Policy Backgrounders

To H-1B or Not to H-1B: That Is the Policy Question

October 24, 2025

The Administration has recently announced major changes to the H-1B visa program, including a $100,000 fee for new petitions and adjustments to the lottery system for awarding new visas. However, growing Congressional interest in reforms and ongoing litigation may signal that additional changes are coming, requiring close attention by business and university leaders.

• While there is bipartisan acknowledgement of flaws in the H-1B program – and some stakeholders have applauded the Administration’s specific actions – others have argued that the changes would not have their intended effects and disproportionately harm smaller US firms and universities. At least two lawsuits have been filed challenging the legal basis for the new fee, leaving its future uncertain.
• Firms and universities should carefully assess their visa compliance programs amid heightened scrutiny. They should also evaluate how changes to the H-1B program may impact their human capital strategies and consider strengthening domestic talent pipelines.
• CEOs and university presidents should also engage with policymakers to share perspectives on the H-1B program and how the proposed changes would impact their operations.
• Finally, CEOs and university presidents should closely monitor developments as actions by the Administration, Congress, and courts may all impact the H-1B program.

Origins of the H-1B Program

The employment of immigrant and non-immigrant foreign workers in the US has long been a contentious policy issue. Indeed, the Foran Act of 1885 (also known as the Alien Contract Labor Law) established a general ban, with some exceptions, on employment-based entries, a prohibition which lasted until 1952. Notably, exceptions were made for agricultural workers during World Wars I and II and in the post-war period. In 1952, amid debates about immigration in the context of the Cold War, Congress enacted the Immigration and Nationality Act (INA), which, in section 101(a)(15)(H), created a nonimmigrant visa classification for individuals of “distinguished merit and ability” coming to the US to “perform temporary services of an exceptional nature requiring such merit and ability” on the condition that there were insufficient US workers available to perform such service.

After the INA’s enactment, initial demand for H-1 visas was relatively modest. In the first year only about 2,000 nonimmigrant visa petitions for individuals of distinguished merit and ability were received, primarily athletes, artists, and musicians. However, interest grew over time – by 1978 about 17,000 individuals were admitted to the US with H-1 visas and by 1990 there were nearly 53,000 H-1 visa entries.

By that time, economic and demographic trends led Congress to pass the Immigration Act of 1990, a sweeping bipartisan bill that, among other changes to the US immigration system, replaced the H-1 visa program with the H-1B program, setting an annual issuance cap of 65,000 and outlining more detailed criteria for qualification including having “highly specialized knowledge” and holding, at a minimum, a bachelor's degree or its equivalent. In its first full year of availability, about 52,000 individuals were issued H-1B visas, but the program has grown steadily over time with about 117,000 H-1B visa issuances by 1999 and 220,000 in 2024.

Program Overview

Since passage of the Immigration Act in 1990 – except for temporary increases in the late 1990s and early 2000s – US law has maintained a cap of 65,000 regular H-1B issuances with an additional allowance of 20,000 visas for those with advanced degrees added in 2004. However, since H-1B visa holders employed by higher education institutions, certain research institutions, or government research organizations as well as renews and extensions are not subject to the cap, the number of H-1B visas issued regularly exceeds the cap. Indeed, while H-1B approvals overall have more than doubled since 2000, approvals for new employment have remained flat and now account for just 35% of approvals – growth has instead come entirely from renewals.

Since H-1B visa demand routinely exceeds the cap, US Citizenship and Immigration Services (USCIS) has historically used a lottery to award the visas. For the upcoming fiscal year, for example, about 344,000 eligible individuals registered for the lottery. Once approved, H-1B visas are valid for three years and can generally be renewed for an additional three years. In some circumstances, additional extensions are allowed. Most H-1B workers are hired in STEM fields, with about two-thirds employed in computer-related occupations. As part of the approval process, employers must attest to the Department of Labor that they will pay the greater of the actual wages paid to similar employees or the prevailing wages for that occupation and meet other conditions. The program also includes provisions for allowing visa holders to transfer their eligibility between employers if certain conditions are met.

Program Evolution: Support and Criticism

Since the creation of the program, H-1B visa holders have become important parts of the US high-skill labor force, particularly in tech with many firms arguing that the program helps them attract global talent. Notably, many executives of major tech firms – including Elon Musk (SpaceX, Tesla), Sundar Pichai (Google/Alphabet), Erin Yuan (Zoom), and Satya Nadella (Microsoft) – held H-1B visas. Economic research has also found that the program has benefits for patent output, employment, productivity, and wages.

However, critics charge that the H-1B visa has evolved to be used for hiring not only top global talent, but also lower skilled workers. This is in part, critics say, because of the lottery system used to allocate available visas. Since firms can submit as many lottery registrations as they wish, some firms flood the lottery with registrations for lower skilled, relatively interchangeable recruits to ensure that some percentage of them get approved. According to one analysis of 2023 data, nearly 25,000 H-1B visas were approved for such firms. In addition, about one-third of visas, according to one estimate, are given to employees at firms where a significant share of employees are H-1B visa holders. In some cases, firms have been found liable for employment discrimination against non-H-1B visa holders.

Recent Developments

Responding to critiques of the program, on September 19 the President directed three important changes to the H-1B program: (1) implementation of a $100,000 fee for H-1B visa petitions, (2) prioritization in the lottery for “high-skilled and high-paid” workers, (3) and revisions to existing wage requirements to prevent employers from hiring lower-cost foreign labor instead of US workers. Following the announcement, agencies have released additional details about how the directives will be implemented.

After the President’s announcement, ambiguity about how the Administration would implement the fee temporarily led to significant confusion with some firms instructing H-1B employees to avoid leaving the US or return to the US immediately if they were traveling internationally. On September 21, the Administration clarified that the fee would not apply to existing H-1B visa holders entering the US or to visa renewals, but would instead apply to those registering for the 2026 lottery. The Administration further clarified on October 20 that those converting to an H-1B visa from a different visa (e.g., an F student visa or an L visa for multinational firms bringing a foreign employee to the US) would not be required to pay the fee. The policy allows the Secretary of Homeland Security to issue exemptions in cases where it would be in the national interest. Nationals of Chile and Singapore, who technically receive H-1B1 visas with slightly different terms and limits than H-1B visas, are also exempt under the terms of trade agreements with those countries.

Immediately following the announcement, many stakeholders raised concerns about the burden the fee would place particularly on small firms, universities, and non-profit research institutions. While the exemption of conversions from other visas (particularly F visas) may provide relief in some cases, the observers have noted that the exemptions favor large multinational firms that can use the L visa pathway to avoid the fee and do not benefit universities or domestic firms seeking to hire more experienced employees.

On September 24, the Department of Homeland Security released a proposed rule that would amend the lottery process by which H-1B registrants are selected. According to the proposed rule, the lottery would be weighted in favor of registrants whose wages are high relative to others in that occupation. However, some observers have noted that this approach would not have the Administration’s intended effect since wages would be evaluated within an occupation rather than across occupations. For example, the proposed process would favor a computer support worker making $70,000 because that wage is high relative to the median wage of $62,000 for that occupation. However, it would disfavor a computer scientist earning $120,000 because that is less than the $141,000 median wage for that occupation.

The Department of Labor has also announced an H-1B enforcement initiative, “Project Firewall,” under which the Secretary of Labor will “personally certify the initiation of investigations [into H-1B employer compliance] for the first time in history.” A bipartisan pair of Senators have also sent letters to several major US firms asking for information about their use of the H-1B program.

Conclusion

Policies governing the H-1B visa program are quickly evolving, with changes taking place within a global competition for high-skill talent. For example, the US Chamber of Commerce and a coalition of the American Association of University Professors and other groups have each sued the Administration over the legal basis for the new visa fee. In addition, as some US firms have stated that they will cease hiring through the H-1B program firms in other regions, including the UK, Europe, and the Middle East, have expressed interest in attracting talent that may have otherwise sought to go to the US. China has also announced the creation of a K visa for “exchanges related to education, science and technology, culture, as well as entrepreneurship and business activities,” though additional details have not yet been made available. Still, there is bipartisan recognition of flaws in the program and interest in reforms intended to prevent the displacement of US workers.

The future of the H-1B program will depend on whether reforms can reconcile its dual purposes: enhancing US economic competitiveness while ensuring fair treatment and opportunity for US workers. These enduring trade-offs continue to define the debate that has shaped the program since its inception.