Proposed H-1B changes could redefine global talent acquisition

The US Department of Homeland Security (DHS) revealed its thoughts on a pending overhaul of the current H-1B visa program with the release Tuesday of a Federal Register notice laying out a set of proposed new rules for the recruitment of foreign workers.

The 105-page notice, which follows late last week’s executive order from President Donald Trump that imposed a $100,000 fee on new H-1B visa applications, “proposes to implement a weighted selection process that would generally favor the allocation of H-1B visas to higher skilled and higher paid aliens, while maintaining the opportunity for employers to secure H-1B workers at all wage levels, to better serve the Congressional intent for the H-1B program.”

In his order, Trump wrote, “information technology (IT) firms in particular have prominently manipulated the H-1B system, significantly harming American workers in computer-related fields. The share of IT workers in the H-1B program grew from 32% in Fiscal Year (FY) 2003 to an average of over 65% in the last five fiscal years. In addition, some of the most prolific H-1B employers are now consistently IT outsourcing companies.”

In its notice, the DHS noted, “the changes proposed in this rule would better ensure that the H-1B cap selection process favors relatively higher-skilled, higher-valued or higher-paid foreign workers rather than continuing to allow numerically limited cap numbers to be allocated predominantly to workers in lower skilled or lower paid positions.”

To that end, it estimates that wages earned by successful H-1B applications would total $502 million in 2026 and soar to $1 billion the following year and $1.5 billion in 2028.

Workforce division a possibility

Justin Eggstaff, managing partner, US federal government, at Info-Tech Research Group, said, “the new suggested H-1B visa process may change how companies deal with global talent. From a policy perspective, it is premised on notions of protection of US workers by creating more discretion when companies bring foreign workers into the equation.”

Effectively, he said, “it could create a real division of the workforce: larger companies will pay the price of admission and continue to attract specialized talent from overseas, while smaller companies and startups may or may not pay the price of admission or may simply be out of the international worker marketplace altogether.”

Eggstaff added, “where skill set is critical and unavailable in the US market, companies will pay for the positioning. However, if the value is marginal, they would consider hiring in the local workforce, restructuring the project team, or utilizing alternatives such as low-code/no-code or AI.”

This, he said, “could lead to more job opportunities for US workers, particularly at the entry and mid-level, while foreign talent may be increasingly limited to highly specialized, senior roles where the business case justifies the expense.”

David Foote, chief analyst and research officer at Foote Partners, a firm that that focuses on what it describes as “the people (versus vendor) side of managing technology,” said that what is being suggested in the notice is it is “an attempt to be fairer, but salary is not a proxy for skill level. It never has been. Right now, a senior cybersecurity analyst in San Jose, that job is averaging almost $180,000 a year. That job in Grand Rapids, Michigan is about $108,000 a year.”

Biggest challenge? How to make it work

He said that within the current system, “the largest numbers of H-1B visas are in California, Texas, and Virginia. Why? Well, because in California there are a lot of tech companies, Texas, a lot of tech companies, and in Virginia, because you’ve got this whole area around Washington DC, which is just full of tech hires. It’s very easy to see that it’ll continue to benefit those areas.”

Aside from the proposed changes “definitely being a disadvantage for startups and nonprofits and academia because there’s a lot of hiring in those areas,” Foote said, the proposal from the DHS “also adds complexity, and I think litigation risk as well.”

There are, he said, “a lot of things that I don’t like as an analyst, that I see that are unfair about the current system. Anything that’s based on a lottery can be unfair. So, it’s not a bad idea to weight by higher wages, but I see a lot of problems in how to make that a reality, how to actually engineer that so it’s fair, because it’s going to hurt people.”

Another wrinkle that needs to be sorted out, Foote pointed out, is if you base a winning H-1B visa on salary, what happens when the world moves from the Knowledge Economy to the Innovation Economy, which is what is currently happening. “There are all these incredibly valuable soft skills that humans have that are going to be more highly prized,” he said. “How can an H-1B visa program possibly connect pay to these softer skills? This is a huge issue.”

The public will have 30 days, beginning on Wednesday, to submit comments about the proposed changes via the Federal Register.