The Optional Practical Training (OPT) program, in which the American government pays American employers to discriminate against American workers has grown rapidly in recent years, and during FY 2017 it used nearly $2 billion swiped from trust funds for the elderly to favor 240,000 alien college grads over an equal number of U.S.-resident grads.
It is hard to believe, but true; 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, as we described in some detail in a recent posting.
When we wrote the prior article, we were working with out-of-date numbers; subsequently we secured estimated FY 2017 data that shows that some 240,000 American workers are adversely impacted by this program (shouldered out of jobs by the subsidized aliens); earlier data set that number at 140,000.
The subsidies to hire the foreign alumni are extracted from the Social Security, Medicare, and Unemployment Insurance Program trust funds and were estimated to be in the area of $1.155 billion in that article. It is now clear that in FY 2017 the total subsidies came to something like $1.98 billion, or close to $2 billion.
The program, as we noted earlier, 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.
Estimation Techniques: Jobs Lost. There is an obscure USCIS document that shows the number of approvals of Employment Authorization Documents by category, "EADS by Classification and Basis for Eligibility, Oct. 1, 2012 - June 29, 2017", that Daniel Costa of EPI pointed out to me.
It shows the numbers of OPT/EADs (usually good for one year) issued to F-1 college grads, 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. So I 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, I 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 I have 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. Perhaps this downward adjustment should be 5,000 or 10,000 larger, but not much more.
Estimation Techniques: Losses to Trust Funds. Then I 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.