DHS Unabashedly Biased in Its New OPT Proposal

The Optional Practical Training (OPT) provision for foreign students in the U.S. is now back in the news.  Under OPT, a foreign student can work in the U.S. for a certain time after graduation. As you may recall, earlier this year a court struck down the federal government’s 2008 expansion of the duration of OPT from 12 to 29 months for STEM students, on the grounds that that decision had not been properly put up for public comment as a proposal. The judge set a deadline for a resubmission of the 2008 proposal for public response. The government had been planning to make a new OPT rule anyway, which would extend OPT duration even further, to 36 months, so they have rushed putting out the new proposal for comment, to comply with the judge’s deadline. The new proposal is now up for comment.

Critics of the proposal have already begun to speak, such as David North of CIS. North, a former U.S. Labor Department official, notes that OPT amounts to the government offering a $10,000 incentive to employers for hiring a foreign student instead of a U.S. citizen or permanent resident. This bonus takes the form of the foreign students being exempt from payroll tax (due to their student status, which they technically still have under OPT in spite of having graduated). I would add that if OPT’s duration were to be extended to three full years, as DHS wants, the employer bonanza gets multiplied by 3, so it becomes $30,000 or more. Why hire Americans, eh?

Since this tax exemption from payroll tax was pointed out in the lawsuit against DHS, and has been one of the major points raised by critics, DHS was well aware of it. Yet they are refusing to address it or even acknowledge it. Hard to understaand such blatant pro-employer bias from an administration headed by a former community organizer.

The DHS people do throw in one bone for Americans, in banning employers from replacing U.S. workers by OPTs.  However, as I have stressed often in this blog, the bigger problem with OPTs and foreign workers in general is that employers hire foreign workers instead of Americans, rather than using foreign workers to replace Americans. As I have harped on in this blog, this is yet another example of the downsides to overemphasizing the Disney/SCE cases (where U.S. workers were replaced by foreign ones), as many critics of H-1B are doing.

The DHS then shows further severe bias in its proposal by citing only pro-foreign-worker research (and distorting neutral research; see below), notably that of my UCD colleague Giovanni Peri, an Obama Administration favorite source. Nothing at all from the other side, including my own research showing that the overall quality of the foreign students is low. Since my work was published for EPI, a Democratic Party-oriented think tank, founded in part by Clinton Sec. of Labor Robert Reich, it is further clear that DHS has not looked at this issue with any impartiality whatsoever.

Indeed, DHS grossly misinterprets the work of Prof. Jennifer Hunt of Rutgers. She found in essence that (a) immigrant STEM workers file more patents than native English mjaors and (b) the patenting rate of immigrant STEM workers is less than, or at most equal to, that of native STEM workers. (See my EPI paper for details.) DHS seized upon finding (a), without explaining it for what it is, and  of course, it has no relevance to the issue at hand.

In contrast to DHS’ recent statements, in which they openly admitted that they intend OPT as an end-run around the H-1B cap, they now describe OPT in warm and fuzzy terms of “mentoring” (putting the T back into OPT). That raises several questions:

• If the U.S. indeed “needs” the foreign students (DHS’s phrasing on this point verges on desperation) to remedy a STEM labor shortage, why do these students need training? The DHS/industry narrative is that the U.S. lacks sufficient workers with STEM training, while the foreign workers are supposedly already trained.
• And, if workers with such training are indeed needed, why won’t these special mentoring programs be open to Americans? Why just offer them to foreign students?
• Since DHS admitted that its motivation in OPT is to circumvent the H-1B cap, does that mean that if the cap were high enough to accommodate everyone, these same foreign students wouldn’t need training after all?

Very poor proposal, even by DHS standards. Hopefully the judge in the case will see through it.