Expert: Disney Rewards Employees for Record Profits by Replacing Them with Cheaper Foreign Workers

Disneyland Paris
AP Photo

An Economic Policy Institute expert is highlighting the disconnect between Disney Corporation’s high profits and the company’s subsequent replacement of its employees with less expensive foreign labor.

In a recent blog post, EPI expert Ron Hira, a professor at Howard University, puts the layoffs at Disney and the employees under more scrutiny. He points out that—despite record breaking profits, a stock price up 150 percent over the prior three years, and a CEO taking home $46 million last year—hundreds of employees were rewarded by being replaced with cheaper foreign workers on H-1B visas.

So, you would expect a firm that puts its employees first to share the vast prosperity that’s been created with the very employees who went above and beyond to help generate those record profits. Well, how did [CEO Bob] Iger repay his workers—sorry, I mean cast members—for creating all this profit? Not with bonuses and big raises. Instead, as the New York Times just detailed in a major report, he forced hundreds of them to train their own replacements—temporary foreign workers here on H-1B guestworker visas—before he laid them off.

According to Hira, who has testified before Congress on the need to protect American jobs, the H-1B guest workers are simply less expensive and can elevate profit.

H-1B guestworkers are cheaper than American workers and don’t have much bargaining power, and any company would be foolish not to take advantage of this highly lucrative business model that has been inadvertently created by Congress and multiple presidential administrations.  Of course, this business model is paid for by destroying the livelihoods and dignity of tens of thousands of American workers. The costs are also borne by American taxpayers, through foregone tax revenue and the additional social services that need to be provided for those newly unemployed American workers.

As Hira recounts, Disney’s story is one that has been relived in a number of companies across the country. Despite the apparently growing prevalence of H-1B workers replacing American employees, the Obama administration has declined Congressional requests for an investigation.

The contractor Disney hired to replace the laid off employees, HCL, according to Hira, was the sixth largest recipient of H-1B visas in 2013 with 1,713 visas.

Like most top H-1B employers, government data reveal that HCL uses the program for cheap, temporary labor rather than as bridge to permanent immigration. In fiscal 2013 it applied for only 128 green cards, compared to its 1,713 new H-1B workers, or 7 percent of the H-1Bs it hired that year (because H-1B visas are valid for up to six years, HCL’s total H-1B workforce is much larger, but it does not disclose this information).

He noted that these foreign workers are paid significantly less than the Americans they are replacing.

According to government data acquired through a Freedom of Information Act request, the median wage HCL paid those 1,713 H-1B workers was $61,984, which is essentially the entry level wage for an information technology (IT) worker, and more importantly, a 25 percent discount on the median wage of $82,710 for Computer Systems Analysts in the United States. Moreover, it’s almost certain that Disney’s 25 percent H-1B discount is an understatement, because many of the laid off Disney workers I spoke with were earning approximately $100,000, and had been employed there for many years, so they had also earned and accumulated benefits packages based on their seniority.


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