US Govt. Rewards Capitalists with $2bn Bonus for Employing non-US Graduates

The New Observer

The US government’s “Optional Practical Training” (OPT) program pays American companies to employ foreign graduates over the head of Americans, and in the 2017 financial year “swiped” $2 billion from trust funds for the elderly to favor 240,000 alien college graduates over an equal number of U.S.-resident graduates,” a new report has revealed.

The study, produced by the Center for Immigration Studies, said that “employers of foreign students who have a degree from a U.S. institution are given an 8.25 percent tax break if they hire an alien, rather than a U.S. college grad with the same skills, and paid at the same salary.”  

Worked out with FY 2017 data, this means that some 240,000 American workers are adversely impacted by this program (shouldered out of jobs by the subsidized aliens), the CIS report said, adding that the subsidies to hire the foreign alumni are extracted from the Social Security, Medicare, and Unemployment Insurance Program trust funds were estimated to be in the area of $1.98 billion.

The program has had silent but bipartisan support; it was created by the Bush II administration without any congressional authorization, was subsequently expanded by the Obama administration, and has been tolerated by the Trump administration.

The employers benefiting from the subsidies directly, and universities benefiting indirectly, know all about the program, which is all but unknown to the older Americans subsidizing it, and is similarly unknown to the young U.S. college grads who are hurt by it.

“Given this twisted political dynamic, inertia, and the total silence of the media on this point, the program persists and grows each year,” the CIS report continued.

The report went on to quote what it called an “obscure” United States Citizenship and Immigration Services (USCIS) document that shows the number of approvals of Employment Authorization Documents (EAD) by category, “EADS by Classification and Basis for Eligibility, Oct. 1, 2012 – June 29, 2017.”

This document shows the numbers of OPT/EADs (usually good for one year) issued to F-1 college graduates, as well as the number of extensions for F-1 alums who had studied science, technology, engineering, or math (STEM), and each of these, recently, has been good for two more years.

The CIS research added the most recent regular OPT and STEM/OPT estimations to the prior year’s STEM extension data to get a current estimate of the number of subsidized jobs held by OPT aliens (and thus denied to U.S. workers) at the end of FY 2017.

Data were available for only the first nine months of FY 2017 so, assuming a constant flow of these applications, the CIS researcher multiplied the available number by 1.333, which produced this:

* Estimated regular OPT for FY 2017: 153,646

* Estimated STEM extension for FY 2017: 44,073

* Reported STEM extensions for FY 2016 : 45,184

* Total: 242,903

This the CIS rounded down to 240,000 to account for some returns to the old country and some movements to other visas, primarily the H-1B, but probably some conditional green cards for those newly married to citizens or green card holders.

Then the CIS took the 240,000, and applied a guess of $50,000 a year for these jobs (it is probably rather higher for the STEM people) and multiplied to get a rough idea of the total wages. It comes to about $12 billion.

Since employers and employees — routinely — each contributes 8.25 percent of the salary to the trust funds, this indicates a loss to the funds of 16.5 percent of the whole, or a total annual loss of $1.98 billion.

“So the government is giving almost $2 billion in tax breaks to American employers if they hire alien — not resident workers,” the CIS report concluded.

The New Observer