Just graduated from university and heading for the job market? There are a few things that you need to pay attention to. U.S. companies save money by employing a selective few foreign graduates as compared to American ones. How does this happen you may ask? This simply happens through a program called the Optional Practical Training (OPT), which allows international students on F-1 visas to work in the U.S. after graduation.
The interesting part is that the even though U.S. workers and employers have to pay towards Social Security and Medicare, these companies who hire OPT workers do not have to pay these taxes. This works out to a 15% discount per employee.
Why It Matters
The math is pretty simple, hiring an OPT worker costs less even if they present the same qualifications as an American graduate. As time goes by, this creates a system where U.S. citizens are undermined and that too, it isn’t because they aren’t qualified. It simply costs more to hire them.
It really is frustrating to know that you have just graduated and have student loans to pay off, now when you apply for your first job, you find that the company has chosen someone else, only because it’s cheaper.
A Growing Trend
In recent years, the number of foreign students who are working through OPT has increased significantly, the growth has been in fields such science, technology, engineering and math fields. Foreign graduates can work and stay for up to three years and their employers won’t need to pay Social Security or Medicare.
Sadly for U.S. students who have just graduated, this means that there is a lot more competition. According to data, foreign graduate are actually being paid up to 40% lower than other American workers who doing the same jobs
Why U.S. Graduates Lose Out
The impact on American graduates is clear:
- Fewer job opportunities. Companies may hire cheaper OPT workers instead of U.S. graduates.
- Lower starting salaries. If employers can pay less for OPT workers, wages across the board are pushed down.
- Unfair competition. American graduates are essentially competing on an uneven playing field created by a tax loophole.
Now, you may think that this is just a problem for younger citizens entering the work environment, but that isn’t the only thing. The companies who employee OPT workers don’t pay into the Social Security and Medicare system, this means that less money is going towards the program, and this program is something that millions of Americans rely on.
The Bigger Picture
Even though the idea is to help international students get experience, but now it has grown into a cost saving measure for employers.
What Could Be Done
There are a few ways policymakers could make the system fairer:
- Reduce the tax disparity. Companies and foreign graduates on OPT should be required to make the same contributions to Social Security and Medicare as the general public.
- Make things more transparent. Clearly state the number of OPT employees being employed and the effect this has on American grads.
- Examine the program’s scope again. Make sure OPT fulfils its intended function of providing educational training rather than turning into a long-term labour loophole.
Final Thoughts
The job market is already saturated and finding a job as a graduate is difficult. The OPT system makes it even more difficult as it does not consider experience or qualification but rather looks to hire cheaper staff. This also has an impact on Social Security and Medicare as there is less money going into the system.
This issue does not mean that international students must no longer get opportunities, but rather the system must be fair and give graduates equal access to opportunities.