Posted by: Ann Corcoran | July 9, 2012

Legal visa programs for foreign workers hurt American senior citizens

So says the Center for Immigration Studies (CIS) in a report I missed last month, here, hat tip Jim.

One of the most widely read posts I’ve written here at PTPR is the one entitled, Wonder why your college kid can’t get a summer job?’

That post is about the Summer Work Travel Program cited by CIS’s David North which of course benefits the foreign young people who come to the US for 4 months each year for those summer jobs AND it benefits the employers who save on payroll tax deductions.

How many of you have wondered (while visiting a theme park or summer resort) why there are so many young Russians, among others, working as janitors, amusement ride operators, waitresses and such?  This is your answer!

Here is how North begins (emphasis mine):

One of the many reasons why the Social Security, Medicare, and Federal Unemployment Tax Act (FUTA) trust funds are in trouble is that American employers can avoid paying taxes to these funds by hiring certain classes of aliens, who, in turn, also do not pay these taxes.

The payroll tax loss for such a full-time worker at $30,000 a year was about $4,230 a year in 2010. That’s a $2,535 bonus to the employer for hiring an alien rather than a U.S. citizen or a green card carrier and a $1,695 bonus to the alien worker, and thus a $4,230-a-year blow to the three trust funds collectively. At $60,000 a year, the damage to these funds is twice as great, or $8,460 a year.

There are over half a million of these pampered alien workers. A careless government, of course, does not keep track of these losses in payroll taxes. Why generate data on a subject you would rather ignore? The damage to the trust funds is remarkable, it is continuing and, sadly, the advocates of the elderly, such as AARP, are doing nothing about this problem.1

The difficulty is that those who benefit from these tax breaks, corporations like Disney, are much more powerful than the retirees who are hurt by them. As too often is the case in America, the narrow, intense lobbies routinely beat the generalized, but low-key interests of the rest of us.

North cites six programs that are hurting elderly Americans, but since I’ve written previously about the foreign kids that is the one I’m interested in this morning.

Summer Work Travel Program run by the US State Department

The program is operated by the U.S. State Department, and it is one of the subsets of the J-1 Exchange program. It licenses certain middleman agencies to recruit the aliens and to place them in jobs in the United States. The admissions are for four-month periods.


SWT, however, had a great deal of (thoroughly deserved in my view) negative attention during 2011 as a result of a strike by a group of alien summer workers at a factory controlled by the Hershey Corporation;9 the workers, all enrolled in the SWT program, complained of low wages, long hours, difficult working conditions, and other indications of exploitation.  [Readers, see my post last August about the strike, here, SEIU was driving it!—ed]

The SWT program forces enrolled participants to pay for their own round-trip airfare, steep fees for the middleman agencies, and often-expensive housing and eating arrangements, but rarely pays much more than the minimum wage. The program also shoulders aside young American workers who might otherwise have these summertime jobs, often at resorts.

These are clearly jobs that U.S. residents can and should do, but the State Department’s program gives employers a 8.45 percent discount to hire foreign workers, rather than American ones, through the peculiar provision excusing employers (and workers) from paying the normal payroll taxes.

The grim facts about the program were described in unsettling detail by my CIS colleague, Jerry Kammer, a skilled investigative reporter, in a highly useful CIS Backgrounder10 and in a video program entitled “The $100 Million Work Travel Industry”.11  [See that report, here]

Did you get that!  One could argue that the kids shouldn’t have to pay the payroll tax because they won’t (hopefully) still be in America when they get old, but why should the EMPLOYERS get off the hook?

The incentive is thus well-established—hire foreign workers before American workers!

The next time you are tempted to say, “I’m o.k. with people who got into the US legally, it’s the illegal aliens working here that I have problems with!”  Don’t say it!


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