We're about to lose a lot of foreign STEM workers

Summary

The Indicator from Planet Money: “We're about to lose a lot of foreign STEM workers”

Date: September 30, 2025
Hosts: Waylon Wong, Darian Woods
Guest: Michael Clemens (Economist, George Mason University)
Duration (content only): Approx. 10 minutes

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Episode Overview

This episode delves into the new, drastic changes to the U.S. H1B visa program, specifically a newly announced $100,000 fee imposed by the Trump administration on new entrants. The hosts discuss what the H1B program has meant for the U.S. economy, how this change affects individuals and companies, and the broader consequences for America’s future competitiveness in STEM fields.

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Key Discussion Points & Insights

1. Personal Impact: Darian Woods’ Honeymoon Disrupted

• [00:11 - 01:49]
  • Darian recounts receiving alarming visa-related news while on his honeymoon:
    • His wife (an H1B visa holder) received a message from her boss concerned about the new policy.
    • After panic and a missed flight, it was clarified the policy only applied to new H1B applicants.
  • Quote:
    • “So we take this very panicked, tearful trip to the Barcelona airport... we're reconsidering like, you know, what country do we live in?” – Darian Woods [01:01]

2. The H1B Visa Program: Origins & Purpose

• [03:37 - 04:44]

  • Michael Clemens frames H1B as the main pathway for high-skilled, often STEM, foreign workers into the U.S. since 1990.

  • The annual cap is 85,000 visas, but more are given due to exemptions for non-profits and academia.

  • The program requires employers to try hiring U.S. workers first and sets minimum wage bands.

  • Quotes:

    • "Essentially, it is our largest bridge between the high skilled talent of the world and the US economy." – Michael Clemens [03:54]
    • “This is an extraordinarily highly regulated program.” – Michael Clemens [04:44]

3. H1B’s Economic Impact:

• [04:55 - 06:42]

  • Major increases and decreases in visa caps have allowed economists to study H1B’s effects.

  • Evidence is overwhelming that H1B workers bring major benefits:

    • More patents filed, more startups founded, higher survival of businesses
    • Broad-based increases in U.S. productivity, not just for STEM jobs but supporting industries

  • Quotes:

    • “Economists have shown that H1B workers cause higher productivity for the whole US economy.” – Michael Clemens [05:20]
    • “One study published in 2015...concluded that the program was responsible for 30 to 50% of all the productivity growth that happened in the US during that time.” – Darian Woods [05:56]

  • Clemens notes this is a universal finding in respected research:

    • “We're talking about a highly vetted piece of research that took years. And many, many other studies have corroborated exactly this effect.” – Michael Clemens [06:20]

4. The Wage Debate

• [06:42 - 07:40]
  • There’s consensus that H1B visas boost overall productivity.
  • Less agreement on effect on American wages:
    • Research shows some competing tech workers might see slower wage growth, not wage cuts.
    • “Growing less than other people is not the same as going down.” – Michael Clemens [07:12]
    • The productivity effect can still mean wage growth for all, but to varying degrees.

5. Built-in Limitations of H1B: Worker Flexibility

• [07:40 - 08:40]
  • H1B visas typically tie workers to sponsoring employers, which reduces the worker’s bargaining power and can depress wages.
  • “Anything that ties workers to employers reduces wages because it reduces your outside option.” – Michael Clemens [08:23]

6. Why the New $100,000 Fee Is a Big Problem

• [08:40 - 09:35]

  • The new fee is a sharp jump from previous charges ($2,000–$5,000).

  • Many non-profit and academic employers can’t afford it; even tech firms face uncertainty.

  • The arbitrary, potentially ever-increasing nature of the fee acts as a "risk tax" that deters both workers and companies.

  • Quote:

    • “People aren't going to want to invest their futures in a visa program that could just be shattered at any minute based on the arbitrary whims of politicians.” – Michael Clemens [09:08]

7. Global Competition for STEM Talent

• [09:35 - 10:04]

  • Other countries (Canada, UK, China) are actively courting the high-skill immigrants America is now turning away.

  • Possible long-term consequences for U.S. leadership in fields like artificial intelligence.

  • Quote:

    • “If... you see China racing ahead in artificial intelligence... and you wanted to look back and say, well, is there anything the United States could have done differently? ... this month of 2025 would be a great place to look.” – Michael Clemens [09:48]

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Notable Quotes & Memorable Moments

• Wedding Gift from the Trump Administration:
  “Well, this was a lousy wedding gift from the Trump administration.” – Waylon Wong [01:49]
• Economists’ Envy:
  “Is this the kind of study that you as a fellow economist, look on with envy where you're like, oh, I wish I had structured a paper like that?” – Waylon Wong [06:12]
• Long-lasting Personal Impact:
  “I will remember September 2025 very clearly.” – Darian Woods [10:09]

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Important Timestamps

• [00:11 – 01:49] — Darian’s honeymoon story and initial confusion/fears about the visa change
• [03:37 – 04:44] — How H1B works and why it exists
• [04:55 – 06:42] — Economic impacts and overwhelming research consensus
• [06:42 – 07:40] — Wages and competing interests
• [07:40 – 08:40] — Worker flexibility and wage suppression
• [08:40 – 09:35] — The new fee’s practical and psychological impact
• [09:35 – 10:04] — Global competition and U.S. risks

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Tone & Takeaways

The tone of the episode is urgent but analytical, mixing Darian’s personal anxiety and disruption with the measured, research-driven insights of Michael Clemens. The hosts use both humor and candor:

• They highlight the human cost (Darian’s honeymoon panic) alongside the big-picture policy and economic shifts.
• The key takeaway: Draconian changes to H1B—particularly unpredictable, high costs—threaten America’s long-term innovation ecosystem at a moment when other nations are eagerly recruiting these workers.

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For Listeners

This episode is essential context for anyone following immigration policy, STEM workforce trends, or U.S. innovation competitiveness. It’s a sobering, concise look at how a seemingly wonky policy decision can have sweeping effects for individuals and the entire economy.

Transcript

[Sponsor/Advertiser]

Npr.

[Waylon Wong]

This is the Indicator from Planet Money. I'm Waylon Wong and I'm joined by Darian woods, freshly back from his honeymoon. Congratulations. Hi.

[Darian Woods]

Thank you.

[Waylon Wong]

How was your trip?

[Darian Woods]

It was mixed. So most notably I was on the beach with my now wife and she gets a text message from her boss and it's saying, are you in the country?

[Waylon Wong]

Oh my gosh.

[Darian Woods]

And we're like, what? What? What happened? And so we look at the news and Donald Trump has announced that there is this new huge hundred thousand dollar fee for new entrants into the country for people with H1B visas. And my wife is on an H1B visa.

[Waylon Wong]

Oh my gosh. This was such a huge news story last week and you were living it.

[Darian Woods]

I could not escape the news. It was very frustrating just as you're trying to unwind. And so we take this very panicked, tearful trip to the Barcelona airport and we're reconsidering like, you know, what country do we live in? It's really stressful. And we missed the last flight out of Barcelona to the US before the deadline. And so we're just thinking, what do we do now?

[Waylon Wong]

Oh my gosh, Darian, what a nightmare.

[Darian Woods]

Yeah. And it was actually good news that we missed that flight because we still had a couple of days on our honeymoon left. And we later discovered that there was a clarification that actually this didn't apply to existing visa holders as only for new applicants for H1B visas. And so, yeah, we resumed our honeymoon the best we could.

[Waylon Wong]

Oh, Darian. Well, this was a lousy wedding gift from the Trump administration. And Darian, actually your wife is one of millions of workers that have come to the US under this visa program in the last few decades. It's a program designed to attract educated, credentialed foreign workers to the US and now the Trump administration is changing it drastically.

[Darian Woods]

Yes. So today on the show, an economist explains the impact the H1B visa program has had on the US economy. Economy and native born workers. And what the new hundred thousand dollar fee could mean for the future of the program.

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[Waylon Wong]

The H1B visa program has been in place since 1990. Michael Clemens is an economist at George Mason University who studies immigration and he says the program is the prime primary way that high skilled immigrants come to the U.S. these are people with college degrees or specialized knowledge in technical fields.

[Michael Clemens]

Essentially, it is our largest bridge between the high skilled talent of the world and the US economy.

[Darian Woods]

The program has an annual cap of 85,000 visa holders. Michael says in a typical year, the number of people getting these visas is more than 100,000. That's because some non profit and academic employers are exempt from the cap.

[Waylon Wong]

The majority of the H1B visa holders work in STEM fields like computer programming, scientific research and medicine. Many of them initially come to the US as college students and then stay in the country to work.

[Darian Woods]

Michael says the program has a lot of rules in place. Besides the annual cap, there are bands at which the wages have to be. Employers have to show that they looked intensively for a US Worker for the position and they have to pay a fee if they used a disproportionate number of visas.

[Michael Clemens]

From the very beginning, a lot of American lawmakers were concerned about admitting foreigners to the US labor market and what that would do. This is an extraordinarily highly regulated program.

[Waylon Wong]

The H1B visa program has changed in size over the years. Congress significantly increased the annual cap in the late 90s and cut it in 2004. These big swings created a natural experiment for economists to study what happened in communities that saw influxes of foreign STEM workers. And Michael says the evidence shows that H1B visa workers lead to more patents, more businesses getting started, and longer survival of startups.

[Michael Clemens]

This is not he said, she said in the literature. This is really a universal finding of serious economic research on this subject. Economists have shown that H1B workers cause higher productivity for the whole US economy. It really makes sense when there is an innovation hub where people are making new startups and building entire new industries. That doesn't just mean more jobs for engineers, it means more jobs for childcare workers and farm workers who are picking the salads that those people are eating at lunch and security workers and construction workers and everybody else.

[Darian Woods]

One study published in 2015 looked at the 20 year period from when the H1B visa was created. And the economists concluded that the program was responsible for 30 to 50% of all the productivity growth that happened in the US during that time.

[Waylon Wong]

Is this the kind of study that you as a fellow economist, look on with envy where you're like, oh, I wish I had structured a paper like that?

[Michael Clemens]

Oh, yes. I mean, it's in the Journal of Labor Economics, which is the top journal of labor economists all around the world. You have to give your spleen to get into that journal. It takes. We're not talking about a blog post where somebody put together some numbers. We're talking about a highly vetted piece of research that took years. And many, many other studies have corroborated exactly this effect that they have found.

[Darian Woods]

Michael says there's strong consensus among economists that H1B visas boost productivity. A less settled question, he says, is what happens with wages? The Trump administration says the H1B visa program undercuts the wages of American workers.

[Waylon Wong]

Now, Michael says there is research showing that without H1B workers, competing American tech workers would have seen higher wages. But he points out that this is still, still in an environment of wages going up across the board.

[Michael Clemens]

A greater supply of one particular kind of worker can make the wages of directly competing workers grow less. But growing less than other people is not the same as going down. This is one of those cases where two things can be true. It is possible for the productivity effect of all of these talented high skilled foreign stem workers working together with Americans can raise everybody's wages while not raising everybody's wages to the same amount.

[Waylon Wong]

Is this something that could be addressed through policy? Or is that kind of like a baked in trade off to accept because we want all of these huge productivity gains that has been documented. Does that make sense?

[Michael Clemens]

Yes, it makes sense. It matters a lot. And it's not baked in. What's crucial to understand is that the H1B visa program needs reform. And one of the ways that it desperately needs reform is is that the H1B visa de facto ties workers to employers.

[Waylon Wong]

This is because H1B workers have to be sponsored by employers. And if they want to stay longer term, their employer had to sponsor their green card. That process starts over if workers switch jobs.

[Michael Clemens]

Anything that ties workers to employers reduces wages because it reduces your outside option. Why don't our employers just pay us less? Because we could leave and go somewhere else. H1B workers often can't. That can depress wages in this program, and that depresses wages in the industry.

[Darian Woods]

So Michael thinks more flexibility in the program could help raise wages for workers through more competition among employers. This new fee, he says, is not the answer.

[Waylon Wong]

The new fee is a huge bump from the $2,000 to $5,000 that employers used to pay. Many nonprofits and academic institutions can't afford $100,000. And even if deep pocketed tech companies could techn, Michael says, that's not really the point either.

[Michael Clemens]

This tax is much more than $100,000 because it's a risk tax and is completely arbitrary. Next week it could be $250,000, and the week after that it could be a million dollars. People aren't going to want to invest their futures in a visa program that could just be shattered at any minute based on the arbitrary whims of politicians. And companies likewise are not going to want to invest in work streams that depend on this visa due to that uncertainty.

[Darian Woods]

Meanwhile, Canada, the UK and China are adapting or launching new visa programs aimed at attracting foreign STEM workers, exactly the kind of workers that the US Is turning away.

[Michael Clemens]

If you in years ahead, when you see China racing ahead in artificial intelligence and other areas and you wanted to look back and say, well, is there anything the United States could have done differently? There is, and this month of 2025 would be a great place to look.

[Waylon Wong]

Well, this month of 2025 has been a very memorable one for you, Darian.

[Darian Woods]

It has indeed. I will remember September 2025 very clearly.

[Waylon Wong]

This episode was produced by Corey Bridges with engineering by Jimmy Keeley. It was fact checked by Sierra Juarez. Kate Kincannon edits the show and the indicator is a production of npr. Your honeymoon scrapbook is like a going to the airport in a panic.

[Darian Woods]

Here's all the speeding tickets I got in Barcelona.

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