The US H-1B Fee Hike: A 'Blunt Instrument' Targeting Wage Arbitrage with Global Consequences
UPSC Relevance
Prelims: International Relations (Bilateral relations - India-US); Indian Economy (Indian Diaspora, Remittances, Service Sector Exports, Labour Force); S&T.
Mains:
General Studies Paper 1 (Society): Effects of globalization on Indian society.
General Studies Paper 2 (International Relations): Effect of policies and politics of developed countries on India’s interests; The role of Indian diaspora.
General Studies Paper 3 (Economy/S&T): Indian Economy and issues relating to employment; Effects of liberalization on the economy.
Key Highlights from the News
America's newly imposed $100,000 H-1B visa fee increase aims to disrupt the business models of both Indian IT giants and American tech companies.
The primary goal of this policy is to eliminate wage arbitrage, the practice of employing Indian engineers at lower salaries than American workers.
However, the article strongly criticizes this policy as a "blunt instrument" that will harm America's own innovation ecosystem.
Key Consequences:
Talented foreign students studying in American universities may choose to go to other countries like Canada, Australia, and the UK after graduation.
Small and medium-sized companies will not be able to afford these higher fees, which may only benefit large tech companies.
When companies cannot hire foreign workers in the US, they may completely offshore their operations, leading to job losses within America.
The author argues that a more nuanced approach, such as setting fees based on salary levels, would have been better.
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