When foreign graduates of US schools stay in the country, we all benefit

The Department of Homeland Security is considering new regulations that could gut the Optional Practical Training (OPT) program that affords international students the opportunity to work for a limited time in the United States after they graduate from a U.S. college or university. Dismantling this program would clearly be an unequivocal blow to international students. But because OPT brings valuable talent into the U.S. labor force–leading to higher productivity and innovation–undermining it would also ultimately harm Americans.

The OPT program is, in fact, a win-win for both international students and Americans. Recent graduates gain valuable on-the-job experience, the opportunity to demonstrate their capabilities to employers, and the potential to transition to a temporary worker visa. In return, the American economy benefits from the hard work of these immensely talented and dedicated individuals.

{mosads}In a Niskanen Center report, I investigated the economic effects of OPT, and found that the program leads to higher levels of innovation and higher earnings for Americans — with no evidence of an adverse effect on labor force participation or unemployment.

The research suggests we should expect a region to generate about five additional patents and the average resident to make no less ($2 more each year on average) for every 10 OPT participants the region employs. 

This should be no surprise given just how accomplished OPT participants are: in 2017, over 70 percent had master’s degrees and another 10 percent had doctorates. Over half graduated with degrees in science, technology, engineering and mathematics (STEM) fields. 

Indeed, OPT serves as the nation’s largest high-skilled worker recruitment program, bringing in well over 200,000 American-educated foreigners each year — even more than the H-1B program (the high-skilled guest worker program), which grants longer periods of work but fewer new slots each year. 

Many OPT graduates would like to obtain H-1B visas. But with multiple applicants for every available visa, they are in short supply. OPT operates as a “waiting room” for recent graduates, as they hold hope that they’ll be among the lucky ones who can obtain a guest worker visa before their OPT runs out. 

Critics of OPT assert that American workers are bound to be at a disadvantage because of the program, yet the statistics tell a different story. In fact, a greater concentration of OPT workers in the labor force is correlated with higher earnings and lower unemployment rates. Specifically, with every additional two percentage points that OPT workers comprise a region’s labor force, average annual earnings are $2,000 higher for all of the region’s workers. The region’s unemployment rate, meanwhile, dips to one percentage point lower.

Now, it is true that correlation and causation are different animals. To that end, the Niskanen study employed techniques to test for a causal effect. It used a new regulation passed in 2016 that greatly expanded the number of OPT participants as a natural experiment and in addition used a measure of the network effects that attract immigrants to certain regions to isolate random variations in the geographic distribution. It found no evidence that OPT leads to higher unemployment or reduced wages.

The program’s benefits give good reason to be skeptical about DHS’s move last year to raise fees on participants and make it easier to deport and bar OPT participants and to raise fees on participants.

Two upcoming regulations are even more troubling. The first, expected in September, will make the OPT process more complicated, bureaucratic and difficult to navigate. The second — which has no clear timeline — promises to completely overhaul the program, likely by slashing the duration of OPT status and the number of participants. 

OPT has given international students valuable work experiences and provided the labor force with talented employees since the 1950s. Despite the current administration’s skepticism about the program, its benefits have prompted both Democratic and Republican lawmakers to call for protecting it (and, in some cases, even expanding it). If we want a more dynamic and innovative economy, we should be focusing on ways to steer more talented international students on the path to citizenship, rather than making it increasingly difficult to settle in the U.S.

Americans have always taken pride in their tradition of entrepreneurship. However, in taking into account the reality that Americans today start fewer new businesses than they used to, it must be acknowledged that this entrepreneurial spirit is not necessarily self-sustaining. International students can help keep that dynamism alive–as long as we continue to offer them ability to do so.

Jeremy Neufeld is an immigration policy analyst at the Niskanen Center