Americans are losing jobs to a visa program. Can it be fixed?

The H-1B visa can be a powerful way to bring crucial workers to the US. But there's growing criticism that the program is being used simply to bring in lower-cost workers from overseas. The needed reforms, some say, are simple.

Jae C. Hong/AP/File
A woman with a Mickey Mouse hat walks toward Sleeping Beauty's Castle at Disneyland, in Anaheim, Calif., Jan. 22, 2015.

Leo Perrero thought he was getting a promotion, or a raise. Or at least an enthusiastic high-five.

He had worked in IT at Walt Disney World in Orlando, Fla., in some capacity for more than a decade. “I really enjoyed it,” Mr. Perrero says. “I had great friends, and Disney puts a lot of work into creating a positive work environment. And the kids loved going to the parks whenever they wanted.”

Perrero was fresh off a glowing performance review, earning an evaluation he describes as “the highest you can get.” So when he was called into a last-minute staff meeting in 2014, he thought it would be a good one.

It wasn’t. Instead, he and his colleagues were told they had three months to find new jobs. An outside contracting firm would be taking over the department. And, in order to receive their severance packages, Perrero and his co-workers would have to train their replacements – guest workers from India making about half their salaries.

“It was embarrassing to break it to my wife and children,” Perrero says. “To be cast aside like that was very demoralizing.”

In the past couple of years, scores of laid-off workers from a wide range of US companies – from accountants at Toys ‘R’ Us  to entire IT departments at pharmaceutical giants and major utilities firms – have come forward with similar stories.

Typically, their replacements have come to the United States on guest worker visas like the H-1B, which, in spirit anyway, allows American employers to recruit workers with specialized training from overseas.

Its supporters, including the Obama administration, have touted the H-1B as a way to inject highly sought-after skills into the US talent pool. But more often, critics say, big companies exploit it to reduce labor costs, leaving more and more skilled American tech workers out of a job.

“There are literally tens of thousands of American workers who have trained their foreign replacements,” says Ronil Hira, a public policy professor at Howard University and a leading authority on H-1Bs. “And the workers being imported have no more than ordinary skills that are abundantly available in the US.”

Mr. Hira believes the H-1B can a boon for the US economy and for immigrants in search of a better life – his parents came to the US as skilled workers in the 1950s – but that it needs some serious revisions. And as the controversy over both H-1Bs and immigration writ large heats up, a growing force of economists and lawmakers, are offering up ways to do it, from requiring companies to prove they recruited in the US first to limiting the program to foreign workers with advanced degrees. Workers like Perrero, meanwhile, are starting to speak up.

'Knowledge transfer'

For three months, Perrero took part in “knowledge transfer” sessions at Disney. His replacement would “sit next to me, watch, and record all of the audio and video off my computer,” he says. “It was shocking how inexperienced and unskilled they were. I covered the same basic concepts over and over again.”

Last week, Perrero and Dena Moore, another Disney tech employee, filed separate lawsuits against both Disney and the outsourcing firms that employed their replacements, HCL and Cognizant, alleging the companies conspired to unlawfully use H-1B visas to bring in cheap foreign labor and displace American workers. The collusion lawsuits are reportedly the first of their kind in the US.

Disney laid off approximately 250 tech workers in 2014.

Ms. Moore told The New York Times in January that she had applied for more than 100 jobs with Disney and was not rehired. Perrero says he knows of only “two or three” colleagues that managed to find new jobs within Disney.

In an e-mail to the Monitor, Disney called the lawsuit “completely and utterly baseless” and said that it had re-hired “more than 100 workers affected by the reorganization into other roles.” The company also says that Moore turned down a new position at comparable pay to her old one.

Both the lawsuits and their willingness to speak on the record are rare. To collect their severance packages, workers forced out of other companies after training their replacements have had to sign agreements not to take legal action or speak out against their former employers.

Alexis and Mitch, whose names have been changed because they signed nondisclosure agreements as a condition of receiving severance, were among approximately 200 such IT staffers laid off from Northeastern Utility in Connecticut when it merged with Massachusetts-based NSTAR (now known as Eversource Energy), in Connecticut and Massachusetts in 2014.  

Mitch, who is in his 60s, says he saw his job carved up between one on-site trainee and 10 remote workers in India who logged onto his computer screen to observe his movements. “I was miserable, depressed, just very upset,” he says.

He wasn’t in a financial position to retire and the possibility of finding another job at his age seemed a far cry at best. “I’m thinking, will I have to work at McDonald’s?”

“Most of these people were in their 50s or closing in on retirement, and this had been a stable, lifelong career for them,” Alexis says. “We were old and expensive.”

Who gets the visas?

The outsourcing firm that won the bid to bring in contractors for Alexis and Mitch’s department, Infosys Limited, is one of the biggest sponsors of H-1B visas in the country. The US grants 65,000 regular H-1Bs annually, as determined by lottery (85,000 when H-1Bs set aside for graduate degree holders are included). But research by Hira and others shows that most end up in the hands of large outsourcing companies like Infosys, Tata, and Accenture, which have the manpower to flood the lottery with tens of thousands of applications year after year.

This has drawbacks for foreign workers as well. For one, it worsens the odds of securing and H-1B for smaller companies and the people with truly sought-after skills they would like to sponsor (like the French software engineer profiled in The New York Times who couldn’t get an H-1B to stay on at a San Francisco startup).

Second, guest workers are bound to the company that brings them in, and “most of the top H-1B employers are using the program for cheaper temporary labor – as a vehicle to outsource jobs overseas rather than as a bridge to permanent immigration,” Hira said in congressional testimony last year.

In an e-mail to the Monitor, Infosys says it “does not practice or condone unfair or unethical H-1B visa practices, and that “allegations that H-1B visa holders are underqualified and/or underpaid are demonstrably untrue.”

“As a matter of law and corporate policy, Infosys pays all of its employees (including H-1B visa holders) at or above the prevailing wage as determined by the US Department of Labor,” the e-mail continues.

Messy politics, possible solutions

In Washington, as with anything involving immigration, the debate around H-1Bs is a thorny one; it has been since the H-1B was introduced in 1991.

The Obama administration has supported expanding the possible number of H-1Bs in the past, a move for which the tech industry has lobbied for years. Presidential candidate and Sen. Marco Rubio (R) of Florida has defended increasing the allowable number of H-1Bs, but has also argued for reforms that would prevent the program from being used at the expense of American workers. Fellow candidate Sen. Ted Cruz, (R) of Texas, who has supported raising the cap on H-1Bs in the past, lists a number of possible reforms on his campaign website, including making the visa exclusively available to people with advanced degrees.

In recent months, reforming the program has drawn bipartisan support. In November, Sens. Chuck Grassley, (R) of Iowa, and Dick Durbin (D) of Illinois, introduced a bill that would “prohibit the replacement of American workers by H-1B or L-1 visa holders,” and prevent large companies with a majority H-1B workforce from applying for more. Democrats Richard Blumenthal of Connecticut and Bill Nelson of Florida, senators from states with some of the most high-profile accusations of H-1B abuse, have cosponsored the legislation.

“Fixes are so easy,” says Daniel Costa, the director of immigration law and policy research at the left-leaning Economic Policy Institute in Washington. “Require that the market wage be paid and require employers to prove they recruited US workers first.”

“Have a Labor Department database that requires you post the job for 30 days [in the US],” he continues. “If you really can’t find anybody, you get your worker. If that is going to destroy the program, that means it really is just a tool for exploitable labor.”

Hira also recommends conducting random audits of employers, particularly those with a past of displacing American employees. “The current compliance system relies on whistleblowers,” he says, “who can face retaliation or legal action from their companies.”

In at least one case, public outcry over the practice prompted a swift governmental response. In  2013, the Royal Bank of Canada responded to reports that Canadian-born workers were training their foreign replacements with an apology and promises to severely restrict its use of non-Canadian workers. The next year, Canada’s government passed a series of reforms to the country’s Temporary Worker Program, including reducing the number of available visas and making public the names of companies who use foreign labor. The rollout is still under way.

The American lawmaking process is messier than Canada’s, and any legislation to reform the H-1B program faces a longer road. Still, more displaced workers are taking action. A few, like Perrero, Moore, and Brian Buchanan, a former Southern California Edison IT worker, have come forward with lawsuits alleging discrimination by companies and the outplacement firms.

Others, like Mitch and Alexis, are campaigning anonymously. They’ve told their stories to several senators’ councils, including Cruz and Blumenthal. Alexis says they’ve “been in touch” with Sarah Blackwell, the attorney for the Disney suits.

In the meantime, both have found other jobs: Mitch found work with a contractor, at a lower salary. After looking into being a freelance graphic designer, Alexis found she could make more money selling books through Amazon. “I didn’t want to work for another big corporation. I feel broken from that,” she says.

Perrero is out of IT, working at his father-in-law’s business. He hopes more people in his situation will come forward – and suggests it should be illegal for companies to design severance agreements to punish workers for doing so. “Financially, it’s a difficult decision, but it will make the biggest impact,” he says.

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