Big Tech Unwittingly Creates Argument Against OPT Program

By David North on January 29, 2020

The lawyers for Big Tech have just created — totally unwittingly — a major new argument for eliminating or seriously reducing the Optional Practical Training (OPT) program, which subsidizes Big Tech employers, and others, that discriminate against new college grads who are citizens or green card holders in favor of those on foreign-student visas.

The industry lawyers, of course, would hate to see OPT go down the tubes, but they may not know the possible consequences of what they are doing.

By cutting back on OPT, the Department of Homeland Security would ensure preservation of a fee structure that has produced a third of a billion dollars of fees for itself; that amount of DHS money is in danger should Big Tech's lawyers win a case now in the federal courts.

But hold on to your hats, readers, as the convolutions and double negatives of immigration policy are about to be displayed in hurricane force. Before describing the angels-dancing-on-the-head-of-a-pin arguments of these lawyers let's sketch the complex setting in which all this is playing out.

The Current System. All of this involves the interactions between two foreign worker programs with different rules, and based on different governmental decision-making structures.

The older and larger of the two programs, set up by Congress, is the H-1B program for skilled workers, mostly college grads, and mostly employed in Big Tech.

There are something like 900,000 of these workers, and they and their employers — like the rest of us — pay the usual payroll taxes. The visas are granted for an initial three-year period, and are often extended for many more three-year periods. There is a ceiling of 85,000 new visas a year in this program, but an unlimited number of renewals. It is very controversial because of the negative impact on jobs for citizens and green card holders.

There are substantial fees paid by employers in the H-1B program, which there are not in OPT; further the H-1B fees are much larger for firms, such as the big Indian outsourcing companies, that hire mostly H-1B workers, and lower for those hiring smaller percentages of them. The former are sometimes called 50/50 companies, as they have more than 50 employees and more than 50 percent of them are H-1Bs; the legal term is "H-1B dependent".

The newer and smaller of the programs is Optional Practical Training, which was dreamed up during the Bush II administration, expanded by the Obamas, and preserved by the Trumps. It has no congressional authorization and could be repealed by the stroke of a pen.

There are about 300,000 workers in it (with the government pretending they are "students" when they are really alumni and full-time workers.) The work permits in this program are relatively short term: one year for all new alien college grads from U.S. colleges and universities, and a total of three years for those former foreign students with degrees in the STEM fields (science, technology, engineering, and math).

OPT workers and their employers are both excused from the normal payroll taxes, which support our aging and elderly through the Social Security, Medicare, and Federal-State Unemployment Insurance programs. While the OPT work permits are for limited periods of time, there are no ceilings on the number of them, and they have more than doubled in recent years.

Links Between the Two Programs. OPT was created to: 1) expand the number of foreign workers in the United States without a congressional mandate; and 2) ease the process by which alien grads of U.S. colleges can move from student to H-1B status. Since there was usually an apparent over-subscription to the H-1B program, foreign students in U.S. colleges often could not move immediately from the status of genuine student to that of an H-1B worker. In many cases they had to return to their homes (usually in Asia) before getting hired as an H-1B.

Following the establishment of OPT, there was a new, industry-friendly, intermediate step in the process, that of OPT worker. The usual sequence is now: First, the alien's graduation, next on to OPT status, and then on to H-1B status; thus meaning that the recent alien grad did not need to leave the country prior to becoming an H-1B. OPT, in a word, made it easier for employers to use the H-1B program, and thus to deny jobs to U.S. workers.

The Court Case. The lawyers for Big Tech have focused on one small part of the complex system just described. In a filing in the federal court for the District of Columbia, they have sought to eliminate the $4,000 H-1B fee for H-1B workers who adjust their status (from OPT, for instance) to that of H-1B while remaining in the United States. They want something on the order of $350 million to be refunded to the 50/50 employers, which is what they say was improperly charged to them over the last six years.

Their angels-on-a-pin argument relates to a distinction they draw between those adjusting to H-1B status while in the United States and the admission of H-1B workers from abroad. They say that Congress meant only the admissions to produce fees at this level, and that adjustments were to have much smaller fees.

That an admission and an adjustment both add equally to the population of foreign workers, and that hundreds of thousands of jobs are taken from citizens (and green card holders) whichever arrival technique is used, is apparently of no concern. Their pitch pertains not to social policy, but to their own view of the legal definition of adjustment, a view that would cost DHS more than a third of a billion dollars.

The Kicker. I am not a lawyer and cannot make a prediction of what the judiciary will do on this fine point, but I can suggest a possible unintended consequence of Big Tech's winning this one, if they do.

DHS, which has done nothing about the OPT program since January 2017, might look at the program in a different light. Suddenly, DHS has an unexpected bill of a third of a billion dollars that it must pay; plus a continuing loss of $60 million a year. (I get the latter figure by dividing $350 million by six and rounding.) The continuing impact of these massive costs, however, could be contained were DHS to curtail OPT.

You see, if the OPT program were abolished, virtually all the arrivals of H-1B workers would be admissions from abroad, all to be paid at the higher rate. And DHS has total control of OPT; it could reduce it or kill it completely by issuing a new regulation.

If DHS decided, against its own institutional financial interest, to continue OPT at its current size — some 300,000 jobs taken from U.S. college grads every year — it would not only mean 300,000 jobs lost to citizens at a cost of $3 billion or so a year to America's elderly and afflicted (through losses to the Medicare, Social Security, and Federal-State Unemployment Insurance trust funds), it would also take away $60 million each year from DHS' own funds that could be used to finance the more careful administration of the immigration law!

So if Big Tech's lawyers win the case, and if DHS reacts to end or diminish OPT, it might turn out, in soccer terminology, to be an "own goal" of monumental dimensions.