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The United States has enjoyed an extraordinary competitive advantage in the global economy: our ability to attract the world’s most talented and ambitious individuals. This isn’t an accident of history—it’s the result of what I call America’s exorbitant privilege in the global talent market.
Consider the evidence. While immigrants represent just 14 percent of the US population, they comprised 23 percent of the total workforce in STEM occupations in 2019. As of 2022, the four most valuable private, venture-backed US companies had immigrant founders, as did three of the most valuable public companies globally. Approximately one-quarter of new employer companies in the United States are started by immigrants, and first- and second-generation immigrants founded 46 percent of Fortune 500 companies.
The contribution of immigrants to innovation is extraordinary (figure 1). Roughly 26 percent of US-based Nobel Prize winners from 1990 through 2000 were immigrants. When Meta built its Superintelligence team, more than 75 percent came from immigrant backgrounds. This pattern appears at the highest levels of American business: Satya Nadella (Microsoft), Sundar Pichai (Google), and Eric Yuan (Zoom) all arrived in America on H-1B visas before ascending to lead some of the world’s most valuable companies.
The success of immigrants creates spillover benefits for American society. The enterprises they found and lead increase GDP and employ hundreds of thousands of US workers—meaning immigration policy isn’t zero-sum, but a force multiplier for American prosperity.
The self-selection effect
This remarkable track record reflects what economist Thomas Sowell identified as the self-selection effect of immigration. While 96 percent of the world’s population remain in their country of birth, the 4 percent who migrate display unique characteristics: higher ambitions, greater willingness to take risks, and stronger entrepreneurial tendencies.
Recent cross-national evidence confirms that migrants are positively selected on human capital relative to nonmigrants, with US-bound migrants showing especially strong selection. According to a 2023 Gallup World Poll data, when adults across 142 countries are asked where they would move permanently if given the opportunity, nearly 20 percent select the United States—more than twice the share choosing Canada, the second most popular destination (figure 2).
Even among return migrants—who make up just 3.4 percent of skilled laborers within five years—measured ability remains above the average for nonmigrants in their countries of origin.
Those who stay in the United States represent the most talented subset of an already exceptional group.
This positive selection reflects two meritocratic filtering mechanisms: universities and employers. Many successful immigrant high-skilled workers arrived as graduate students, the entry point for most skilled immigration. At this level, universities raise the bar for international applicants, who face employment constraints due to visa restrictions. Evidence shows that admission rates for immigrant graduate students are lower than for domestic students—top programs cannot afford to admit international students unlikely to succeed in the job market.
Similarly, firms hiring international workers are profit-maximizing entities seeking the most productive employees available. Market pressures ensure they cannot afford mediocrity. These two mechanisms have historically ensured that international skilled workers are positively selected on ability.
Beyond technical skills, immigrants bring attitudes—ambition, drive, work ethic—that make them exceptional contributors. One frequent complaint captures this reality: international students often work harder than domestic counterparts because their employability determines whether they can remain in the United States.
Some view this as unfair competition requiring government intervention to protect domestic workers. But this zero-sum thinking misunderstands how labor markets work.
The ambition and work ethic that drive immigrant success don’t displace American workers—they create opportunities for them. Companies founded by immigrants employ hundreds of thousands of Americans. Innovations developed by immigrant engineers benefit American consumers and workers across industries.
The $100,000 problem
The Trump administration’s proposal to levy a $100,000 fee on H-1B visa sponsorships would fundamentally undermine this meritocratic system by introducing an arbitrary financial barrier unrelated to actual talent.
Rather than celebrating exceptional work ethic and leveraging it for national advantage, this policy would make it financially prohibitive for firms to hire ambitious individuals willing to work hard. In the name of leveling the playing field, we would price out the very qualities that drive innovation and economic growth.
This isn’t protecting American workers—it’s denying them the spillover benefits that immigrant-driven enterprises create while shielding those unwilling to compete on merit.
The fee’s burden falls perversely: it would devastate precisely the innovative startups that drive American dynamism while barely affecting established giants. For an early-stage startup hiring ten skilled engineers, this represents a $1 million burden that could determine survival—exactly the companies where immigrant founders have historically had their greatest impact. For Google, Microsoft, and Amazon, $100,000 represents a rounding error they might even welcome as a barrier preventing startup competitors from accessing the same global talent pool.
This dynamic perverts the market. Instead of talent allocation being determined by who can make best use of skilled workers, allocation would be determined by who has the deepest pockets today. We would be subsidizing incumbents at the expense of disruptors.
The fee also misunderstands how talent identification works. While leaders like Pichai or Elon Musk were undoubtedly promising, it would have been impossible for their initial employers to predict their eventual impact with certainty.
In a competitive economy, American workers benefit most when they compete on merit within a system that attracts the world’s best talent, not one that relies on artificial barriers advantaging large firms over small ones.
Real problems deserve real solutions
The H-1B program has legitimate critics, and some critiques deserve serious consideration. It’s essential to be clear about what’s actually broken—and what isn’t.
Recent data appear damning at first glance: only 15.8 percent of Labor Condition Applications were filed at Wage Level IV (the highest tier), while 15.4 percent were filed at Level I—the lowest tier. Critics point to these statistics as evidence that H-1B workers are concentrated at the bottom of the wage distribution, potentially undercutting American workers.
But context matters. Much of this apparent wage discrepancy reflects a measurement problem, not abuse. The prevailing wages to which H-1B salaries are compared aren’t adjusted for years of experience. The vast majority of H-1B beneficiaries are in their mid- to late twenties—recent graduates at the entry point of their careers. This is actually how high-skilled immigration should work: bringing in talented individuals early, when they’re most likely to build their careers and lives in America.
The problem isn’t that young H-1B workers earn less than experienced Americans—it’s that comparing their salaries to the entire workforce makes legitimate early-career hiring look suspicious in the data.
The real abuses lie elsewhere. Some H-1B visas are genuinely misused by IT consultancies exploiting outsourcing loopholes to replace American workers. The Disney and Southern California Edison cases revealed how companies can technically comply with H-1B rules while using third-party contractors to displace domestic employees. These practices deserve aggressive enforcement.
The lottery system itself is also problematic. While immigrant selection remains positive overall, it’s absurd that an online master’s degree holder has the same chance as a PhD from MIT or Stanford. We could do far better with merit-based selection that accounts for educational quality, specialized skills, and employer demand.
What reforms would actually help? Rather than imposing a blunt $100,000 fee that punishes legitimate early-career hiring alongside actual abuse, we need targeted solutions:
Close outsourcing loopholes by requiring companies to directly employ H-1B workers rather than using third-party contractors as intermediaries.
Improve wage requirements with experience-adjusted benchmarks that distinguish between entry-level and senior positions.
Implement merit-based selection that replaces the random lottery with criteria like educational attainment, field of study, and offered salary.
The global competition
The stakes extend beyond immediate economic impacts. Canada has no numerical caps on skilled immigration and explicitly markets itself to H-1B holders. The UK launched a “scale-up visa” targeting high-growth companies. Australia offers a direct pathway from student visa to permanent residence.
Research shows that when visa restrictions are tightened, firms relocate work abroad. Britta Glennon’s study found that for every H-1B visa rejection, firms hired 0.4 employees abroad on average. Microsoft’s 2007 decision to open a software development center in Vancouver, explicitly citing US immigration issues, perfectly illustrates this dynamic.
We’re not just losing individual workers—we’re losing entire industrial ecosystems.
America’s choice
We can continue leveraging America’s exorbitant privilege in the global talent market, or we can retreat into protectionism that hands our competitive advantages to countries eager to welcome the talent we reject. If the United States wants to remain the world’s innovation leader, it must continue to welcome those willing to take the leap, cross oceans, and devote their lives to discovery. Our edge is selection from a larger global pool. Closing the door shrinks our innovative future. The choice is openness or stagnation.
Our immigration policies need reform—but the goal should be to make the system fair, preserving our ability to attract top talent. A $100,000 fee for an H-1B visa accomplishes neither objective. It doesn’t target outsourcing firms or wage abuse—it simply makes America less attractive to exactly the people who have historically driven our prosperity while tilting the playing field toward large, established firms at the expense of the entrepreneurial companies that have been the engine of American innovation.
In a globally competitive economy, the countries that win will be those that can assemble the best teams, regardless of where team members were born. The United States has spent decades building this capability. We abandon it at our peril—and we certainly shouldn’t abandon it in a way that strangles the startup ecosystem that made it possible in the first place.
Paola Sapienza is the J-P Conte Family Senior Fellow at the Hoover Institution, where she co-directs the J-P Conte Initiative on Immigration. She is a founding member of the Hoover Program on the Foundations of Economic Prosperity.