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Wages or Wagers?

June 9, 2015
© Adam Zyglis

It’s no fairy tale. According to an article in the NY Times, around 250 information technology employees working for Disney were laid off from their jobs. These are the people who keep the computer systems running at DisneyWorld.

But the ironic part is that in order to get their severance package, these workers were required to train their replacements. They weren’t laid off because their work wasn’t needed, instead, they were replaced by foreign workers (brought in by outsourcing firms from India) with temporary work visas (called H-1B visas), who would work for significantly less money.

But according to federal rules, H-1B visas are supposed to be used to allow foreign workers to come in on a temporary basis when there are no Americans with the required skills. Indeed, they are required to not “adversely affect the wages and working conditions” of Americans. Instead, the reality is that the majority of H-1B visas are going to outsourcing companies.

Now, I am not entirely against outsourcing. As the founder of several technology startups, I have even used outsourcing. But only when there was a specific, limited term project and it didn’t make sense to spend the time and effort to hire a bunch of highly skilled people who would then need to be laid off after the project was done.

Laying off a bunch of workers and replacing them with H-1B visa holders goes completely against the spirit of the law, and is only possible because of numerous loopholes. These loopholes need to be closed.

Even worse, companies are often shooting themselves in the foot when they pull stuff like this just to save a little money. The theory that highly skilled workers are fungible assets (can be replaced by lower cost workers who can then do the same job) has been shown to be false over and over again. Workers are not just a set of replaceable skills. Companies (like Costco and Starbucks) who try hard to keep their workers happy and reduce turnover rates tend to have happier customers and end up making more money.

How can Disney claim that its parks are the “Happiest Places on Earth” if their employees are not happy?



  1. Hassan wrote:

    If I am not mistaken H-1B must be paid prevailing wages, otherwise government can deny the visa or may be punish company later (not certain about this). But there is another category of visa that is really temporary, in which people will come for few months work/learn and then go back and then work from their country, and more people will come after that, till first batch comes back. I think it is L1 visa.

    Thursday, June 11, 2015 at 7:37 am | Permalink
  2. Max wrote:

    Wow, I had no idea this was happening.

    Thursday, June 11, 2015 at 11:15 am | Permalink
  3. ralph wrote:

    Walt must be spinning in his grave, though Scrooge McDuck is alive and well! Think I heard they recently raised their admissions prices too by something like 25-30%. Now we know when they sang about “Disney’s wonderful world of color”, it was all about the color green.

    Thursday, June 11, 2015 at 1:34 pm | Permalink
  4. Hassan wrote:

    BTW, strictly from personal experience, and from cities in Texas, I have never seen a reasonable (average) IT person not having a decent paying job. Specially in software. I have worked with many recruiters and they are always short on people. On the other hand I have seen too many below average people in software churning crappy software.

    What I am about to say may sound racist, but I cannot ignore overwhelming data that I have lived through. And the reason is not race but socio-economic factors. So here it goes:

    I have rarely, may be 1 out of 100 seen bad software developers who are American born and raised (irrespective of race). They join the field for passion. Quite high number of Americans are innovators that have invented technologies and frameworks and stuff. So American software professionals are either genius or above average or average and very few below average.

    Now unfortunately I cannot say same about people who were not born and raised in US (or educated in American universities). As one of my mentor (white guy) has said, these people do software because their money in it. If you tell them to dig ditch for same money, they will happily do that. So people from India have contributed a lot in software/IT. There may be few innovators, many above average, quite many average, but unfortunately a lot many below average as well. This is because perhaps just large population as well, so 1% of Americans is quite less than 1% of Indians. But I think they come into this field for money not passion.

    So there is no reason to outsource jobs or hire them to replace Americans. And as I said, there is just too much work, and fewer people (good ones), so not sure why Disney or any company will let go of people who are doing good job.

    Thursday, June 11, 2015 at 1:58 pm | Permalink
  5. eyesoars wrote:

    Nothing new for ‘The Mouse’. They treat their workers notoriously. Nor did this change after Uncle Walt died.

    Re: Hassan, I have to say that I disagree completely. There are plenty of lousy s/w people born and raised in the U.S.. Also plenty of good ones.

    My experiences with foreigners are that many of them are very good. Many of the Indians, Iranians, Japanese, Nepalis, Australians, Tunisians, Russians, Vietnamese, Malaysians, English, and many other nationalities I’ve worked with have been quite good. On average, they’ve been slightly better than the U.S. programmers I’ve worked with, but the variance is also higher. I’d also expect that, given the drive required to move to a foreign country, integrate into a new culture, perhaps learn a new language and live speaking it, and make a home there.

    There have been one or two nationalities of programmers I have been very disappointed with… but that, I suspect, is more an issue with their culture and (real or perceived) social status than innate ability.

    Thursday, June 11, 2015 at 7:05 pm | Permalink
  6. Michael wrote:

    Simple solution: require H1-B recipients to be paid 150% of the average American employee performing similar duties. That’d get rid of the bad actors very quickly.

    Thursday, June 11, 2015 at 8:01 pm | Permalink
  7. Michael wrote:

    One other thing to respond to this: “How can Disney claim that its parks are the ‘Happiest Places on Earth’ if their employees are not happy?” Almost 20 years ago (wow, it’s been that long?), I performed with a musical ensemble in Disney World a couple of times. This experience gave me the opportunity to see what goes on at the parks behind the scenes. And that’s certainly not the happiest place on Earth. Not by a long shot.

    They have probably the tightest message control of any organization I’ve seen (which also includes defense contractors). The magic of Disney World depends on absolute perfection of image. If you screw up and break character in front of patrons, you kill the magic and tarnish some child’s memories. That. Cannot. Happen. And they make sure you know that before you go out there.

    So the answer to your question is twofold: message control and acting.

    Friday, June 12, 2015 at 8:28 am | Permalink
  8. BTN wrote:

    I think requiring H1-Bs to be paid 100% would get the job done on that front. Of course, I’m sure that you would have quite a bit of fraud (ie, foreign IT workers kicking back some of their paycheck to their employer), especially when the workers are based in a foreign country.

    Friday, June 12, 2015 at 8:22 pm | Permalink
  9. ebdoug wrote:

    My son has worked at the same software company for 22 years since he got out of college. He is leaving in two weeks after he gives notice. He is one of those people who helps, gets the job done, is always nice and is a genius.

    He wants a rest before he goes back to work, but he will be looking for work in the Northern Virginia area.

    Saturday, June 13, 2015 at 6:10 am | Permalink
  10. ralph wrote:

    Wow! Glad I opted out of this scam from the get-go. These theme parks in general are all phony ripoffs. Go to a national park, take a hike or climb a mountain. See the real deal.

    Saturday, June 13, 2015 at 7:36 pm | Permalink