Disney Layoffs in Context Of H-1B Visa Program

Disney Layoffs in Context Of H-1B Visa Program

 The New York Times recently posted an article regarding the layoff of approximately 250 Informational Technology (IT) employees at Walt Disney World, and their subsequent replacement by highly skilled technical temporary foreign H-1B workers. This blog addresses some of the statements made in the article and discusses common misconceptions regarding the way in which H-1B visa petitions actually work.

An Overview of the H-1B Visa Program

The H-1B visa category is used for the temporary (non-immigrant) employment of highly educated foreign professionals in “specialty occupations”, which require at least a bachelor’s degree, or is equivalent, in a related field of study. The H-1B visa program provides 85,000 temporary visas for foreign professional workers to be employed in the U.S. for up to 6 years.

According to the American Immigration Council (AIC), nearly two-thirds of H-1B petitions filed for foreign H-1B workers are for positions in STEM (Science Technology, Engineering, and Mathematics) occupations.[1] In recent years, the demand for H-1B visas has far outweighed the existing supply.

Negative Impact on American Workers?

The New York Times article references various sources, which indicate that hiring H-1B workers negatively impacts overall wages in the U.S. However, according to AIC, the overwhelming evidence shows that H-1B visas do not drive down the wages of Americans and that there are in fact studies that show a positive impact on wages overall.  Specifically, from 1990, when the H-1B program started, to 2010, an increase in H-1B petitions filed in the STEM fields have been associated with a significant increase in wages for college-educated, U.S.- born workers in 219 U.S. cities.[2]

H-1B workers are not “cheaper” than their American counterparts. Hiring an H-1B worker means that an employer ends up paying: (1) USCIS H-1B petition filing fees as high as $5,550 per visa petition; (2) a minimum salary tied to the higher of either the prevailing wage for the occupation in the intended area of employment or the actual wage paid to workers with the same or similar job, education level, and work experience; (3) attorney fees; and (4) for health and/or other employee benefits offered to all other employees. 

There are built-in protections in the law and regulations to ensure that the wages and working conditions of American workers are not negatively impacted through the employment of H-1B workers.  Both the Department of Labor and USCIS play important roles in ensuring that H-1B employees are paid the correct wage/salary and that their employment does not in any way deteriorate the working conditions of American workers, through audits and other compliance mechanisms.

Understanding Business Realities

We currently live in a fiercely competitive global economy comprised of various players in a wide array of sectors, whose goal it is increase their respective market shares and profitability. To remain competitive in today’s global and fast-paced economy, employers strive to minimize their costs. Many companies outsource their technical (and other) functions by entering service agreements/contracts with IT companies that provide the services of their workers (including H-1B visa holders) as IT Consultants, to avoid having to pay benefits and assume other costs typically associated with direct hires. By lowering operating costs, companies are often able to provide cheaper goods and/or services to its customers and clients. 

If, as stated by Disney executives, those who lost jobs were allowed three (3) months to transition and résumé coaching so that they could apply for other positions in the company, such action is commendable, especially at a time where very few companies in similar situations do so. Likewise, if one hundred and twenty (120) of those laid off actually found other jobs at Disney, it is somewhat unfair to vilify Disney for laying off a very small percentage of its total workforce and replacing them with contracted H-1B workers.

It is also important to look at the larger picture - Disney has managed to create almost thirty thousand (30,000) new jobs in the U.S. over the past decade and a net gain of seventy (70) technology jobs overall.  Besides, the H-1B workers brought in as replacements do not constitute the entire Disney work force; they supplement the existing work force rather than displace them. As stated by the Chairman of Walt Disney Company, Mr. Robert A Iger, Disney employs less than ten (10) H-1B workers

The Way Forward

Existing data shows that H-1B workers positively impact the US economy and the employment opportunities for American workers. To remain competitive in today’s global economy, the H-1B program should receive additional visa numbers - at least enough to meet the current demand. The fact that the H-1B quota was met within the first five (5) business days in April in 2014 and 2015, clearly demonstrates that U.S. companies require additional visas for highly skilled, professional workers. H-1B workers currently fill a critical need, particularly in the STEM fields.

Finally, it is important for us all to understand that Immigrants from all over the world have helped to build the U.S. economy and continue to do so. Their contributions to the economy help to create new jobs and opportunities for all Americans.

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[1] See http://www.immigrationpolicy.org/just-facts/h-1b-visa-program-primer-program-and-its-impact-jobs-wages-and-economy

[2] See http://www.nber.org/papers/w20093

 Read more articles from Mona Shah & Associates

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