H-1B Visa Reform: 2009 All Over Again?

Kristen here. When I joined Morgan Stanley in 2007, at the height of the then-credit boom, getting an H-1B visa was no small feat. 

What is an H1-B visa? The H-1B visa program allows foreign workers who are highly skilled in areas like tech, finance and medicine to work in the US. As a result, these are the exact visas that international students most commonly need to stay in the US post graduation if their goal is to work on Wall Street. 

In 2007, demand was sky-high. These visas are allocated through a lottery system with a cap, so even highly-qualified international candidates had no guarantee of obtaining one successfully. Many of my analyst-class friends did not secure visas at the time. They glibly joked after a few months on the desk in NYC that they were going to be “deported” to Morgan Stanley’s international offices in London, Singapore, or Hong Kong to complete their two-year analyst program.

But by 2008, the world had changed. Setting aside the brief moment when banks who had taken TARP funds were worried about losing access to the H1B program altogether (a story for another day), the financial crisis caused hiring to collapse, and with it, the pressure on the visa system. By the time the 2009 analyst class rolled in, demand had fallen so sharply that getting an H-1B was almost a given. 

Fast-forward to today. In 2024 alone, U.S. financial firms filed nearly 12,000 H-1B requests. But after a meeting with tech CEOs at the white house, President Trump signed an executive order to completely rewire the H-1B visa system. 

The headline: a $100,000 fee on new H-1B entrants.

Current visa holders and renewals are exempt from the first charge, but anyone applying from outside the U.S. faces this steep new cost — not just once, but every year to renew for up to six years. The order also directs DHS to move away from a pure lottery system toward a “merit” or wage-weighted selection process.

The intent is clear. It’s designed to discourage entry-level or lower-wage foreign hires and prioritize high-earning, “national interest” roles. For employers, this reshapes the math. Sponsoring a junior analyst at $100k per head is hard to justify. Sponsoring a senior quant with unique skills? Still worth it. 

It also places international firms at a huge advantage. Similar to what we saw in 2007, they’ll still recruit top graduates from around the world, but more of those hires will go through the two year analyst program in London, Hong Kong, or Singapore rather than New York. The jobs won’t disappear, they’ll just shift geography. Firms can then take advantage of other visas that apply to lateral transfers, like the L-1 intracompany transferee visa.  

Where this really hits hard is at smaller, non-global firms. Without a foreign affiliate office to park talent, many will simply stop hiring non-Americans at the junior level. 

We expect to see four knock-on effects for our industry:

• Offshoring Acceleration: Teams may expand more aggressively abroad rather than in U.S. offices.
  

• Reduced Competition: The result is the big firms who have the international presence likely won’t have to change much. They’ve been through this during boom years when getting an H-1B visa is difficult.
  

• Fewer International Analysts: This will likely lead to banks favoring Americans over international students especially at smaller firms, reducing diversity and possibly lowering the quality of candidates. This last part is a little bit debateable, only because there are SO MANY AMAZING candidates who are applying for very few roles at the junior level. But banks have been notoriously overhiring and then culling the ranks to weed out any weakness. Without putting candidates through the rigors of the job, it’s hard to discern the best long term hires. And while the average international candidate isn’t necessarily superior to the average American candidate, international candidates who are able to jump through all the hoops necessary to make it to the US tend to be the best of the best from their countries. The U.S. is able to attract the best and brightest for college, but is putting policies in place that discourage them from staying here to work. As Scott Galloway puts it: the US is basically like the football team who always gets the first round draft pick…which we are now essentially giving away.
  

• Ease of Obtaining H-1Bs: This will significantly lower demand for H-1Bs across the board thereby theoretically making it easier to get one, just like we saw in 2009 when demand was low. Cynics have observed that this change followed directly on the heels of President Trump’s summit with the heads of big tech companies. They likely had been frustrated by how difficult it was to get these visas for their top talent. Since absorbing the hit of $100k is barely a rounding error to these companies awash with cash, some speculate this was designed to stack the odds in their favor.

Personally I don’t think this will be devastating to say, a Morgan Stanley, JPMorgan, or Goldman Sachs — the premier global institutions. At the margins, American students may find it a tiny bit easier to get entry level jobs at banks and financial institutions with mostly a US presence. On the flipside, smaller firms may find themselves at a disadvantage relative to the big players with a global presence. And the center of financial gravity may begin to shift away from the US to abroad.

Catch our full breakdown on the podcast here!