The Trump administration announced Friday that companies trying to hire foreign workers through the H-1B visa program would have to pay $100,000 per worker. It caused chaos over the weekend: Current H-1B visa holders abandoned flights out of the country, fearful they’d have to pay $100k to return, or renew their visas. Foreign students stressed over whether they’ll have job prospects in the U.S. at all after graduation. 

The administration later clarified that this only applies to future H-1B visa applicants and not renewals. The aim of this, they said, is to boost employment and wages of U.S. workers. Will it?

A $100,000 fee is, by all accounts, going to discourage a lot of companies from hiring foreign workers through the H-1B program. What happens next is debatable.

“It might improve the job prospects of certain types of U.S. workers,” said Gaurav Khanna, an associate professor of economics at University of California, San Diego. He’s thinking of computer scientists, for example.

“In the short run, IT (information technology) firms might try to hire a few U.S. born computer scientists,” Khanna said.

Longer term? “It stops the IT firm from growing. And as a result, it doesn’t hire other workers,” he said.

Historically, top science and engineering talent from around the world are drawn to work in the U.S. There may be a trade-off. Research by Patrick Turner, an economist at Notre Dame, suggests H-1B immigration in the ‘90s and 2000s may have limited how much more STEM workers are paid over non-STEM workers. 

But, the innovations created by these workers have benefitted the whole workforce, Turner said.

“Not having those workers in this country means that we miss out on kind of the technological advantages that those workers bring,” he said.

H-1B visas are capped at 85,000 workers per year. In most cases, companies have to enter a lottery to get them. Researchers took a look at companies that don’t get those visas.

“Productivity slows down, firms get smaller, sometimes they go out of business,” said Ethan Lewis, a professor of economics at Dartmouth College.

Startups that aren’t able to hire foreign workers suffer in particular.

“They become less likely to IPO, less likely to have a successful acquisition, less likely to patent,” said Britta Glennon, an assistant professor at University of Pennsylvania’s Wharton School.

Glennon’s research looked at what multinational corporations do when they can’t hire foreign workers.

“Their response is not to hire more American workers, but actually to hire foreign workers at their foreign affiliates instead,” she said.

Glennon said the H-1B system is used by some companies that game the lottery by flooding it with applications to bring in relatively lower-paid IT workers at the expense of, say, highly skilled AI PhDs who are also applying. 

“I don’t think that those are necessarily the types of positions that, you know, Congress was thinking of when they created the H-1B visa program,” Glennon said.

But she said that problem could be solved with something other than a $100,000 fee on H-1B workers of all kinds.