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STEM OPT Program Also Helps U.S. Domestic Workers, New Study Finds

A new study from Lehigh and Temple universities finds a strong correlation between expansion of OPT and an improved U.S. economy.

Donald Trump did not suspend the Optional Practical Training program this month when he finally signed a long-awaited executive order restricting international work visas, including the H-1B visa that is the goal of thousands of newly minted MBAs every year. He still might, if the right-wing rumor mill is accurate. But a new study co-authored by a Lehigh University College of Business professor finds that if Trump does restrict or suspend OPT, the move won’t achieve his stated desire of boosting domestic U.S. workers, because high-skilled immigration actually helps U.S. workers, and therefore the U.S. economy.

The study, Creation or Destruction? STEM OPT Extension and Employment of Information Technology Professionals, is co-authored by Jing Gong, an assistant professor in decision and technology analytics at Lehigh, and two colleagues at Temple University. The three presented it at a conference in Munich, Germany last year

Gong, whose work at Lehigh focuses on firm and consumer behavior in online markets, says the study’s findings pertain to business schools as well as information technology programs. That’s because for the past three years most of the top B-schools in the U.S. have designated all or part of their MBA programs as Science, Technology, Engineering, and Math programs — thereby qualifying their graduates for up to three years’ post-graduate work in the U.S. through the OPT program. Gong’s study that since the OPT program was expanded during the Obama years — a policy change that greatly increased the supply of foreign IT professionals in local labor markets and greatly impacted the tech industry in the U.S. — jobs for domestic workers and their wages have increased.

“Our results demonstrate that an increase in the supply of foreign IT professionals as a result of the OPT extension boosts employment for domestic IT professionals,” the authors write. “STEM workers bring entrepreneurship and their innovations create jobs,” adds Gong.

DOMESTIC U.S. WORKERS GAIN FROM ‘SPILLOVER EFFECT’ OF FOREIGN WORKER INFLUX

Lehigh assistant professor Jing Gong. Temple photo

Gong co-authored the study with Xue Guo and Min-Seok Pang of Temple University. The researchers collected wage and employment data from public sources and compared the number of workers, as well as the average wage of workers, before and after the STEM OPT extension in 2008. They concluded that while foreign nationals were seen to “cannibalize” domestic workers, the two groups actually complement each other — and employment of foreign workers even boosts the employment of domestic workers.

Gong’s study joins a voluminous literature supporting the economic efficacy of STEM OPT. Support for OPT is well-documented and bipartisan — as it is for H-1B, which nevertheless was suspended until the end of 2020 by President Trump. (Among the many studies supporting preservation of H-1B is this new one from Stilt, a
fintech company that helps immigrants and the underserved get credit.)

Bill Boulding, dean of the Fuqua School of Business at Duke University and a leader in the effort to convince Washington of the value of OPT and H-1B, told P&Q this month that he understands the impulse to put American citizens back to work when more than 40 million are unemployed. He was pleased to see that the OPT program, a critical path for badly needed STEM talent, was not curtailed, but dismayed at the suspension of H-1B, particularly as “there are other, more direct routes to address unemployment that would be more effective than shrinking the labor pool.”

“Business school deans,” Boulding continued, “have been extremely vocal in explaining the importance of immigration of highly skilled talent to the U.S. economy. It’s disappointing to see the suspension of H-1B visas. Research has shown that skilled immigration actually creates more jobs for the U.S. economy. On the flip side, research also shows that if companies can’t recruit needed international talent to the U.S. they will offshore those jobs — ultimately hurting American workers by providing less opportunity in our economy.

“As I’ve had conversations with policymakers in D.C., both sides of the aisle have expressed a deep understanding of this issue and the importance of immigration to U.S. economic health. We should be expanding the number of H-1B visas available to grow our economy, not curtailing them.”

SUSPENSION OF H-1B COULD HURT THE U.S. ECONOMY IN THE LONG RUN

The fear shared by Boulding’s colleagues at U.S. B-schools is that foreign students will eschew U.S. graduate business education without the hope of long-term stays in the U.S. post-graduation. Jing Gong says the preservation of OPT was good for the U.S. economy, but the suspension of H-1B — the visa that is the ultimate goal of those in the OPT program — will undoubtedly hurt, if it is extended into 2021 or beyond.

Gong, who earned her Ph.D. in Information Systems and Management from Carnegie Mellon University after obtaining a bachelor’s in Information Management and Information Systems from Tsinghua University in Beijing, China, joined the Lehigh College of Business faculty in 2019. She says while at CMU studying for her Ph.D., she worked with university economists, observing their policy-related research, “so that has always been in my heart.”

“From the findings of our paper, the implication is that foreign professionals do have a spillover effect on domestic workers, and we actually also have additional evidence to show that some of the mechanisms are through innovation and entrepreneurial activities,” Gong tells Poets&Quants. “So foreign professionals can boost innovation and also boost entrepreneurial activities. So with the OPT policy untouched, that’s good, because the positive benefit would be still there.

“On the other hand, and still based on the findings of our study — although we don’t really have H-1B data really extensively studied in this paper — if we follow a similar logic, H-1B comes after OPT, right? So foreign students first use OPT to work in the U.S., and then the employer would apply for them to get a H-1B. That’s the typical path. So if H-1B is affected in the long run, these students, even if they have OPT, they still need H-1B to really stay in the U.S. in the long term. With that policy affected marginally, some people may still be concerned about their stay in the U.S. in the long run. Not necessarily in the short run, but in the long run.”

Read the study co-authored by Professor Gong and two Temple University co-authors here

DON’T MISS TRUMP SUSPENDS H-1B THROUGH 2020, BUT LEAVES OPT INTACT and B-SCHOOLS REACT TO TRUMP’S SUSPENSION OF H-1B