The new $100,000 H-1B fee tacitly acknowledges what early policy architects signaled: expanding temporary tech visas can depress domestic wages. By bringing the fully loaded cost of a new H1B hire closer to what the local market would require to recruit and retain comparable talent, it narrows the wedge between visa-enabled staffing and hiring Americans at market rates.

On September 19–21, 2025, the administration announced a $100,000 fee on new H-1B petitions. Major U.S. tech and consulting employers—many among the program’s largest sponsors—argue the fee undermines competitiveness and throttles innovation; some are openly modeling whether to shift more work into India-based Global Capability Centers. Indian industry and officials, for their part, warn of disruption for a population that consistently receives about 70% of all approved H-1Bs, and local media trace market jitters to the fee. Even sympathetic voices in tech leadership call the price tag “too high” relative to the policy goal.

That reaction reprises the familiar frame in U.S. debates over high-skill immigration: do visas fill critical talent gaps that fuel innovation, or do they depress pay for domestic STEM workers? Empirical and official assessments have long acknowledged the wage channel; early 2000s analyses, for example, described foreign IT inflows as a “moderating force on wage increases,” and Alan Greenspan later argued that tight skilled-immigration quotas had propped up a “privileged elite” and that easing such constraints would reduce skilled wage premia.

But there is a more consequential reading of the history. Years before today’s headlines, an INET Working Paper highlighted research making an extraordinary claim: in the run-up to the Immigration Act of 1990 (IMMACT90)—the law that created the H-1B—proponents and employers allegedly agreed with labor on the wage effects, at least behind closed doors (Weinstein 2017). According to that account, the actual rationale for H-1B and IMMACT90 was to tamper with the wage mechanism on which native workers rely for their ability to earn, and weaken the bargaining power of domestic STEM workers by augmenting labor supply via demographic panic. An internal NSF analysis captured the logic succinctly:

“A growing influx of foreign PhDs into U.S. labor markets will hold down the level of PhD salaries to the extent that foreign students are attracted to U.S. doctoral programs as a way of immigrating to the U.S.”

Although today’s proponents often dispute that wage mechanisms adequately clear STEM labor markets, the NSF economist in the internal study explicitly credited market wages with resolving past shortages:

“There have been numerous instances during the last 45 years in which high-ranking national figures have called for national action to increase the flow of college students into NS&E fields… These shortages, however, were swiftly eradicated without major focused policy initiatives through market forces and minor adjustments by employers.”

— Myles Boylan, Internal 1986 NSF/PRA study

On this telling, the purpose of H-1B was to interfere with that wage-clearing mechanism—introducing a parallel “compensation” channel (a visa) that has value to foreign workers but not to natives, thereby suppressing cash wages for U.S. STEM workers. According to this account, NSF commissioned two studies with complementary public/private functions at a time when internal projections suggested STEM PhD salaries could reach $100,000 by ~2000 (the “pessimistic scenario” in internal documents). One was an esoteric internal study (Boylan, 1986, NSF/PRA) containing detailed demand curves which explicitly allowed for market-clearing wage increases. The other, however, was a public study that was crafted as a demographic narrative, stripped of market mechanisms, which framed the problem as a looming “shortfall” caused by the smaller Generation X cohort—thereby creating urgency for legislative action without foregrounding wage adjustment as the remedy. By removing the wage-adjustment machinery from the public analysis, the argument was made, and the need for higher compensation could be recast as a structural shortage, bolstering the case for an expanded high-skill visa channel.

Read through this lens, the present controversy over the new $100,000 H-1B fee is not merely a reprise of the “do visas hurt or help wages?” debate. Rather the foundational premise of the H-1B framework was already an acknowledgment—shared by all sides in private—that increasing foreign STEM supply would restrain U.S. wage growth. The debate then is not really about whether wage pressure exists but rather about how explicitly policy should admit, harness—or counteract—it.

So what has the actual effect been of this program? While it is difficult to get an accurate estimate of the visa program on wages, we can do some back of the envelop rough, exploratory calculations on the magnitude of the effect on the tech labor market.

First, let us review the mechanisms through which the contemporary pipeline works. The United States doesn’t just hire through H-1B; it draws from multi-year channels. F1 and M1 visas bring in foreign students for academic or vocational training. After graduating from a US institution students can apply for an Optional Practical Training (OPT) visa, which allows international students on F-1 visas to work in the U.S. for up to 12 months after completing their degree, gaining practical experience in their field of study. Students in STEM fields may qualify for a 24-month extension, allowing for a total of 36 months of work authorization. This can be seen as the pre-H1B stage of the pipeline. There is also a program for gifted skilled people, which is separate.

According to US government data, in 2024 there were approximately 381,140 people with work authorization through a form of practical training, with approximately half of these being in computer science or engineering. Meanwhile, despite the stated cap of 85,000 visas, US Customs and Immigration Services approved almost 400,000 H-1B petitions in FY-2024 with about 70 to 75% of these being for computer related and engineering jobs. Put together that is roughly half a million jobs. The Bureau of Labor Statistics estimates the size of the US workforce in STEM occupations to be approximately 10.7 million. This suggests that these channels represent about 5% of the US STEM labor force. Regardless of one’s belief about the positive or negative effects on the economy, it is hard to make the argument that this is not a significant shift of the labor supply curve. The claim that is sometimes made, that the flow is “too small to move wages” is not credible—especially in metro-concentrated markets where software dominates the occupational mix and where there are few buyers.

Despite its manifest effects on domestic labor markets, proponents of the H1B visa program often make the argument that it is a way for US employers to access “the best and the brightest.” After all industry giants like Elon Musk, Satya Nadella and Sunder Pichai all came in on these visas. This argument is worth a careful assessment. If wages are broken down into five levels, with Level 3 representing the median local wage for an occupation, prevailing H1B wage rules allow employers to meet compliance at Level 1 or Level 2—wage levels that sit below the local median. Analyses by the Economic Policy Institute and others document that a majority of positions are certified at those lower levels; the Department of Labor’s wage framework was not built to ensure median-plus pay, and in practice it does not. This doesn’t mean all H-1B workers are underpaid; it does mean the system permits staffing models inconsistent with the “star talent” narrative that’s used to sell the public on the program.

If employers truly need once-in-a-generation talent, the law already provides a mechanism that does not rely on lottery luck or entry-level wage bands: the EB-2 National Interest Waiver⁹ (NIW). USCIS’s January 2025 policy update re-clarified the Dhanasar test (national importance, well-positioned, and on-balance benefit) and tightened the articulation of underlying EB-2 eligibility. For genuine stars, NIW is the straightforward path—and it is inherently more honest about who deserves a fast track. H-1B, by contrast, is a mass program that has—by design—become a staffing channel for ordinary (if valuable) roles. Policymaking should reflect that difference.

A disturbing effect of the structure