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A government program that allows foreign students to stay and work in the country after graduation has grown rapidly over the last few years and has even surpassed the H-1B visa program for highly-skilled workers, according to a recent report by Pew Research.
The report shows over 257,000 foreigners were authorized to remain and work in the United States in 2016 through the Optional Practical Training program, which was created by former President George W. Bush for F-1 student visa recipients. Student visa holders may apply for OPT employment authorization before or after graduation. The standard authorization allows these foreign students to work in the United States for one year. Students in STEM fields may be authorized to work for three years.
The article goes on to state the following:
Several media outlets like the Wall Street Journal and the Los Angeles Times reported on the program’s growth last week, but they left out an interesting fact: employers are incentivized to hire these foreigners over American citizens because they receive a tax exemption for doing so. Employers save money by hiring non-citizens over citizens because they are not subject to payroll taxes for these workers.
An analysis by the Center for Immigration Studies explains that employers receive a tax exemption of 8.25 percent (Social Security, Medicare, and federal unemployment insurance) for hiring OPT recipients over Americans. Assuming employers are faced with hiring two equally talented STEM majors at approximately $60,000 a year, hiring the foreigner would save the employer approximately $14,850 over the course of three years, which is the length of time of a STEM OPT authorization. Assuming all 257,064 OPT workers earn a salary in a similar monetary range, the total payroll tax exemption results in billions of dollars in losses to the nation’s entitlement trust funds.
The report, written by Eduardo Neret for the Washington Examiner, also notes that US schools are benefiting from foreign students as well, and further stated:
Pro-immigration activists defend the OPT program like they do the H-1B visa program. “We need these workers,” they say. “They’re skilled and they make us more competitive in the international job market.”
At the very least, these claims are insulting as they imply American students aren’t skilled enough, or that they aren’t studying in the STEM fields – both of which are untrue. However, their arguments are beside the point. Just because businesses want skilled workers doesn’t mean the government has to incentivize hiring foreigners over its own citizens. Why can’t the program be changed to eliminate the incentive, making it just as expensive to hire the foreigner as the American? In fact, perhaps there should even be a tax for hiring a foreigner over an American.
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