Insourcing: American Lose Jobs to H-1B Visa Workers

If a company is done with an employee, guest workers often find themselves stranded in the U.S. without a job. After five years as an H-1B, employers are required to start paying social security, so the worker becomes less attractive. When the job is over, so is the visa, making them into illegals. Their staffing company may h
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Businesspeople standing in line
Businesspeople standing in line

Disney characters sing lofty messages about finding your true self, developing your special talent and becoming successful doing what you love. Their stories never say: study to become a highly-skilled Information Technician, work hard for years at Disney, train your foreign replacement, and don't forget to leave your benefits at the door when it slaps you on the back.

Since October of 2014, Disney aggressively used "guest workers" for low-wage staffing to replace American workers. The H-1B, a 3-year work visa, allows foreigners to enter the country for specific jobs. Originally, H-1B visas were structured to bring in highly skilled, uniquely talented individuals if the American labor pool ran dry. But since 1990, employers have been abusing the visa program to reduce payroll and maximize profits.

Gary Beach, of the Wall Street Journal said the H-1B visa "was intended to complement, not replace American workers. It's gotten out of hand."

Americans are losing jobs to foreigners and training their replacements.

Disney laid off 850 American workers, some of whom were given 90 days to train their replacements with the threat of losing their severance pay if they didn't stay to the end. "We all felt humiliated when the foreign workers sat next to us and watched everything that we did," wrote one Disney employee going through the experience. The training sessions prove that the H-1B workers don't hold special skills that American workers lack. "If our own pool of IT professionals were so incompetent, then why would companies like Disney have us train our replacements and spend months teaching them?" wrote the displaced worker.

So many staff spoke Hindi during their training period that a departing employee remarked, "I really felt like a foreigner in that building."

Disney calls the practice "knowledge transfer" whereby IT professionals chart the step-by-step processes of the job, audiotaping conversations and recording their computer screens. "We were then astonished as everything that we did on our job was documented and read right back to us for further critiquing." By the end of the 90 days, new workers had an instruction manual to which they could refer after the Americans left.

Employers Have Reasons to Abuse Foreign Guest Visas

Carly Fiorina is legend for replacing American workers with low wage visa workers at Hewlett-Packard. Employers aren't required to pay minimum wages, don't have to offer benefits, and social security taxes are waived for five years, reducing costs by 17 to 21.5% of their total salaries, saving employers billions of dollars annually. High tech giants Google, Xerox, and Facebook have taken advantage of H-1B workers.

Corporations such as Toys 'R Us, Xerox, Molina Medical, Pfizer, and Microsoft used H-1B "guest" workers to reduce their payroll costs. Utility company Southern California Edison laid off 500 employees, warning SCE workers to train their replacements in 90 days or they wouldn't receive severance.

The Numbers of Replaced American Workers are Staggering

In 2015, the number of visas issued to all immigrants crossing the borders legally was almost 11 million, according to statistics collected at Foreign Service Posts.

Supposedly, the government has set a cap of 85,000 new H-1B's each year for the entire country. But many workers come in using other types of visas such as:

OPT: Optional Practical Training
F-1: student
B-1: business
J-1: exchange visitor
CPT: (Curricular Practical Training) interns who are recruited later
Q: Special Disney-invented visa for workers who are "authentic to the Epcot experience"

Workers then switch to an H-1B. Switches are not recorded as part of the 85,000 cap and there are no checks and balances in place to reign in visa clearances.

The Department of State, who issues worker visas, reports figures for all 16 different types of work-eligible visas, showing that 70 million have been issued since 2007.

When the Government Accountability Office studied the H-1B visa program in 2011, they reported reasons why the numbers of guest workers are impossible to track:

The total number of H-1B workers in the U.S. at any one time--and information about the length of their stay--is unknown, because (1) data systems among the various agencies that process such individuals are not linked so individuals cannot be readily tracked, and (2) H-1B workers are not assigned a unique identifier that would allow for tracking them over time--particularly if and when their visa status changes.

The AFL-CIO reported in 2009 that as many as 25% of imported workers have fraudulent visas. Today, this translates to as many as 17.5 million foreign employees gaming the system.

9-11 Terrorists Arrived Here With Worker Visas

Scariest of all, the visa worker program is poorly administered. Homeland Security doesn't screen applicants at the airport, so visa holders gain entry at airports, making a wall at the border obsolete.

"The main, legitimate criticism right now -- which is one we would level as well -- is that the accountability mechanisms are not fully integrated and not seamless," says Dean Garfield, President and CEO of the Information Technology Industry Council.

When the Government Accountability Office reviewed the H-1B program in 2011, they wrote "a recent Department of Homeland Security study reported that 21 percent of the H-1B petitions they examined involved fraud or technical violations."

Potential Terrorists in Key Positions

In March, 2006, David Huber, a worker who was replaced at ComEd in Chicago, testified in front of the Subcommittee on Immigration and Border Security, "Two of the three individuals who replaced me were from China. As part of my job, I had access to all the data communication switches that control the electrical grid for the Chicago area. Anyone with this access could shut down the entire telecom operations for the power company and possibly the power grid itself. It is very likely that my replacements will return to China, taking with them detailed knowledge about the inner workings of our electrical grid system. After the recent controversy over our ports, I can't believe that Congress thinks this is a good idea."

Corporations with Record Profits Cut American Jobs

Disney posted $7.5 billion in profit in fiscal year 2014, a month after major layoffs in October 2014. The company continued to lay more Americans off until 850 lost their jobs from Orlando, Florida to Anaheim, California.

Is this replacement of American workers for unskilled foreign workers a matter of greed? Or is it simply a global shift in workers in a flattened world?

Ron Hira, Associate Professor of Public Policy at Howard University and author of Outsourcing America: What's Behind our National Crisis and How We Can Reclaim American Jobs, says it's shifting corporate goals. The stakeholders of companies used to include workers, the community, and the nation. Now the focus is on shareholder value and increasing profits. "Much of the compensation of 46 million dollars that Bob Iger [CEO of Disney] received is from stock," Hira said, explaining how management benefits from stock performance. "At some point, you have to ask the question, when are these CEOs and the shareholders going to be satiated? When are they going to share some of those profits and prosperity with the workers who have created that value? I think the answer is: never."

"Staffing" Companies Find Cheap Labor

For CEO's, cheap labor is just a phone call away. They call themselves consulting, staffing, or employment companies. But those who are fighting against the industry call them "body shops." International (HCL Global Systems, Tata Consultancy Services, Satyam, Infosys, Accenture, Cognizant) and domestic (IBM) outfits facilitate the process of replacing Americans with foreign workers. Six of the largest firms are based in India. An attorney at VisaPro will teach human resource personnel how to use H-1B visas to cut costs with foreign nationals.

Cognizant Technology Solutions, Inc. boldly states, "We have an active recruitment program in India" in their informational materials. Some staffing companies entice foreign nationals with high figures, but when they arrive, they make as little as $25,000 per year. Once in America where the cost of living is comparably expensive, living conditions are poor.

Complaints are rarely filed against the staffing companies, since the workers often fear reprisals and removal from the country. Investigations into wrongdoings take years, and require an indictment by a grand jury before the Department of Justice will confirm or deny allegations.

How did abuse of the guest worker program start?

Follow the Money Around Washington

Before 1990, the visa program made it difficult for employers to hire guest workers. They had to explain why they needed a candidate with specialized skills, what training the specialist had that Americans don't have, and they screened the applicant.

Then Microsoft went to Washington. Ostensibly to hide the trail of money, an organization named Business Software Alliance (BSA) acted as cover while lobbyists greased wheels in Congress. Microsoft spent more than $20 million during the critical years 1998-2000 to tweak H-1B legislation, such as giving students on an F-1 visa the ability to work.

High tech firms and the staffing agencies who help job seekers come to the U.S. are still getting around the 85,000 workers-per-year cap through a "H1B cap-exempt" workaround. Companies lobby for loosened visa legislation, then abuse the loopholes they created.

In Washington, two laws created exemptions from the cap (then set at 65,000 H-1B visas per year). The first was disingenuously titled "The American Competitiveness in the Twenty-First Century Act of 2000". One of the biggest funders of visa-friendly bills is the Information Technology Industry Council. Their member companies, some of the biggest names in the industry, hire, recruit, train, place, and/or subcontract foreigners. The following are just a snapshot of some of the bills making it easier to replace Americans with foreign nationals:

  • HR. 4227 Amended the Immigration and Nationality Act to eliminate the cap on H-1B visas for 2000.
  • HR. 4444 (1986) Repeals the visa application fingerprint requirement and certain related provisions. Repeals existing requirements that immigrant visa applicants submit supporting documentation in duplicate and that consular officers retain duplicates of all issued immigrant visas.
  • In the works:
  • HR. 2758 Allows non-agricultural immigrants a permanent exception to the annual limit.
  • These changes have already hurt Americans. "Statutory changes made to the H-1B program have, in combination and in effect, increased the pool of H-1B workers beyond the cap and lowered the bar for eligibility," reported the Government Accountability Office in a 2011 study of the guest worker program.

    Presidential Candidates Need to Weigh In

    Unless Hillary Clinton states otherwise, she supports importing more foreign workers to replace and fire competent U.S. workers. In 2011, as Secretary of State, she assisted the U.S. Embassy in India by authorizing them to break federal law and accept every visa in excess of 60,000 to replace American workers. According to James Otto, labor rights attorney, Clinton also spent more than 40 million taxpayer dollars to educate foreigners and import them.

    Developer Donald Trump hires illegal aliens for his construction jobs. Trump hired 200 undocumented Polish workers to demolish the building that made way for Trump Tower in Manhattan. According a Reuters review of U.S. Department of Labor statistics, Trump sought to hire 1,100 foreign workers on the visa program. Much as he maligns Mexicans, if he wants cheap labor, he may use undocumented workers to build his wall.

    What can be done to improve the worker visa program?

    Hira said, "You have to have policies in place that give workers at least a fair shake. When you're bringing in guest workers, you're really creating unfair intervention in the labor market, unfair competition for those workers." He suggests raising the wage floor for guest workers, so that employers have to pay a premium for their specialized skills, following the spirit of the guest worker visa program.

    Otto also suggests the law automatically recognize that all guest workers are employees of the U.S. corporation who hires them in addition to the staffing company. This creates a paper trail of how many foreign born workers are used by each corporation. A statute created by the state or federal government would thus give authorities the ability to track numbers. In addition, every H-1B applicant should be required to provide certified college transcripts that must then be verified by their agency or employer.


    In the meantime, 18 former Disney employees filed a lawsuit, hoping to shed light on the problem of insourcing, a topic that isn't getting much press.

    "The F-1, foreign student, used to be a non-working visa," says Otto, the attorney representing replaced Disney and Molina Healthcare workers in Southern California, "but because of change of the rules, the employer doesn't have to pay them minimum wage, and the foreign student doesn't have to pay any taxes." After 6 months as an F-1, the student can take a job in the U.S. and then change immigration status to an H-1B. "A foreign worker can take a non-specialty job, displacing one American worker, and then after 12 months, and without any experience, change status before he graduates to an H-1B, where he displaces yet a second American worker who is highly skilled."

    "There is no doubt that the imported guest workers are not the best or the brightest," said Otto. "I'd like to ask (Presidential candidate) Trump, what difference will it make to build a wall when so-called American companies are hiring illegals by the truckload through the H-1B workaround?"

    Foreign Workers Left Stranded

    If a company is done with an employee, guest workers often find themselves stranded in the U.S. without a job. After five years as an H-1B, employers are required to start paying social security, so the worker becomes less attractive. When the job is over, so is the visa, making them into illegals. Their staffing company may hold their paperwork hostage, forcing them to pay thousands of dollars to seek legitimacy.

    Meanwhile, American IT workers and others are left stranded without jobs.

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