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$100,000 for a H-1B visa might be more reasonable than you think

E-1B program has given U.S. huge talent but needs reform

 

By Peter Morici

Sept. 30, 2025 – Washington Times

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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Powell Risks Making 3% Inflation the New Normal

By Peter Morici

Sept. 22, 2025 – Newsmax

The Federal Reserve has chosen to prop up a flailing economy and labor market over price stability.

The 2018 Tax Cut and Jobs Act and President Biden’s infrastructure, industrial and social welfares policies boosted federal deficits from 2.9% of GDP in 2016 to 6.6% last year.

Those powered 2.5% annual GDP growth from 2017 to 2024.

The Big Beautiful Bill juices federal deficits a bit more than $300 billion a year, but President Trump’s tariffs will generate a similar amount of new revenue.

Absent additional fiscal stimulus, economic forecasters in January expected growth to slow to 2.0% this year but with the supply chain disruptions imposed by Trump’s tariffs, they have lowered their expectations.

We haven’t seen the full impact of tariffs on prices, but headline and core inflation remain closer to 3% than the Fed’s 2% target.

Many businesses haven’t pushed through all their increased tariff costs. With those in flux, businesses are uncertain about the prices they can charge and what they will ultimately be paying for materials, components and goods for resale.

Price restraint can’t last.

In a slowing economy, shareholder pressure forces business to increase profits by not filling vacant positions, trimming other expenses and boosting productivity.

Those strategies have limits, and the University of Michigan and Conference Board surveys of consumer expectations peg one-year inflation at 4.8% and 6.2%.

Unemployment remains low, but job listings, resignations and layoffs are below pre-and post-COVID shutdown levels and net hiring is near zero.

For workers with jobs, inflation-adjusted incomes are rising. Those without jobs and new graduates face hard times finding work.

Businesses are using Artificial Intelligence to reduce headcount, and a stagnant labor market is creating fear among the middle-class.

It’s no surprise that Trump pressured the Fed to lower interest rates and is contemplating declaring a national housing emergency to ease building codes and lower tariffs on construction material.

But construction activity is limited by the availability of buildable land close to large employment centers, and Trump’s deportation and strict immigration policies limit labor supplies in the construction sector.

Home buyers may use lower mortgage rates to simply bid up prices.

Housing is 35% of the Consumer Price Index and lower interest rates could ultimately become rocket fuel for inflation.

All that put Fed between a rock and a hard place.

If it charts a cautious path on inflation, it lets a tough jobs market fester but if it follows through with a rate cutting cycle, it risks making 3% inflation the new normal.

Moreover, the Fed can set the federal funds rate—the overnight rate the banks charge each other for funds. But consumer and business loans often benchmark off the 10-year Treasury rate, which doesn’t always move with the federal funds rate.

From September to December 2024, the Fed lowered the short-term target rate by a percentage point, but increased federal borrowing pushed up the 10-year Treasury and mortgage rates.

Many forces could again push that bellwether rate up.

AI spending is creating huge demands for new capital. Should President Trump’s tariffs boost manufacturing, expanding factories will be capital intensive too.

NATO allies in Europe are increasing defense spending. Their coalition governments can’t easily cut social programs and taxes on the continent are already burdensome.

Hence, European governments will be borrowing more and competing with the U.S. Treasury for international investors’ funds.

The baby boom generation will be drawing down savings during their retirement years but the smaller cohort who follow in their wake are not saving as much for their golden years.

On net, that spells a drain on savings available to finance business investment and government debt.

Trump’s attacks on Federal Reserve independence undermine confidence in U.S. government bonds as a durable store of value and push up interest rates.

Reforms following the Global Financial Crisis discourage banks from making markets in government and corporate debt.

Often, large banks provided a cushion in times of distress—buying bonds during selloffs—to ease losses for big clients for other services, because banks were confident bond prices would eventually rebound offering them a profit.

That cushion is now reduced, making even federal debt and top-rated corporate bonds potentially more volatile. And investors should want higher interest rates to compensate.

Consequently, even as the Fed lowers short-term rates, a 10-year Treasury rate that is the sum of long-term expected inflation and economic growth—or 4.5% to 5%—is more likely.

Moreover, the Fed can’t fix the disruptions AI imposes on labor markets—many managerial and professional roles are being displaced by decision-making software called agents.

Lowering the federal funds rate, may take the heat off the Fed from the White House but historians may well blame Chairman Powell for locking in 3% inflation.

 

Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.

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