Tech and politics clashed over Christmas when a spat erupted between Trump-lieutenant Elon Musk and the President Elect’s nativist voter base. At issue was the H1-B visa program, which makes it easier for American firms to recruit non-citizens for highly-skilled roles.
Tech companies say it’s vital to attracting the world’s best and brightest. MAGA fundamentalists say the visas are being abused, displacing US-born employees with cheap immigrant labor.
Musk responded with an expletive-laden rant and vowed to go to war. However, the sustained furor from one of Trump’s most loyal, and vocal, voting blocks has rattled tech leaders.
The reason I’m in America along with so many critical people who built SpaceX, Tesla and hundreds of other companies that made America strong is because of H1B.
Take a big step back and FUCK YOURSELF in the face. I will go to war on this issue the likes of which you cannot…
— Elon Musk (@elonmusk) December 28, 2024
Many now worry that the incoming administration might act to restrict the program – or even kill it. How is America’s tech sector benefiting from H1-Bs, and what skill sets could be at risk if they go? We consider the evidence.
Key Takeaways
- Elon Musk upset the MAGA faithful when he angrily defended America’s HB-1 visa system, which Tesla and other tech giants rely on for hard-to-find specialist talent.
- Right-wing influencers were outraged, accusing Musk of betraying one of Trumpism’s cornerstone beliefs.
- H1-Bs, they claim, have been subject to abuse and undermine wages and working conditions for US citizens.
- Musk has since said the H1-B program needs reform, but he and Donald Trump appear to be standing by it.
Why Are Trump Supporters Angry About H1-Bs?
It all kicked off on Christmas Day when right-wing activist and social media influencer Laura Loomer criticized Trump’s choice of Sriram Krishnan, an Indian-born US technology entrepreneur, as senior White House policy adviser on AI.
Deeply disturbing to see the appointment of Sriram Krishnan @sriramk as Senior Policy Advisor for AI at the Office of Science and Technology Policy.
It’s alarming to see the number of career leftists who are now being appointed to serve in Trump’s admin when they share views… https://t.co/pf0WiViy32 pic.twitter.com/nR0TkZpNK7
— Laura Loomer (@LauraLoomer) December 23, 2024
At issue was Krishnan’s past support for lifting caps on ‘green cards’ (work visas) and making it easier for tech firms to bring more skilled foreign workers into the US. According to Loomer, that put him on a collision course with Trump’s America First agenda.
She and other MAGA figures accuse Silicon Valley of using H1-Bs as a mechanism to keep wages down and workers docile. Rather than giving innovative firms access to the world’s top minds, they argue the program creates a class of low-paid indentured servants who are utterly dependent on the goodwill of employers if they want to stay in the country.
Musk, who will soon be co-chief of Trump’s DOGE government waste watchdog, took to X and pushed back, hard:
Your understanding of the situation is upside-down and backwards.
OF COURSE my companies and I would prefer to hire Americans and we DO, as that is MUCH easier than going through the incredibly painful and slow work visa process.
HOWEVER, there is a dire shortage of extremely…
— Elon Musk (@elonmusk) December 25, 2024
So who’s right?
What H1-B Workers Bring to the Table
There’s no denying immigration’s impact on US tech. A quick scan of America’s top 10 technology firms shows five have foreign-born CEOs.
Microsoft’s Satya Nadella hails from India, as does Google chief Sundar Pichai. Jensen Huang of Nvidia came to the US from Taiwan. And let’s not forget Tesla’s South African/Canadian CEO Elon Musk. They’re all immigrants in an industry numerically over-represented by people from beyond America’s shores.
At least a quarter of America’s STEM workforce is foreign-born.
But there may be a good reason for that. An analysis from the free-market Cato Institute claims that H‑1B workers “have an especially big impact on American innovation.” They give a boost to R&D, Cato says, while increasing the number of patents and the number of business startups.
In his book The Gift of Global Talent, author William Kerr notes that since 1976, citizens of foreign countries have filed between 25 and 30% of America’s patents. That’s more than double the rate of native-born inventors – largely because foreigners are more likely to have STEM degrees.
Cato cites multiple studies measuring how highly-skilled immigrants deliver direct benefits in terms of tech innovation and productivity – while displacing relatively few native-born workers.
Their presence can also make Americans richer.
- A 2010 study from the University of California San Diego found that Indian IT workers on H‑1B visas increased the wages of American workers by $431 million that year.
- A 2018 study found that H‑1B workers inside tech-focused Big Four consultancies also increased the wages of their native-born American colleagues with the same job title.
- More recently, a 2024 study from the University of Utah found that startups which had all their H1-B visa applications approved in a given year were more likely to survive in the next 5 years.
Complicating the picture are the waves of layoffs that have seen US software and hardware firms shed more than 150,000 jobs since 2022.
Tesla (TSLA), Alphabet (GOOGL), Amazon (AMZN), and Microsoft (MSFT) all downsized significantly in 2024. When so many workers are being sacked, MAGA critics wonder why Musk and others are so adamant about keeping free access to overseas talent.
It’s also clear that some IT outsourcing firms have gamed the system and exploited procedural flaws.
Providing Skill Sets Startups & Unicorns Need
According to the Nolo legal information website, the jobs most likely to qualify for an H1-B visa skew heavily to tech roles, including database administrators, electrical and electronic engineers, industrial and mechanical engineers, software engineers, systems analysts, and programmers. Those occupational families are broad enough to fit the needs of hot categories like semiconductors, data science, AI, cybersecurity, and cloud.
But getting a visa approved by the US Department of Labor isn’t a slam dunk. According to the American Immigration Council, any employer applying for an H1-B must demonstrate that hiring from outside the country won’t harm US workers.
They must make the business case for hiring and promise that bringing on an H-1B worker will not negatively impact the wages and working conditions of US workers in similar roles. Employers must also notify current staff that they intend to hire under the H-1B program.
Since H1-Bs were first created in 1990, Washington has capped the annual number at 65,000, with another 20,000 available to foreign professionals who’ve graduated with a Master’s or PhD from a US university. The bar is set pretty high.
Doesn’t America Have Enough Tech Workers of Its Own?
Judging from the most recent PISA test scores, US schools produce some of the world’s best-performing students in math and science-related disciplines. And lots of them.
So why isn’t that sufficient? Musk and others argue that because America’s tech sector is the biggest and most vibrant in the world, it needs bigger numbers of candidates and the flexibility that only an international talent pool can provide.
New startups pop up daily, while existing firms can grow by double digits from one quarter to the next. Products, platforms, systems, and technologies evolve faster than America’s graduate pipeline can adjust.
That all suggests widening the recruitment net and giving tech firms more freedom to seek the specific skills and aptitudes they need – even if it means continually looking abroad.
How Would Losing H1-B Visas Impact Tech?
While no one can say for sure, the past offers some guidance as to what could happen if access to outside tech talent was suddenly restricted.
A 2024 study from the University of Pennsylvania found that the expiry of an early-noughties lift to the annual H1-B visa cap in 2002 created a tech skills shortage. Big firms with operations in more than one country adjusted by hiring roughly one worker abroad for every H1-B visa application rejected at home.
The authors note that a few years later, Microsoft opened a development center across the border in Canada to take advantage of its northern neighbors’ less restrictive immigration policies. Within 12 months the new site had brought in more than 300 people from over 40 countries.
In December 2023, Samsung was forced to push back the opening date for its Texas chip manufacturing facility. Then in January 2024, Taiwan’s TSMC delayed opening one of its planned Arizona plants. Skilled workforce shortages were blamed for both.
The Bottom Line
Musk, who once held an H1-B visa of his own, has since rowed back on his all-or-nothing defense of the program while Donald Trump has tried to calm things by declaring broad support for his soon-to-be head of DOGE.
On December 28 he told reporters “I have used it many times. It’s a great program.” During his first term, however, Trump put a halt on all new foreign work permits, eliciting cheers from the MAGA grassroots.
Tech leaders worry that more such restrictions might be on the horizon – especially as hardcore anti-immigrationists on Trump’s senior White House team will now be emboldened to keep pressing their case. If the industry keeps pink-slipping workers by the thousands while still bringing in new H1-Bs, expect criticism of the talent visa program to get louder.
FAQs
What is a talent visa?
Who is eligible for an H1B visa in the US?
What is the new rule for H1B visas?
Does US Big Tech depend on foreign tech talent?
References
- Elon Musk on X (X)
- Laura Loomer on X (X)
- Sriram Krishnan on X (X)
- Elon Musk on X (X)
- Foreign-born STEM Workers in the United States (American Immigration Council)
- New report shows the importance of foreign-born talent to the U.S. STEM workforce (NSF)
- Don’t Ban H‑1B Workers: They Are Worth Their Weight in Innovation (CATO)
- The Gift of Global Talent (Stanford University Press)
- Global Talent Flows (American Economic Association)
- The IT Boom and Other Unintended Consequences of Chasing the American Dream (SSRN)
- H‑1B Visas and Wages in Accounting: Evidence from Big 4 Payroll and the Ethics of H‑1B Visas (SSRN)
- Skilled Immigration Frictions as a Barrier for Young Firms (The CGO)
- Layoffs.fyi – Tech Layoff Tracker and Startup Layoff Lists (Layoffs)
- H-1B Visa: How Lower-Paying Firms Game Immigration Work Program Lottery (Bloomberg)
- Types of Jobs Most Likely to Qualify for an H-1B Visa (NOLO)
- 2025 Tech and IT Salaries and Hiring Trends (Robert Half)
- The H-1B Visa Program and Its Impact on the U.S. Economy (American Economic Association)
- PISA Scores by Country 2024 (World Population Review)
- How Do Restrictions on High-Skilled Immigration Affect Offshoring? Evidence from the H-1B Program (SSRN)
- Elon Musk on X (X)
- Elon Musk changes his tune on H1-B visas as he tries to cool raging MAGA civil war over skilled immigration (NY Post)
- Stephen Miller will be Trump’s homeland security advisor in new White House role (npr)