More on the Innards of H1-B Program: Indenture Starts in OPT Period

By David North, April 13, 2012

It is well known that many H-1B workers are, in effect, indentured by employers who have filed to obtain green cards for them — they are nominally free to leave, but it can be hard to keep your resident alien application alive after leaving the employer who set it in motion.

But, as I have learned recently in conversations with would-be H-1B workers at a major D.C.-area university this spring, the feeling of indenture starts even earlier.

Many international students who are about to secure U.S. master's degrees in various computer-related areas are taking relatively low-wage jobs with software firms in the hope of securing an H-1B job later.

So these workers are entering a waiting period to qualify for another waiting period. You can bet they will be docile and hard-working.

My contacts with these double-interim workers came as a byproduct of the volunteer income tax counseling that my colleagues and I provide to graduate students this time of year. As I help them fill out their 1040s and 1040NRs (NR for non-resident) I ask them about their career plans. Most of our clients are international students in computer fields and many are from India and China, but there is always the Bangladeshi seeking a PhD in astronomy, or the Romanian seeking a graduate degree in English.

Upon receipt of a high-tech degree, international students are eligible for a 29-month extension of the F-1 student visa in the Optional Practical Training (OPT) program, which allows employment in the United States even though the course of study that produced the F-1 is long over. For more on this particular segment of the Obama more-migration program see my CIS Memorandum "Looking at the H-1B Process Through the Eyes of the Participants" and an earlier blog.

Thus the OPT program is a bridge to the H-1B program, which in turn is a bridge to the green card or permanent resident alien program. An OPT job can be obtained instantly if the employer is willing, while the H-1B program takes longer.

A few of the students, primarily Indians, said that they were taking OPT assignments because their OPT employers had told them that they would file for the H-1B six months or a year later. Some said that their employers had told them that after six months or so of employment they would make a decision about an H-1B, and many others had accepted jobs just in the hope that an H-1B would appear in the future.

Those were the lucky (or more talented) ones. In what I thought was a chilly bit of reality, I found that four weeks before graduation most of the international high-tech students were still looking for OPT jobs, so maybe the high-tech labor market is tight even for foreign students with advanced degrees.

Or maybe members of the subset of the grad student population that needed my help with their income tax forms were less likely to land jobs than their colleagues who did not need my assistance. Bear in mind that I spoke to no one seeking a job with just a bachelor's degree.

I also found it interesting that most of these students, while aware of OPT generally, were not aware of the advantage that it gives them vis-a-vis U.S. citizens and green card holders with the same degree, i.e., that their employers save 7.65 percent in payroll taxes by hiring the OPT candidate rather than the resident with the same qualifications.

One young woman from India told me cheerfully "Oh, yes, that means that I do not have to pay those payroll taxes."

That is perfectly true, but that part of the deal is of little interest to employers, who, I am sure, are well aware of the benefits of OPT to the corporate bottom line.