How America’s Immigration System Betrayed American Workers

Acting ICE Director Todd Lyons recently announced that federal investigators had identified more than 10,000 foreign students linked to suspicious companies in a fraud scheme involving the 25 largest employers in the federal Optional Practical Training (OPT) program.

First created under the Bush administration, OPT was designed with a simple purpose: allowing foreign students on F-1 student visas to gain up to 12 months of hands-on work experience in their field before returning home. The program was expected to serve only a few thousand students a year.

Instead, OPT – and particularly its STEM extension which stretches that window from one to three years – has metastasized into something unimaginable to the program’s creators. It is now a massive, unregulated backdoor to the American labor market that bypasses H-1B caps entirely and operates with minimal oversight, undercutting American wages and stealing opportunities from native-born workers.

What Lyons reported is not an isolated scandal. It is yet another window into the sprawling criminal abuse of the immigration system that stretches from the OPT program’s ghost worksites all the way to the H-1B visa lottery, which corporations have spent decades exploiting to suppress wages and push qualified American workers to the sidelines.

Together, programs like OPT and H-1B are not “supplementing” the American workforce, but rather deliberately replacing it.

The H-1B Myth: “Best and Brightest” or Cheap Labor Pipeline?

The H-1B visa program has long been sold to the American public as a tool for attracting exceptional foreign talent – the rare specialists no domestic candidate could match. The corresponding salaries paid to H-1B candidates supposedly reflect that premium.

However, in fields dominated by H-1B workers, which include IT, engineering, accounting, and back-office white-collar roles, wages have remained stagnant or failed to keep pace with inflation, a result that defies basic market logic if a genuine labor shortage existed or if these positions required top global talent.

A true labor shortage would drive wages up sharply as employers competed for talent. Instead, the H-1B program functions as a cost-saving pressure valve, allowing corporations to bypass the domestic labor market entirely, importing cheaper foreign alternatives to American talent.

Additionally, the lottery system that governed H-1B selection for years has been systematically exploited. Employers, particularly outsourcing firms and staffing agencies, flooded the registration pool with large volumes of low-skilled, low-wage foreigners, overwhelming the system and crowding out genuinely high-value American candidates.

As U.S. Citizenship and Immigration Services itself acknowledged when it moved to reform the process, the old lottery was “exploited and abused by U.S. employers who were primarily seeking to import foreign workers at lower wages than they would pay American workers.”

Because H-1B status ties a worker’s visa to a specific employer, the arrangement also creates a form of indentured servitude, as H-1B recipients cannot easily walk away, demand a raise, or organize.

Thankfully, new reforms taking shape in 2025 and 2026 are a step in the right direction.

A wage-based selection system replacing the pure lottery, a $100,000 fee on petitions for workers based outside the U.S., and a proposed nearly 33 percent increase in prevailing wage thresholds all work to better align the program with its original purpose.

While these new rules are welcome, they will be treated as temporary obstacles to overcome without aggressive enforcement. Determined fraudsters have a strong incentive to circumvent any rules and restrictions.

The Citizen Penalty: Who Actually Pays

It is important to be clear about who bears the cost of this fraud. Because it is not the corporations that have used H-1B and OPT as wage-suppression tools.

Instead, it is the American computer science graduate who sent out dozens of résumés only to be passed over by a firm running a foreign-worker pipeline. It is the mid-career American engineers who watched their industry’s wages stagnate for a decade.

It is also the young American family that scrimped and saved for a down payment, only to find themselves outbid in the housing market by a guest worker with access to FHA financing and state homebuyer grants – all subsidized, in effect, by the taxpayers the foreigners were competing against.

Taxpayer-Funded Homeownership for Temporary Visa Holders

The housing dimension of this story is perhaps the most direct illustration of how federal immigration policy was turned against the very citizens it was supposed to serve.

During the Biden administration, H-1B visa holders who are, by definition, temporary, non-permanent residents, were eligible for FHA-insured mortgages with down payments as low as 3.5 percent – a story that should have been a national outrage but which was met with barely a shrug from the corporate media.

In practice, that 3.5-percent floor often went to zero. And since the Federal Housing Administration does not track the citizenship or residency status on loan applications, we have no idea how many non-citizens currently hold federally insured mortgages.

In short, American tax dollars were used to fund down-payment grants for non-U.S. citizens, allowing them to close on homes at peak 2022–2024 pricing while the American family next door was scraping together whatever they could for their down payment.

It was, in the words of one housing market analyst who tracked the practice closely, the return of NINJA loans — “No Income, No Job, No Assets” — that precipitated the 2008 housing collapse. Only this time, the scam was extended to non-citizens on temporary visas.

According to John Burns Research & Consulting, non-permanent residents, including H-1B holders, accounted for roughly four percent of FHA loan volume nationally in 2024, with significantly higher concentrations in parts of Florida and Texas where H-1B workers are known to cluster.

In specific new construction markets, the share was almost certainly higher, distorting the very programs meant to make homeownership accessible to American citizens of modest means.

In May 2025, the Trump administration issued HUD Mortgagee Letter 2025-09, restricting FHA loan eligibility to U.S. citizens and lawful permanent residents, ending the practice for H-1B and other temporary visa holders.

As a result of these restrictions, the share of FHA loans going to non-permanent residents dropped from six percent in April 2025 to nearly zero by July.

In markets like Celina, Texas, where new construction had been fueled in part by this zero-down pipeline, home prices began softening almost immediately after the program was shut down.

The episode illustrates how interconnected these policy failures are. H-1B visa programs suppress wages in the industries where these workers are concentrated. Those same workers — often earning less than genuine market rates but still more than entry-level American workers displaced by the program — then compete in the housing market for the same starter homes. And until May 2025, they competed with a government-backed financing advantage that American citizens did not have.

The American worker was squeezed from both ends: losing ground in the job market and then losing ground in the housing market, in part because of programs their own tax dollars were funding.

When a government makes it systematically easier for a temporary visa holder to secure a federally backed mortgage than for a native-born citizen to compete in his own job market, it has abandoned its primary obligation.

Acting ICE Director Lyons said it plainly: “This fraud is not victimless. It is a blatant attack on the goodwill of the American people.”

He is right, and the goodwill he describes is not inexhaustible. Unfortunately, far too many involved in these scams see American generosity as a weakness to be exploited.

Restoring the Priority of the American Worker

The reforms championed by the Trump administration are a good start, but Congress must go further. The OPT program, which lacks the explicit congressional authorization that underpins the H-1B program, is long overdue for a fundamental reckoning.

At minimum, any reform to OPT should require mandatory worksite verification, strict employer accountability, and immediate termination of status for those caught in fraudulent arrangements. Congress should also simply end the STEM OPT extension outright given all the abuse it has seen.

Regarding the H-1B program, Congress must close the staffing-firm loopholes that allowed outsourcing companies to become the program’s dominant users, which is a far cry from the “specialty occupation” standard the law envisions.

Any employers found to have systematically displaced American workers through the program should face stiff penalties that change corporate behavior, not fines absorbed as the cost of doing business. Federal housing and lending programs also must be reviewed to ensure that taxpayer-backed subsidies serve only American citizens who have a permanent stake in this nation’s future.

Most critically, the government must follow through on the prosecutions it has promised.

The ghost-worksite networks, visa fixers, and shell-company employers exposed in the OPT investigation did not build themselves overnight. Any state that does not comply with the White House’s anti-fraud effort should have its federal health funding turned off, as JD Vance recently threatened to do.

Deterrence requires the kind of consequences that make the next would-be corporate fraudster or corrupt state administrator think twice about acquiring cheap labor at the expense of the American worker to the detriment of the American family.

Adam Johnston is a senior contributor to The Federalist whose work has been featured in The Blaze and the Daily Caller. He is also the creator of the Substack publication “Conquest Theory” where he regularly writes about politics, history, philosophy, and technology. You can find him on X @adamkjohnston.