritize skills in awarding visas, and limit applications to people seeking employment and establishments where they will work.
Limited applications would put employee contracting firms out of the immigration business and curtail their skimming pay for placing immigrants in American workplaces.
This column has advocated that skills-based visas be awarded by auction. Sen. Jim Banks, Indiana Republican, has endorsed such an approach for allocating H-1B visas.
Businesses would be discouraged from hiring immigrants instead of more expensive American workers, and market forces would set fees. (Businesses aren’t going to pay more than they believe they will garner in additional value from an immigrant worker over an American.)
Prospective immigrants would be incentivized to obtain bona fide job offers from businesses to enter the process.
The Trump administration offers no rationale for arbitrarily selecting $100,000, $1 million or $2 million. However, $100,000 might prove reasonable for an H-1B visa.
Over six years, if a Silicon Valley firm can’t get at least $16,500 in value annually from an immigrant employee, it’s hard to argue that he possesses some invaluable or unique skill the American workforce lacks in sufficient supply.
• Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.
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