There's a government program that rewards American employers for not hiring American college grads — for hiring foreign alumni instead — by draining about $2 billion a year from the government trust funds for the elderly (Medicare and Social Security) to pay those employers.

It is the Optional Practical Training program.

How can you write an otherwise accurate article about the subject without mentioning the massive subsidy that the trust funds are providing these employers for the act of hiring the aliens, not Americans?

Well, the Wall Street Journal, on May 10, managed to do exactly that in an article headlined:

Program Allowing Foreign Students to Work in the U.S. Has Grown Rapidly

The headline should have read:

Program Paying U.S. Employers to Hire Aliens Costs Trust Funds $2 Billion

There was not a word about the fact that there are no payroll taxes when employers hire recent foreign college grads; were the employer to hire a recent U.S. college grad both the boss and the worker would — as we all do — chip in our payroll taxes. These taxes, at about 8.25 percent on both the employer and the worker, support the two named trust funds as well as the federal share of the unemployment insurance program.

The WSJ headline mentions "students". One may have warm and fuzzy feelings about students, but the beneficiaries are not students, they are alien alumni, and their employers.

Let's look at this at this from the point of view of an employer facing two equally talented prospects for a job, both recent college grads, both science majors, both available at, say $50,000 a year, and both legally able to work in the United States. One is a former foreign student still here on his student visa and the other is a citizen (or a green-card holder.)

If the employer hires the citizen, and pays her $50,000 a year for three years without a raise, that will cost the employer $150,000 in wages, and $38,250 in payroll taxes, for a total of $188,250. If he hires the foreign "student" the total would be only $150,000.

Might not a rational employer under those circumstances regard the citizen as needlessly expensive, and hire the alien?

You would think that the WSJ, which is written for business executives, would have thought that was worth mentioning.

Under the OPT program — created by the Bush II administration and expanded by Obama's — all foreign college grads get one year of OPT subsidies; those who have degrees in the STEM fields (science, technology, engineering, or math) can get three years of the subsidies. (Despite the Optional Practical Training moniker, no training need take place.)

What the article did report was the — surprise! — rapid growth of this program, from 79,877 in 2008 to 257,064 in 2016. (We multiplied 257,000 by $50,000 a year by 16.5 percent (8.25 percent + 8.25 percent) for our estimate of the more than $2 billion annual hit to the trust funds; had we factored in the extra time for the STEM grads the estimate would have been 30 percent or so higher.)

Whether the WSJ did this on purpose or not, the non-reporting of the subsidy is a great boost for this odd little program, and serves to keep it alive and growing.

To be fair to the paper, this oversight has been seen in other reports recently, such as in the Inside Higher Ed account of the demise of a scruffy university (a visa mill) in Virginia, all of whose "graduates" get the same OPT subsidy as, for example, foreign grads of Yale or Harvard.

Similarly, a San Francisco Chronicle story on the growth of OPT, dated May 10, was long and detailed but did not mention the subsidy.

In the last two instances, but not in the case of WSJ, I know the reporters knew about the 16.5 percent loss to the trust funds; the subsidy to employers who favored aliens grads over American grads.

I know because I told them about it. But they chose to ignore this key fact.

 

David North writes for the Center for Immigration Studies, from where this article is adapted.

 

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