I did not know this until I saw it mentioned on X (formerly Twitter). When a company hires J1 student temporary or season employees, they do not have to pay the 7.5% FICA or Social Security tax on the wages.
If a company hires a seasonal American student, they have to pay the 7.5%. If the company hires a foreign student, they don’t. This creates a perverse incentive for private equity firms, companies or corporations to hire foreign seasonal workers. This is true, I checked it out.
[SOURCE – and IRS SOURCE – and Alternate Source]
Apparently, this is now the common approach within the hospitality industry to save money and increase profit from payrolls. Unfortunately, this approach puts young Americans at a disadvantage when seeking summer or short-term seasonal employment.
For fiscal Year 2025: The U.S. State Department processed 506,142 applications and successfully issued 451,803 J-1 visas.
Now, obviously there may be some regions or areas where there are not enough young people to fill the jobs. However, if you do the math that 7.5% employer contribution saved is a lot of incentive for the corporation to avoid hiring seasonal American workers.
One student making $20/hr x 500 hours worked (over 3 months) = $10,000 payroll. The company has to pay an additional $750 in social security if the student is American. The $750 is saved if they use a foreign J1 student worker.
If the hospitality organization hires 20 seasonal workers for 3 months, using the J1 visa process saves them $15,000 in taxes.
A private equity group, multinational owner or corporation running the business is likely to be looking at the bottom line.
Additionally, this J1 entry allows the overall immigration system to be abused if the person doesn’t leave the USA at the conclusion of their employment. How many illegal aliens are created by those who enter under a J1 visa and never leave?
Suspicious Cat is now aware, and, well, increasingly suspicious:
Another entry mechanism that is no doubt being severely abused and that We the People end up paying for. Ugh.
Thank you Sundance for shining a light on this!
They should pay double for foreigners.
What is the difference between a proscribed Terrorist Organization and the US Chamber of Commerce?
Alas, eliminating this loophole would also diminish the narrative that Social Securty is going bankrupt.
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and yes the question as well. I would say no. And prob no state income tax or state income tax filing requirement either. Just poor foreign students./s. Stop the Chamber of Commerce.
our government fkn Americans every way they can
That’s a big financial incentive to hire aliens. And it blows up the SSA model of pay as you go.
See? If we didn’t have borders this wouldn’t even be an issue!
[sarcasm/off]
Legal immigration is a bigger problem than illegal immigration.
Sadly, uniparty republicans are 100% onboard with screwing American citizens. Aside from Trump and a severe minority of republicans in Congress, the uniparty in power will never protect American citizens.
It is also my understanding that this is true for OPT (Optional Practical Training) Program. Another means to avoid SS tax and yet hire for up to 4 years.
The government is our enemy.
Indefensible. The 7.5% employer portion should still be collected (while SS exists, irrespective of the fact that it should not IMO) and then be deposited into the SS trust fund generally (pretending that it still actually exists, notwithstanding that our corrupt and incompetent DC politicians and appointees have already spent it all on non-SS things).
Fed Gov should not be picking winners and losers, and certainly not picking non-citizens to be winners over the native citizenry (as losers). Totally unconstitutional by any standard (without consideration as to what our less than credible SCOTUS opines).
DC is full of crooks who are bleeding the citizens and the republic dry.
I’m pretty sure anything left in SS at the end of the year is used to pay down the deficit. That may have changed, but I doubt it.
How about the foreign worker and the employer of the foreign worker EACH pay 25% into Social Security. This will be the tale of the tape as to whether foreign workers are more competent or simply cheaper.
Does anybody know if Trump is aware of this?
Paging SEC Bessent!!!
I would think so, considering he’s been so involved in the “hospitality” industry.
The ski Industry abuses this loophole to the detriment of the locals out here in the north east. There are ample young locals to work the slopes and to get a season pass as a perk.
Rampant practice in Colorado as well, both winter and summer.
You’re not kidding when you say we’re in an abusive relationship with our government.
Any which way to screw American workers.
I bet this applies to internships, as the “off-campus” option. Two of my nephews had great difficulty getting a spot this summer, and they are both exceptional young men, fully bilingual and more.
You can see it would mess up the on campus hiring too.
Another reason why SS is going broke… they use SS $$$ for whatever they want…. then refuse to replace it!!
The solution is to simply abolish the IRS. Problem solved. It’s long overdue anyway.
US natural born citizen.
I worked through grad school as a research assistant funded through NSF grants.
Neither I, nor my employer (the University) paid those payroll taxes. Wasn’t an option I could choose.
Those seven years always stand out whenever I get a Social Security statement. But I eventually worked enough quarters even with the hole in payments.
Definitely adds weight to my argument that all foreign workers, even these should be eliminated and American youth or even older people could fill the empty. Argument can’t get help. Is it can’t or ‘don’t want too’. Easy to fly a bunch of youths from a foreign country than bus some from one part of the country to the other. Fingers point but are your fingers clean?
This could easily be remedied through appropriate legislation. But don’t hold your breath.
Oddly enough, this is something I knew.
All those little.highways and byways which deliberately undercut American citizens…
I see the nefarious, globalist hand of the US Chamber of Commerce and its lobbyists on the wheel, fists full of ready cash, stuffing their filthy lucre into the pockets of anti American Congressional grifters and parasites, doing the dirty work.
I remember feeling infuriated when I read it a while back.
Even more so now.
Many foreign “work exchange” workers then go on a tour of the US, often big cities, at the end of the season.
Easy to then not be going home at the end of the Visa
Normal mom and pop’s businesses would have no reason to know this.
What a rip-off to good ‘ole American businesses.
This explains why the drive thru at an international fast food company always has ehat looks to be foreigners working.
How long has this been going on?
The H1-B bulls5it has to stop.
The chyneeze student /spy open door has to stop.
Honestly, if a company is hiring a foreign student, they should be paying at least 15% and maybe even 25% to Social Security. If employers insist on hiring foreigners over citizens, then those employers should be contributing more substantially to the Social Security fund, especially since it has been abandoned by Congress at the expense of American workers.
Oh my ! That’s awful. No wonder kids can’t get hired.
When my son was a teen he had a hard time getting hired for after school or summer work and I couldn’t understand it because we live in a tourist area with many hotels and resorts and restaurants.
When we are at the SC beaches, the seasonal workers are from eastern Europe. This helps to explain why.