Trump's H-1B change, immigration crackdown could send jobs overseas

The big picture: There are two main forces at work here:

• The crackdown on immigration broadly reducing labor supply.
• An aging population and a shrinking native-born workforce.

Zoom out: The White House argues that cutting back on H-1B visas and immigration is a way of "protecting American jobs." U.S. firms will have to hire citizens.

• But there aren't a lot of workers just sitting around on the sidelines to hire, as Axios' Neil Irwin reported.
• Employers say there's a dearth of the skilled talent they need for specific roles that pushes them to hire overseas.

For the record: "There is no shortage of American minds and hands to grow our labor force," White House spokeswoman Abigail Jackson said in a statement.

• A White House official tells Axios "we remain committed to cementing America's technological and scientific dominance."
• The White House also points to an Executive Order in April directing agencies "to modernize, integrate and re-align programs to address critical workforce needs in emerging industries."
• The order called for funding for apprenticeships — earlier this week the Labor Department announced $25 million in funding for such "workforce training" programs in Alabama and Colorado.

Between the lines: It's not clear yet what industries the apprenticeships will ultimately serve. Nor is it clear how willing the administration will be to prepare workers for a broader transition to an AI economy

• "I think the notion that the government necessarily has to hold the hands of every single person getting displaced actually underestimates the resourcefulness of people," White House adviser Jacob Helberg said during an Axios' event earlier this month.
• "This is an incredibly contradictory approach," says Giovanni Peri, an economist at University of California, Davis who studies immigration.
• "Is this going to have real consequences on U.S. science, technology and innovation? Yes."

Follow the money: Companies could spend more training workers.

• Yet even when companies do that training they're running into hurdles: Earlier this month, the federal government conducted an immigration raid on foreign workers who were setting up a battery plant that would ostensibly drive domestic employment in the long-term.

Friction point: Most employers would rather hire U.S. citizens. It's much simpler to deal with the paperwork, for starters. To hire a worker on an H-1B visa, firms must enter a lottery where the odds are already not great.

• Companies do it "because they really do need workers and there is a lack domestically," says Neil Bradley, executive vice president at the U.S. Chamber of Commerce.

What to watch: Employers are trying to figure out what's next. "We're just in the beginning of the discussion," Bradley says.

• If the policy stays in place, companies will need to decide if they'll absorb the $100,000 one-time cost per worker to bring in foreign talent. That would mean they would have less to invest in the rest of their workforce, Bradley notes.
• It also raises the possibility that companies move certain jobs outside the country — a broader loss to local economies and a hit to employment.
• In the past, when the U.S. tightened restrictions on hiring foreign workers, multinational companies offshored that work, per a widely cited 2023 paper that looked at H-1B data and company activity.

The intrigue: Employers are also looking to AI and automation to offset labor shortages — but that path may be rockier, as immigrant workers play a crucial role in the AI sector.

The bottom line: The U.S. has long relied on immigrants' skills to drive economic growth. Now, that pipeline is under threat.