Tag Archives: e-verify

High-skilled hacks: the case of Optional Practical Training

This post is part of my “high-skilled hacks” series, focused on immigration to the United States. The series explores various workarounds and caveats to immigration law that high-skilled workers and their employers have discovered in order to further their own interests, at the expense of the original intent of immigration law. Through the series, I try to argue that, although these hacks are an improvement over an alternative where only the basic immigration system existed, freer migration for all would be simpler, fairer, more efficient, and more just. The introductory post of the series is here.

Roughly, the situation is like this: creating new visa categories requires legislative action. However, modifying the terms of existing visa categories is a matter of executive discretion. This means that various sorts of extensions can be built into existing visa categories even as people wait for “comprehensive immigration reform” to provide a long-term fix. In this post, I talk of one such stop-gap measure from which I personally benefited (and that was basically my only option): Optional Practical Training.

The system based on original intent

The visa system’s original intent is to try to be as restrictive as possible in granting visas, and to make it hard for people to smoothly transition from one status to another. So, the idea is that those who are on student visas have non-immigrant intent. Once their stay is over, they should go back home. If they want to come back for a job, they should re-apply back from their home countries, without any special advantage over all the other people who didn’t go to the US to study.

What influential high-tech people want to mimic

The students themselves, the universities that they go to, and the companies that wish to hire them, would like another ideal: despite the fact that they are on non-immigrant visas, the students should basically be able to apply for and get jobs, and start working just like US natives. This goal is very clearly at odds with the stated purpose of the student visa, which is intended to encourage study, not a transition to long-term settlement.

With that said, the idea that the US should allow high-skilled students to easily transition to Green Cards has a lot of sympathy within the legislative and executive branches of the US government. Thus, for instance, there have been talks, on and off, of a “staple act” that would allow permanent residency to any U.S. university student who graduates with a Ph.D. in science, technology, engineering or mathematics. But for various gridlock-related reasons cited by Alex, that I discussed in the introductory post, and the fact that this is fundamentally at odds with the purpose of the student visa, this proposal hasn’t really made progress. Incidentally, as Chiappari and Paparelli note, the SKIL bill, an earlier proposal quite similar to the staple act, aimed to do this for student visas. Chiappari and Paparelli:

The Securing Knowledge, Innovation, and Leadership Act or SKIL Act, which was never enacted, included a proposed extension of F-1 OPT to 24 months and would have relaxed for STEM students the statutory restriction prohibiting F-1 foreign students from in tending, at the time they enter the United States or apply for a visa, to stay in the United States indefinitely.)

One direction that high-tech people have made progress in is introducing new skill-based migration schemes, many of which are somewhat niche (this was accomplished with the EB visas, part of the Immigration Act of 1990, and will be the subject of another post). Another direction is to use existing visa statuses, such as the student status (F) and exchange visitor status (J) and tag on more and more at the end of those. These extensions are typically justified based on arguments of “national competitiveness” such as those made in the American Competitiveness in the 21st Century Act (2000). This post discusses one such extension of the F status: (post-completion) Optional Practical Training. There are a number of related programs, including Curricular Practical Training (CPT), pre-completion Optional Practical Training, and Academic Training (this one is for the J status), but for simplicity, this post will focus only on post-completion OPT.

The annual cycle of the H-1B

In principle, you can apply for the capped H-1B (the H-1B category used by all organizations except non-profit research institutes) any time of the year. In practice, however, the quota for a given fiscal year (starting October) is closed within a few days. And applications can be submitted at most six months in advance of the start date. So if you want a shot at the H-1B, you have to apply on April 1 (or rather, the first weekday of April) to start the H-1B October 1.

This poses a problem for people who want to start a job immediately after finishing their studies. Let’s say you intend to graduate on June 15. If you want the H-1B, you need to have found your employer before April 1, and have him or her agree to put in your paperwork by April 1. And then when your studies are over, you have about two months to wrap up and leave. That means you need to leave the US by August 15. And then, since you are now no longer physically present in the United States, and your status has changed from student to worker, you need to apply for a new US visa. Hopefully, you’ve received the H-1B petition approval by then (even though the H-1B itself starts on October 1) so that you can get the new visa. Then, you can start the job on October 1. And graduating in June is the lucky case. If you’re graduating in December, you basically need to spend the next couple months finding a job (potentially violating the terms of your student visa) that you can only hope to start in October, then leave the US by February 15, while your employer files the H-1B petition on your behalf by around April 1. Then, you wait in your home country till around July or August, by which time you have received the petition approval. You then apply for the visa and then enter the US.

So basically, the annual cycle means that students in the US have less of an advantage over the masses of people outside of the US in terms of getting jobs. They still have a huge advantage — they can interview in person for jobs and shop between multiple jobs. But basically, they need to find employers who are willing to agree to file petitions on their behalf seven or more months before they can actually join the job. And unless they graduate in August, they basically need to go back home and get a new visa, with all the uncertainty that engenders.

Enter Optional Practical Training

Optional Practical Training timeline

Source University of Alaska Anchorage

In practice, post-completion Optional Practical Training is a hack around this problem for those on “F” student status. One can apply for 12 months of Optional Practical Training that can start any time within 60 days after the completion of one’s academic program. The terms of the OPT are quite flexible: you don’t need to have a job offer when you apply, and the status is not tied to a particular job. You do need to work during the OPT: a maximum of 90 days of unemployment is allowed. But the work can include contract work (a minimum of 20 hours per week) giving you some flexibility to shop around for jobs.

The most typical use case of OPT is that it serves as a stop-gap for the months between completion of the academic degree and the beginning of the H-1B program. For instance, if you are graduating in June, then you can start your job in July on OPT while your H-1B petition isn’t yet active. This still requires that you secure your job by February so that your employer can file the H-1B petition on your behalf by April, but at least you can start the job right after graduation, and you don’t need to travel back home and re-apply for the visa.

Another use case of the OPT is for somebody who is genuinely unsure about what to do after graduation. The person wants to experiment with different kinds of work. The OPT offers a little breathing room to do that without losing physical presence in the United States.

Related to the program of study

Another bureaucratic requirement of the OPT is that all jobs you do under the OPT must be related to the program of study. That’s because the OPT is tied to your program of study, and is allegedly for the purpose of giving you additional “practical training” in the domains you studied in your degree program (even though in practice it’s just transitional to a H-1B or other longer-term employment status for most people).

However, after some informal investigation, I discovered that relation to program of study was interpreted more loosely than one might naively think. It’s okay for somebody like me, who has studied group theory, to take up my current job that involves machine learning, data science, and programming, as long as I can clearly explain how the skills I learned in graduate school are relevant to my job. Moreover, unlike the H-1B, the job choice doesn’t need to be pre-approved by the USCIS. Rather, what they can do is retroactively ask you to justify how the job (or jobs) you did to meet your OPT requirements were related to your program of study. Having letters from your supervisors at each job, that clearly explained the relation, would generally be sufficient. In most cases, the USCIS didn’t bother. But I heard anecdotally of a chemistry Ph.D. who went into a finance job and was asked by the USCIS to justify it. He was successful in convincing them of the relationship. Basically, unless you are going into a completely unrelated domain (such as a math Ph.D. becoming a barista or an economics Ph.D. becoming a performing artist) you should be fine. (The fact that the relationship to program of study is interpreted loosely is tacit knowledge that you won’t find explicitly mentioned online in any authoritative source. Most university websites that provide detailed information on OPT will not put this information in writing. Oh well. Non-transparent rules and regimes create huge information asymmetries between those in the know and the general masses.)

The cap gap and the STEM extension

H1B cap gap

Optional Practical Training H1B cap gap explained diagramatically. Source: University of Chicago

The OPT has gradually grown to accommodate more and more cases. In the example above, what if you get your job offer only in May? With the original 12-month OPT, you can start your OPT in July (after finishing your academic program in June) but since you can only apply for the H-1B next cycle, you’re still in trouble: your OPT will end by next July. Your employer can file a petition for you next year, but that job can start only on October 1, so basically you are forced to take two or three months off from work, plus you need to travel home to get the new visa. An ingenuous workaround called the “cap gap” has been incorporated into the OPT: if, at the time of the completion of your OPT, you already have a H-1B petition pending with the same employer as you are working with on OPT, you can continue working on OPT with that employer until either your application is denied or your H-1B period begins.

Finally, consider a case like mine. I finished my degree program in December 2013. I didn’t have a job immediately out of graduate school, and was planning on working on a mentoring service with a friend at the time. I did contract work for some employers, including MIRI, using my Optional Practical Training. I finally transitioned to my full-time job in August 2014. It was too late for me to apply for the 2014 cycle. And my OPT would end in January 2015, too early for me to have my H-1B petition for 2015. So what could I do?

Enter yet another ingenuous workaround to the OPT: the STEM extension. This allows a 17-month extension to the OPT for people who have degrees in STEM subjects. The STEM extension comes with heavier restrictions than the usual OPT (in particular, employers need to be enrolled in e-verify). But still, that extra 17 months gives me a chance to apply for a H-1B in 2015. In fact, the STEM extension can be combined with the cap gap, so even if I am rejected in 2015, I can still apply in 2016.

Interestingly, the STEM extension can be attributed to the efforts of one man: Bill Gates. Here’s what he said in testimony to Congress:

First, we need to encourage the best students from abroad to enroll in our colleges and universities and, if they wish, to remain in the United States when their studies are completed. One interim step that could be taken would be to extend so-called Optional Practical Training (OPT), the period of employment that foreign students are permitted in connection with their degree program. Students are currently allowed a maximum of 12 months in OPT before they must change their immigration status to continue working in the United States. Extending OPT from 12 to 29 months would help to alleviate the crisis employers are facing due to the current H-1B visa shortage. This only requires action by the Executive Branch, and Congress and this Committee should strongly urge the Department of Homeland Security to take such action immediately.

Congressional Testimony from Bill Gates, March 12, 2008, that seems to have directly led to the OPT STEM extension

Both the cap gap and the STEM extension, and the contribution of Gates to the passage of the latter, were noted in an article by Ted Chiappari and Angelo A. Paparelli. They write (pp. 2-3, footnotes removed to improve readability):

One of the expansions allows those foreign students lucky enough to win a number in the H-1B lottery to
have their OPT automatically extended until October 1, 2008, when their H-1B status will begin. This makes permanent an accommodation that was first introduced in 1999, but that has lain fallow since 2004. In 2005, Immigration and Customs Enforcement (ICE), the sub-agency of DHS that took over responsibility for administering the F-1 student registration program known as the Student Exchange Visit Information System or SEVIS, refused to implement this provision any more because of its concerns about its ability to track foreign students if they were granted a blanket authorization to stay here beyond their period of OPT. These security concerns are addressed in the new rule, which now requires employers to notify the school’s Designated Student Officer (DSO) of the departure or termination of the student within 48 hours.

The second expansion is an increase in OPT by 17 months to a total of 29 months for students with degrees in science, technology, engineering and mathematics (so-called STEM degrees). This appears to have been inspired directly by the March 12, 2008, testimony of Microsoft Chairman Bill Gates before the Committee on Science and Technology of the House of Representatives. In his testimony, Mr. Gates suggested: “Extending OPT from 12 to 29 months would help alleviate the crisis employers are facing due to the current H-1B visa shortage.” He also correctly observed that “This only requires action by the Executive Branch,” and he pleaded that “Congress and this Committee should strongly urge the Department of Homeland Security to take such action immediately.” (The regulatory change may also have been inspired, indirectly or in part, by some ideas floated in legislative proposals introduced in 2006 and again in 2007 to meet U.S. employers’ need for skilled workers with STEM degrees. The Securing Knowledge, Innovation, and Leadership Act or SKIL Act, which was never enacted, included a proposed extension of F-1 OPT to 24 months and would have relaxed for STEM students the statutory restriction prohibiting F-1 foreign students from intending, at the time they enter the United States or apply for a visa, to stay in the United States indefinitely.)

DHS did in fact take action quickly, but it added a requirement that was not part of Mr. Gates’s testimony: mandatory participation by F-1 students’ employers in E-Verify in order to qualify for the additional 17-month extension. Moreover, DHS limited the 17-month extension to those in practical training in connection with one of the identified STEM degrees. The STEM degrees include a variety of disciplines in computer science, engineering, engineering technologies, biological and medical sciences, physical sciences, mathematics and statistics and science technologies, as well as in actuarial science, military technologies and health professions and related clinical sciences. DHS has designated STEM programs using the list of Classification of Instructional Programs (CIP) codes published by the National Center for Education Statistics (NCES).

The DHS action, which appears to have been announced formally by Homeland Security Secretary Michael Chertoff on April 2, 2008 (you can see the full memo here) was ignored by most, but did get noted and critiqued by some people concerned about the wages and employment opportunities of high-skilled workers (see for instance here and here).

Continued repercussions for visa renewal and travel

The hackish way in which OPT has been conceived — an extension of a non-immigrant student status that’s in practice treated as an interim to a dual-intent temporary worker visa — leads to some interesting contradictions. In particular, if somebody wants to travel outside the US for OPT, the person faces complications at two stages:

  • If the person’s student visa is still valid, he or she does not need to renew it. If, however, the student visa has expired, the person needs to re-apply for a student visa. However, a student visa can only be granted if non-immigrant intent is explicitly demonstrated. OPT applicants generally fail to meet this requirement, and might have trouble getting visas.
  • Re-entry at the port of entry is also complicated. For those within their usual student status (who have not yet begun OPT) a valid visa and travel signature on their I-20 suffice — few are subject to additional questioning. However, people on OPT have additional burdens of proof: they need a valid visa, a recent travel signature (within the last six months rather than within the last year), they need their Employment Authorization Document (EAD) card, and they also need proof of continued employment. Those who have applied for OPT and not yet received their EAD card are strongly advised to not travel. The travel signature requirement arises from the fact that the OPT is still part of student status, even though the student may be working in a different part of the country and has little relationship with the university otherwise.

The Georgia Tech Office of International Education offers a particularly candid description:

Students who decide to travel while the OPT application is pending are highly discouraged from leaving the U.S until the application has been received by USCIS and the I-797 receipt notice has been issued. Students should bring the receipt notice with them as proof that an application has been submitted. Although the receipt notice is a good substitution, admission into the U.S. is up to the discretion of the CBP officer, and there have been reports of students without their EAD work permit having problems at the port of entry.

[…]

OPT is a benefit of the F-1 status. Therefore, students traveling while on OPT and have an expired F-1 visa are required to apply for a new F-1 visa. Although the U.S. consulates/embassies are permitted to grant visa renewals to students participating in OPT, these students may be subject to additional scrutiny. The F-1 visa is a non-immigrant intent visa. Therefore, applicants are required to provide proof of “binding ties” to their home country. This may be more challenging for some students on OPT.

Procedures and requirements for visas can vary between countries and are often subject to change. As such, reviewing the visa requirements on the website for the appropriate U.S. Embassy/Consulate is the best way to prepare you for the visa application process. Visit www.travel.state.gov to determine the procedures for applying for a visa at the U.S. Embassy/Consulate in the country in which you’ll be traveling.

Proposed changes to OPT

While US President Barack Obama’s November 2014 immigration executive action announcement was primarily about deferred action for unlawfully present migrants, the memo from Secretary Johnson also contained some guidelines for changes to the Optional Practical Training program. The main changes being mooted are:

  • Increase the base length of the OPT.
  • Increase the length of the STEM extension.
  • Expand the set of degree programs eligible for the STEM extension.
  • Allow people to be eligible for the STEM extension based on their undergraduate degree program, even if that was outside the US. For instance, somebody who gets an engineering degree from India and then gets a MBA in the US would be eligible for the STEM extension under the proposed scheme.

Here’s a summary from the National Law Review:

Most foreign students on F-1 student visas are eligible for a year of post-graduate optional practical training (OPT) as long as the work experience that they gain is in a field that relates to their degree program. But 12 months of authorized OPT frequently is not enough time to bridge the time between the foreign student’s authorization to work on OPT and the granting of a temporary work visa status. The H-1B quota opens every year on April 1st, and the H-1B visas do not become effective until the following October 1st, at the beginning of the government’s new fiscal year. The quota has been exhausted immediately in the last several years, leaving no H-1B visas available until the next government fiscal year – resulting in a 17-month period with no H-1B visa availability.

This problem is less severe for F-1 foreign students who major in STEM (Science, Technology, Engineering or Math) fields. These students are eligible to apply to extend their OPT work authorization for an additional 17 months, as long as they are employed by US employers participating in the government’s E-Verify program. (E-Verify is a program that any employer can participate in, if it is willing to check its employees’ documents through a government database to ensure the employees are legally authorized to work in the United States. Some employers don’t have a choice: if they have certain federal government contracts, or operate in certain states, they must sign up for E-Verify.) Qualified foreign students who graduate with US STEM degrees are able to continue to work legally through multiple government fiscal years, increasing their chances of “winning” an H-1B visa before their OPT period expires.

The list of STEM “majors” that qualify a foreign student for a STEM OPT extension is limited, however, and the focus until now has been on the US degree program that the foreign student has just completed. It would be much more useful if the government would expand the program to allow for STEM-based OPT extensions for F-1 students who either graduate with a US STEM degree OR complete a STEM degree prior to studying in the United States. For example, many of our MBA students come to the United States with a STEM undergraduate degree. Furthermore, the list of STEM “degrees” should be expanded to be much more robust.

Accordingly, Secretary Johnson directed USCIS and ICE to “develop regulations for notice and comment to expand the degree programs eligible for OPT and extend the time period and use of OPT for foreign STEM students and graduates.” The business community would like to see a significant expansion of STEM eligibility in the new rules. But the business community may not appreciate some OPT restrictions that the Secretary has suggested might be paired with expanded STEM eligibility. Currently there is great flexibility associated with OPT. F-1 graduates on OPT can be self-employed or work as independent contractors, and if they work as employees on a W-2, there is no prevailing wage requirement associated with their employment. The flexibility associated with OPT has proven extremely helpful to foreign entrepreneurs and inventors who use the post-graduation period to refine their inventions, products and business ideas, form companies, and find investors.

A later article from the National Law Review made some further suggestions:

But the STEM fields are narrowly defined. If the STEM fields are expanded, the STEM extension would benefit a larger number of foreign students and employers. In his memo, Secretary Johnson calls for USCIS and ICE to develop regulations to “expand the degree programs eligible for OPT” and to “extend the time period and use of OPT” for foreign Science, Technology, Engineering, and Math (STEM) graduates.

We hope that the expansion of degree programs will include degree concentrations in business administration, finance, economics, etc. so that a larger percentage of foreign students can take advantage of the STEM OPT extension option. In light of the H-1B visa crisis, employers across the US are clamoring for options to hire and retain foreign talent, and expanding eligibility for a post-graduation OPT extension responds to this need. Expanding the degree programs list would also bring value to the US by keeping talented graduates in the US Secretary Johnson also ordered USCIS and ICE to take steps to ensure that OPT employment “is consistent with labor market protections to safeguard the interests of US workers in related fields.” We hope that the end result of this directive does not decrease the flexibility that the OPT program currently offers foreign students. Students and graduates on OPT can be self-employed and work as independent contractors, a flexibility that is not afforded by other widely-available temporary work visa statuses. F-1 students and graduates are not subject to prevailing wage requirements during their employment on OPT which is particularly helpful to new entrepreneurs who sometimes volunteer their time to their own start-ups.

The current flexibility of the OPT program means students can take internships and employment that offer value and further their education. During this limited period, they now have a range of choices and options, including working on their own start-ups. Undue restrictions on the F-1 OPT program would be counterproductive to the goal of improving and enhancing the program to provide the US with talented, energetic and motivated foreign students and graduates.

Lawsuit

I also recently came across a report of a lawsuit challenging the Optional Practical Training program. The lawsuit predictably attacks the half-truths and hackish workarounds used to justify the program. Although approval for the lawsuit came after the memo suggesting possible changes to OPT, the lawsuit had been filed a while earlier and challenged the OPT as it had existed in the past. The article says:

The WashTech lawsuit, which is being heard in federal court in the District of Columbia, challenges the OPT program. If the judge ultimately sides with the plaintiffs, the case could be bad news for the OPT program generally, as well as Obama’s plans to further expand it.

Students still in school or recent graduates can use their student F-1 visas to take jobs through the OPT program. Employers don’t have to pay them a prevailing wage, or Medicare and Social Security taxes. These tax breaks make OPT workers “inherently cheaper” to employ than U.S. workers, the lawsuit argues.

The last para is somewhat inaccurate. It’s true that students on F status, whether currently enrolled or on OPT, are exempted from paying Social Security and Medicare taxes during their first five calendar years (see the Substantial Presence Test for more). On the other hand, those who have been in the US for more than five calendar years do generally need to pay Social Security and Medicare taxes while on OPT. It is also true that the prevailing wage requirement does not apply to OPT, but a large fraction of OPT employment is meant as a stop-gap prior to a H-1B petition, and the latter is subject to prevailing wage rules.

The article continues:

The 17-month extension may have acted as a catalyst in generating interest in the OPT program. There were 123,000 approved OPT students last year, compared to 28,500 in 2008 when the added time was approved.

John Miano, an attorney involved in the case and founder of the Programmers Guild, said the DHS “knew when they promulgated the OPT expansion that it was illegal.”

The justification for the 17-month expansion of OPT for STEM workers “was a ‘critical shortage’ of STEM workers,” said Miano, adding that the DHS had “no objective evidence to support the claim of a worker shortage.”

Miano said the only justification of a worker shortage is from one government study that made no such conclusion, the Rising Above the Gathering Storm report from 2007.

Now, the government will have to explain “where in the cited reported does it say there is a critical shortage of STEM regulations?” said Miano. And with that, “the regulations fall apart.”

There had also been an earlier lawsuit from the Immigration Reform Law Institute, back on May 29, 2008, challenging the STEM extension shortly after its announcement. However, the lawsuit was thrown out by a New Jersey district court judge (you can see the full proceedings here).

Conclusion

I’m personally quite grateful for this series of hacks. Without them, I wouldn’t have been able to stay in the United States. Or I might have been able to stay but would have been much more constrained in my choices. Without the STEM extension, I could not in good faith have accepted my current job. Just a few weeks ago, I was a little worried, because my case status for the STEM extension wasn’t showing up on the USCIS website. If my case had been lost, this would have been terrible for me and my employer. However, after a long phone conversation with USCIS representatives, I learned that the reason my case status wasn’t displaying online was that Obama’s deferred action announcement had required some system upgrades so they weren’t up-to-date. I finally got information that my case was proceeding normally, and my application was approved last week.

But, while these hacks have served me quite well, I also believe that the system as a whole doesn’t make sense. I wish that the same effective freedom that I enjoy were available to people around the world, high-skilled and low-skilled. People will always be constrained by their personal limitations and the limitations of the world around them. But I believe that many of the limitations imposed by migration law are an unnecessary additional set that should be dispensed with.

PS: For simplicity, I have omitted discussion of many aspects of the OPT, including something called pre-completion OPT. For a more comprehensive overview, see the Wikipedia page [FULL DISCLOSURE: I significantly expanded and restructured the page in a series of edits in September 2013, while researching it in preparation for applying for it. I made another series of relatively minor edits shortly after the publication of this blog post, adding some material I discovered in the course of research for the blog post.]

PS2: This didn’t fit well in the main post, but might be of interest anyway: employers have historically been reluctant to hire people on OPT if the annual cycle for those people means they can’t have a H-1B petition in by then. A National Law Review article notes that it has been ruled legal (i.e., not afoul of anti-discrimination law) for employers to choose to forgo hiring workers on OPT for this reason:

In a Technical Assistance Letter (TAL), the Office of Special Counsel has stated that an employer can disqualify an applicant because of future OPT expiration without running afoul of the Immigration and Nationality Act. The INA’s anti-discrimination provisions apply only to U.S. citizens, lawful permanent residents who are not yet eligible to apply for naturalization or who have applied within six months of eligibility, asylees, and refugees. “Accordingly, F-1 visa holders are not protected from citizenship status discrimination,” the Office of Special Counsel states. Therefore, an employer who inquires as to whether the candidate requires sponsorship now or in the future is not participating in discriminatory practices.

This makes conditional sense: the private “discrimination” here isn’t discrimination as much as a government-forced constraint on hiring. My co-blogger Nathan has argued that private discrimination should be permitted even as governments get out of the way, but in this case (and many other cases) the private discrimination is a rational response necessitated by government policy.

Related reading

The Good and Bad of the Immigration Reform Blueprint

This post originally appeared on the Cato-at-Liberty blog here and is reprinted with the author’s permission.

Today, the so-called Gang of Eight senators revealed a blueprint for an immigration reform bill. Details in the actual legislation will matter a great deal but these are initial impressions based on the blueprint. The good and the bad.

Good:

  • Earned legalization for non-criminal unauthorized immigrants. After paying fines, back taxes, undergoing a criminal background check, and other firm penalties, unauthorized immigrants will be able to stay in the United States and eventually earn a green card. This will increase their wages over several years much faster than if they remained unauthorized. 
  • DREAMers will not face the same penalties as unauthorized immigrants who intentionally broke U.S. immigration laws, which is a positive step.
  • Legalization for unauthorized immigrant workers in the agricultural industry will be fast-tracked. This is especially important because the majority of farm workers in most states are unauthorized immigrants.
  • Removing some regulatory barriers and increasing quotas for highly skilled immigrants. This will likely include an increase in the number of employment based green cards and removing the per-country quotas that produce wait times for Indian, Chinese, Mexican, and Filipino workers. Currently, numerous firms and immigrants are dissuaded from even trying to obtain employment based green cards because of the enormous wait times.

Bad:

  • Increases the amount of resources spent on border security. The size of the border patrol is double of what it was in 2004. The number of border patrol agents is seven times greater than what it was in the 1980s with about nine times as many on the southern border. More technology and aerial drones on the border will be wasteful and not produce results.
  • Strong employment verification system like E-Verify. As I wrote here, here, and here, E-Verify is an intrusive big government workplace identification system that does not even root out unauthorized immigrants. In Arizona, which has had mandatory E-Verify since 2008, many unauthorized immigrants have moved deeper into the black market, some industries fire numerous unauthorized workers but don’t hire natives to fill the spots, and the business formation rate dropped because the penalties for intentionally or knowingly hiring unauthorized workers are so draconian.
  • Increases regulations for guest worker visas. Current guest worker visas for agricultural workers are so overregulated that they are barely used. Adding more regulations will only make the visas more unusable and incentivize American farmers and employers to hire unauthorized workers.

A viable guest worker program will increase economic growth in the United States. Guest worker visas are not as good as green cards for lower-skilled workers, but they are the only viable option at this moment. The devil is in the details but this blueprint does not provide for enough future low-skilled immigration.     

Whoever he is, the next US President will be wrong on immigration

Josh Barro of Bloomberg has a good piece on 5 terrible policies which both Barack Obama and Mitt Romney endorsed in last night’s US presidential debate. My only complaint about Barro’s article: its obvious failure to mention immigration policy. The immigration status quo, not just in the US but in virtually every modern nation-state, is regressive, degenerate, and immoral. Maybe this universality makes it unremarkable in the US, but keeping the borders closed certainly qualifies as one of the “Worst Ideas Romney and Obama Agree On,” per Barro’s headline. Continue reading Whoever he is, the next US President will be wrong on immigration

Arizona-Style Immigration Laws Hurt the Economy

This piece originally appeared in Forbes here, and is reproduced with permission from the author. It is written specifically in the context of United States politics.

With  the “papers please” portion of Arizona’s recent immigration law SB 1070 going into effect, civil rights and watchdog groups are in  overdrive readying for the litany of purported abuses and complaints.  Lydia Guzman, president of Respect Respeto, a civil rights group in Arizona that records abuses at the hands of police, said, “Our hotline has been receiving hundreds of calls a day since the law was implemented.”

Forcibly removing peaceful unauthorized immigrants from the U.S., separating them from their families, property, and jobs, to satisfy arcane labor market regulations created by Progressive politicians, is an appalling indecency.  It also inflicts significant economic harm. Arizona’s immigration laws have drastically damaged its economy since mid-2007. The humanitarian arguments may leave those who complain the loudest about unauthorized immigration unmoved, but the supporters of Arizona style immigration laws might be persuaded by the economic costs.

In a new Policy Analysis by the Cato Institute called “The Economic Case against Arizona’s Immigration Laws,” I analyze the economic carnage inflicted by Arizona’s immigration laws.

The Legal Arizona Workers Act (LAWA or employer sanctions) was the first such law, and it tried to regulate unauthorized workers out of the market.  Its chief tool is E-Verify, an electronic employment eligibility verification system used to weed out unauthorized immigrants when they apply for a job.

E-Verify has three major problems.  It is very expensive, discourages investment and increases unemployment.

Just to run an employee through costs around $147. Compliance, however, also requires additional human resources and legal services, increasing the financial burden on firms.

The second problem is that E-Verify scares away businesses, investment, and workers.  E-Verify is tied to what then-Governor Janet Napolitano called the “business death penalty.”  Businesses that knowingly hire unauthorized immigrants have their licenses revoked on a second offense, killing the business.

Despite the fact that application of the business death penalty has been relatively rare the prospect has scared investors and businesses out of the state.  It was largely responsible for a shocking business formation rate decline of 14.3 percent in the third quarter of 2007 in Arizona, rates of business formation in California and New Mexico increased over the same time.

Entrepreneur Richard Melman halted plans of opening a restaurant in Arizona after LAWA passed said:  “You put in $3 million or $4 million, and you can be shut down for a mis­take. Why take a chance? I want to see how it plays out.”  He wasn’t the only one.

The third problem with E-Verify is that it increases unemployment.  Supporters of E-Verify like Kris Kobach, the Secretary of State of Kansas and author of many different state level anti-immigrant bills, claim that E-Verify will force unauthorized immigrants out of jobs so Americans can fill them.

In reality, some unauthorized immigrants are forced out of jobs, which then mostly remain unfilled.  In the immigrant heavy farming industry, crop production employment dropped by 15.6 percent in the first 4 years after LAWA was passed.  American workers did not fill the gaps.  In neighboring New Mexico and California, crop production employment increased over the same time period.  E-Verify explains much of that difference.

Two and a half years after LAWA was passed, Arizona created a more controversial law called SB 1070 to enforce immigration laws outside of the workplace.  The combined effects of LAWA and SB 1070 forced about 200,000 people out of Arizona, most of them from the Phoenix area.

In the six years after April, 2006, the home price index for the 20 largest metropolitan areas in the nation declined by 32.9 percent.  In the Phoenix area, the price index declined by a whopping 51.29 percent.

The housing bust, combined with forcing 200,000 consumers of real-estate out of Arizona lowered prices further.  Homeowner and rental vacancy rates in Arizona were consistently above those in California and New Mexico.  For four years after LAWA passed, Albuquerque and Los Angeles even recorded vacancy rates that were 50 to 75 percent lower than those prevailing in Phoenix.

As a result of the triple whammy of E-Verify, the business death penalty, and the housing price decline partly caused by forcing hundreds of thousands of renters and buyers out of the market, employment in construction collapsed faster and further than in neighboring states.

The economic harm caused by LAWA and SB 1070 is only the tip of the iceberg.  Following the next election, when numerous states will begin to consider Arizona style immigration laws, they should pause to survey the tremendous economic toll it has taken on Arizona.

Open Borders note: More related information is available at the Arizona immigration crackdown page.

Economic Judgment on Arizona’s Immigration Law

This is a cross-posting, with permission from the author, of an article that originally appeared in the Huffington Post here.

On April 25, the U.S. Supreme Court will hear oral arguments over the constitutionality of Arizona’s controversial immigration law. But jurisprudence aside, the economic verdict is already in: The law has damaged Arizona’s economy.

Arizona’s immigration law burdens businesses with regulation and penalizes workers. It has driven tens of thousands of laborers, consumers and entrepreneurs from the state, turning its bad economy even worse.

At its heart, Arizona’s immigration policy is an unfunded mandate that raises the cost of hiring workers and expanding production. Neither is good policy in even the best of economies, which we are far from experiencing currently.

The worst example: E-Verify. It’s an electronic verification system that employers are supposed to use to check the legal work status of all new employees. Besides failing to detect unauthorized immigrants 54 percent of the time — thus flunking its core function — E-Verify falsely identifies legal workers as illegal about one percent of the time. Continue reading Economic Judgment on Arizona’s Immigration Law