Obama Proposes Bonus for Employers Who Hire Foreigners over Americans

The Department of Homeland Security announced a seemingly innocent change in work permit status for foreign students that would give them a huge leg up in competition for jobs with American students.science lab

The so-called Optional Practical Training (OPT) program currently gives all recent alien college graduates a one-year-long, after-graduation work permit. If the alien student has majored in any of the STEM fields (science, technology, engineering, and math), as many of them do, he or she gets an additional 17 months of permitted work.

During these periods U.S. employers are given a substantial bonus for hiring an alien college grad rather than an American college grad with the same skills and the same salary; I figure it can be above $10,000 in many cases involving STEM workers.

Why does the 10 grand bonus go along with the decision to hire the foreign worker?

DHS, by defining a recent college grad as a student, takes both the worker and the employer out from under payroll taxes — thus penalizing the Social Security and Medicare trust funds directly, and our elders indirectly. Congress did not make this decision, at least not directly; but since foreign students and their employers have privileges denied to citizens and green card holders alike, the bonus has been created.

In the current document, DHS proposes to extend the additional 17 months for STEM workers to 24 months; thus from a total period of 29 months to 36 months, about a 20 percent increase. If the bonus given to employers for hiring a STEM graduate is worth $10,000 under the old rules, it is now worth $12,000, and is that much more likely to cause an employer to hire a former F-1 student than a green card or citizen graduate.

Of course, DHS adds some window dressing to the new rule by saying foreign workers cannot directly replace American workers and that universities have a responsibility to monitor these “students.”  Neither of these lax rules will do anything to stem the tide of high-tech jobs going to a cheaper foreign worker than a similarly-trained American.