Washington, D.C. (September 16, 2024) – Two new Center for Immigration Studies reports on foreign student employment programs reveal that the Department of Homeland Security (DHS) is ignoring regulatory requirements designed to protect U.S. workers, while also causing billions in tax revenue to be lost every year. These reports detail how DHS has failed to address the negative impacts of the Optional Practical Training (OPT) program and the extended STEM version of the program.
“STEM OPT was created by executive action, not by Congress, effectively allowing employers to circumvent statutory limits on foreign labor,” said Jon Feere, the Center’s Director of Investigations and author of the report. Feere continued: “Despite clear regulatory requirements to protect U.S. workers, ICE has failed to conduct any wage analysis. The program has grown rapidly, with over 539,000 foreign student workers, making its effect on U.S. workers a critical concern — the lack of transparency is blatant and disturbing.”
ICE’s Failure to Protect U.S. Workers
The STEM OPT program allows foreign students in science, technology, engineering, and math fields to work in the U.S. for up to three years.
Key findings include:
- No Wage Analysis Conducted: ICE has neglected to perform any wage analysis — a regulatory requirement meant to ensure that hiring foreign students under STEM OPT does not negatively impact U.S. workers.
- Rapid Program Growth: Since its inception, the STEM OPT program has expanded significantly, with over 122,000 foreign students now participating. Combined with the broader OPT program, more than 539,000 foreign students are working in the U.S. without an annual cap or comprehensive oversight.
- Lack of Enforcement: Despite the requirement for employers to attest that hiring foreign students does not harm U.S. workers, there is a lack of employer site visits to conduct wage analysis, and extensive fraud has resulted.
$4 Billion in Lost Tax Revenue
In a separate analysis, the Center reveals that Federal Insurance Contributions Act (FICA) tax-exemptions for foreign students may be costing the United States over $4 billion in lost Social Security and Medicare revenue every year.
Key points include:
- Tax Exemptions: Foreign students and their employers are exempt from paying Social Security and Medicare taxes, leading to a significant drain on funding for these federal programs.
- Unfair Hiring Incentives: The FICA exemption may incentivize employers to hire foreign students over U.S. citizens, exacerbating wage disparities and competition in the labor market.
Center Recommendations:
- Enforce Wage Protections: ICE must conduct wage analysis and enforce labor protections.
- Eliminate the FICA Tax Exemption: Congress should consider repealing the exemption to recover billions in lost revenue.
- Limit the Scope of OPT Programs: Narrow the scope and duration of the OPT programs in order to reduce negative impacts on the labor market and Social Security and Medicare programs.
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