Walmart just made a smart move that will upend the skilled foreign labor market. In particular, they’ve already committed to ceasing to make job offers to any candidates who would need H-1B visas. This decision comes in response to an executive order, signed by former President Donald Trump, calling for deregulation. The order implements a $100,000 charge for new entrants into the H-1B program.
Under the new order, effective immediately, employers must pay this hefty fee to process H-1B visa applications for skilled foreign workers. Trump’s administration has cited “abuse” of the H-1B program to justify the reversal. First, they claim that it exploits the American workforce by allowing firms to replace American workers with cheaper foreign labor.
The H-1B visa program is crucial for many industries in the United States, employing roughly 1.6 million individuals across the country. It’s been most widely adopted among companies that fall under the umbrella of technology and engineering. In fact, in recent years, India has filled more than 70% of the H-1Bs. At the same time, China is now the second-largest U.S. source, accounting for about 12%.
The impact of Trump’s order has created a huge controversy. Critics have claimed that the new fee increases would deter companies from hiring these skilled foreign employees. This misstep would constrain their ability to compete in today’s global marketplace. Specifically, they claim that this Europeans-only restriction will hurt U.S. economic growth and innovation in a number of ways.
Supporters of the order with the H-1B program are stupid, and is indispensable to attracting the best and brightest talent from around the world. This is a popular worldview among prominent business leaders, including Elon Musk. They make the moral case that a diverse workforce spurs innovation and keeps our country competitive.
Walmart’s decision to pause hiring H-1B candidates reflects broader concerns among business groups regarding the financial implications of Trump’s new policy. No wonder the U.S. Chamber of Commerce is staunchly against the idea of the fee. In doing so, they warn that it will force American firms to increase wages or employ fewer skilled workers.
US Commerce Secretary Howard Lutnick commented on the implications of this decision, stating:
“The company needs to decide… is the person valuable enough to have a $100,000-a-year payment to the government, or they should head home, and they should go hire an American.” – US Commerce Secretary Howard Lutnick
As Walmart reevaluates its hiring strategy amid these changes, other companies may reconsider their reliance on the H-1B visa program. Whether the long-term effects of this executive order will be as helpful to democracy as we hope remains an open question. All the while, businesses are already struggling with creating a competitive workforce amid new economic realities.