A Tale of Two Exploitative Foreign Worker Programs

By David North on October 31, 2018

This is a tale of two exploitative foreign worker programs, both of which deny American workers hundreds of thousands of jobs, both of which focus on recent college graduates, and both of which provide attractive subsidies to employers for their decisions to hire alien graduates instead of U.S. ones.

Employer-friendly Uncle Sam has a long, detailed menu of foreign worker programs, one for every taste, all designed to excuse certain employers from the American labor market, as we will enumerate in a subsequent posting. Today we will focus on new information that sheds light on two of them, the well-known H-1B program and the less-well-known Optional Practical Training (OPT) program.

The H-1B program is widely used by, among others, high-tech employers; it probably involves close to a million workers, most of whom are college grads; those who use it assert that there is a shortage of Americans with high-tech skills, but independent scholars routinely refute those claims.

The various facets of OPT deal with aliens attending, or formerly attending, U.S. colleges and universities, and it currently supplies something like a quarter of a million subsidized workers to U.S. employers, as we described last week.

Alien college grads of U.S. institutions are eligible for both OPT and H-1B, and employers can use either or both of these programs, as they wish (within certain limits). Graduates of foreign colleges wanting to work in the United States, a much larger population than aliens who have U.S. degrees, can only work under the H-1B program.

New information from the somnolent Student and Visitors Exchange Program (SEVP), an arm of the Department of Homeland Security, shows which major employers benefit from the subsidies in the OPT program (without, of course, mentioning the presence of the tax breaks for employers of alien workers) and this, indirectly, sheds light on the use of the H1-B program.

The subsidies for workers in these two programs come from different, government-approved sources. Employers of OPT workers are excused from paying the normal taxes to the Social Security, Medicare, and Federal Unemployment Insurance trust funds — giving them an 8.25 percent discount on the wages of these workers — essentially funded by our elderly, frail, and sick.

Within OPT there are three sub-programs, Curricular Practical Training (CPT), mostly for current foreign students, Pre-and Post-Completion Optional Practical Training (identified simply as OPT in the tables that follows), mostly for graduates, and STEM (science, technology, engineering, and math) OPT, for graduates with that background. OPT gives subsidies for a year's work after graduation and STEM OPT provides for three full years after the degree.

The subsidies in the H-1B program (which, honorably, does pay into the trust funds) come from the workers themselves, as the pay for H-1B workers is routinely substantially lower than salaries for citizen and green card workers doing the same kind of work.

New Information. It is within the just-described context that we have new information on the three subsets of the OPT program, and the top 200 employers in each of these sub-programs. We have condensed data on the three sub-programs, showing the top 22 users of the overall OPT program in Table 2.

Table 2 shows that nearly 40,000 jobs that could be filed by American college grads are filled by alien workers, and estimates the substantial subsidies that these firms get for not hiring U.S. workers. The 40,000 figure is just for the 22 leading employers; the total numbers of jobs lost by U.S. residents because of this program is probably five or six times as large.

And the subsidies (from the trust funds) are often going to extremely profitable corporations such as Amazon, Intel, Google, and Microsoft. It was useful for DHS to release this information, which I do not believe I have seen before. It is important that the public be aware of these job losses and related subsidies.

As an immigration specialist, what I found interesting above and beyond the detailed subsidy information is what is missing.

I had assumed that all major employers of H-1B workers would also be major users of the OPT program. OPT can be, and is, utilized by some of the H-1B employers to hire future H-1B workers; there are no ceilings with OPT, no lotteries, no waiting periods. Many alien grads of American universities go from F-1 student status to the OPT program, then to H-1B, and for some on to the green card; it is a well-trodden path.

It turns out, however, that many of the big users of H-1Bs, notably the Indian outsourcing (rent-a-programmer) firms, are not major users of OPT. Table 1 shows the 10 biggest H-1B users, the number of workers they sought in 2017, and their absence or presence on the list of the 22 largest employers of OPT workers:

Table 1. 10 Biggest H-1B Users

Employer Rank on
H-1B Use Scale
Requested 2017
Rank on
OPT List
Infosys 1 25,405 Not on list
Capgemini 2 17,479 Not on list
Tata 3 13,134 Not on list
IBM 4 12,381 9
Wipro 5 10,607 Not on list
Accenture 6 9,479 Not on list
Tech Mahindra 7 8,615 Not on list
Deloitte 8 7,645 7
Cognizant 9 5,370 Not on list
Microsoft 10 5.029 5

Source: Columns one, two, and three are from Stef W. Kight, "The 25 companies with the most H-1B workers", Axios, January 19, 2018.

An employer that is high on the H-1B scale, and missing on our list of 22 major OPT employers must have made the decision to de-emphasize or eliminate recruiting of alien grads of U.S. universities and instead decided to recruit overseas, which means in practice, in India. This apparent decision is not to be encouraged; an alien trained in an American university is presumably more attuned to American thinking processes and the American labor market than one totally trained overseas.

I suspect that the outsourcing firms have also figured out that a worker brought in from another country (primarily India) is more likely to be docile than one who has spent at least a couple of years at an American university. Such an employer would not use many OPT workers.

I cannot say that I know how the hiring decisions are made by outsourcing companies like Infosys, Tata, and Wipro, but they have probably figured out that the H-1B system is more favorable to them than OPT alone, or the combination of OPT and H-1B.

Workers in H-1B status are more bound to their employer than those in OPT; in the first system the worker is allowed in this country only because the employer hired that person. In the OPT year, or more often, years, the worker is allowed to be here because of his or her own credentials. The latter employees must feel less indentured that those tied up with H-1B. So guess which system the big outsourcing firms prefer?

As noted previously, the big, India-related, H-1B-using outsourcing firms not only hire on the order of 98-99 percent Indians, they discriminate against women, even from India.

The new data shows that in addition to these inequitable hiring practices, they have a solid preference within the foreign worker programs; they seem to strongly prefer all H-1Bs to a mix of H-1Bs and OPTs.

Comment on Table 2. Most of the 22 names in Table 2 are familiar big operators in big-tech, big auditing, or big education.

The unfamiliar employer with the largest number of OPT workers is Tellon Trading, which seems to have some Chinese connections, is located in Georgia, and makes mattresses and wire products. Its website proclaims: "We sale mattress components. High quality and Low prices."

If this is the Tellon Trading employing the OPTs, it must spend more on lawyers than on editors. Given the apparent nature of its business, its presence alongside Google and Microsoft is a puzzle; perhaps a reader may have some information on the organization.

Four other firms on the list of 22 have what appear to be Chinese connections noted on their websites: XCG Design Corp., Findream, Arecy, and CG Max Design Corp.; all five do not appear to hire any college students (i.e., those in CPT). This may or may not be a coincidence.

Three of the lesser-known firms have Indian connections noted on their websites: Saibersys, Marlabs, and Veridic Solutions.

Estimation Techniques. Our estimates of the size of the annual subsidies received by these 22 employers are based on the number of reported workers in the alumni category (OPT plus STEM), and in the student class (CPT), multiplied by $50,000 a year for the alumni and $20,000 for the part-time student workers. We then applied an 8.25 percent discount for the employer for the non-payments to the trust funds. The total tax break for the 22 firms is estimated here at more than $155 million; these moneys are lost by the trust funds.

The $155 million is a very conservative estimate of the size of the subsidy because many of the biggest firms (Amazon, Google, etc.) pay much more than the $50,000 that was the average starting pay for all college grads nationwide in 2017. All the firms also had substantial (but unknown) numbers of OPT/STEM workers left over from prior years, as they had three-year subsidies, not one-year ones.

Further, the total impact on the trust funds is twice the $155 million because the individual alien workers also are excused from paying a matching amount of money to the trust funds. (No American workers get that break.)

Some of the zero indications in the table for participation in CPT may be a number of 30 or less, not zero. The DHS document shows the 200 largest users of each in the three sub-programs, not all OPT employers. Tellon and others may have had CPT workers, but they were not on the CPT top-200 list, and thus each had fewer than 31, because the 200th employer on the list had 31 CPT workers. If all nine of the employers with zeroes in the CPT column had exactly 30 such workers each, which is highly unlikely, that would add 270 workers to the 39,483 total.

In my October 26 posting on this subject, I used an estimate of $25 million for Amazon's subsidy from the use of the OPT program; that omitted the subsidy from the CPT part of the program, which when added in gives a corrected Amazon subsidy estimate of $27,625,000.

Table 2. The 22 Largest Users of Government-Subsidized OPT Programs, 20171

Employer2 OPT + STEM CPT Total Estimated Subsidy for Year
Amazon 6,028 1,672 7,700 $27,625,000
Intel 2,846 776 3,622 $13,020,000
Google 2,642 871 3,514 $12,335,000
Integra Technologies 3,474 0 3,474 $14,330,000
Microsoft 1,915 482 2,397 $8,699,000
Facebook 1,276 734 2,010 $6,475,000
Deloitte 1,467 365 1,832 $6,653,000
Tellon Trading 1,817 0 1,817 $7,495,000
IBM 1,015 365 1,380 $4,788,000
XCG Design Corp. 1,341 0 1,341 $5,532,000
Apple 983 319 1,293 $4,581,000
Ernst & Young 880 293 1,173 $4,113,000
Findream LLC 1,066 0 1,066 $4,357,000
Pricewaterhouse 759 252 1,011 $3,547,000
CG Max Design Corp. 906 0 906 $3,737,000
Saibersys 786 64 850 $3,344,000
Marlabs 793 31 824 $3,322,000
Arecy 819 0 819 $3,378,000
Univ. of Michigan 715 45 760 $3,209,000
Cerner Corporation 689 0 689 $2,842,000
Arizona State Univ. 533 0 533 $2,199,000
Veridic Solutions LLC 464 0 464 $1,914,000
Totals for the 22 33,214 6,269 39,483 155,830,000

Sources: Columns 2 and 3, DHS statistics; column 4, column 2 plus column 3; column 5, calculated by the Center for Immigration Studies from columns 2, 3, and 4, assuming $50,000 a year salaries for column 2 and $20,000 for column 3. A zero in column 3 may mean some use of CPT workers, but the employer was not in top 200 for CPT, and could not have had more than 30 of them. See text.
1 Number of subsidized jobs.
2 Arrayed by total number of subsidized workers.