January 14, 2005

View From Lodi, CA: Mickey Mouse (And H-1B “Temporary” Workers) vs. American Middle Class

The Walt Disney Company is a microcosm of today’s corporate America: millions paid in salary and bonus for the big boys while the company downsizes by "laying-off" staff.

The remaining employees are squeezed as hard as possible.

Finally, foreign workers are hired on H-1B non-immigrant visas thus shutting out qualified Americans from mid-level management positions.

For the lucky ones at Disney, January started out with a financial bang.

On January 6, Disney announced that Chief Executive Michael Eisner received a $7.35 million cash bonus in 2004.

With his base salary of $1 million and other compensation, Eisner's total pay package was $8.3 million.

Disney President and Chief Operating Officer Robert Iger also got a healthy $6.5 million cash bonus. Added to his annual salary of $1.5 million and other payouts, Iger’s aggregate 2004 compensation was $12 million.

According to the Disney compensation committee, Eisner and Iger’s bonuses were a reward for the company’s 72% earnings increase during 2004.

While these sums are nothing to sneeze at, even bigger stakes are on the table this week during on going talks between Miramax co-founders Harvey and Bob Weinstein and Miramax’s parent company, Disney.

Ten years ago, Disney bought Miramax from the Weinsteins for $80 million. Today, with their corporate divorce pending, Disney is prepared to buy out the Weinstein’s contract for $100 million.

Also, the trial between former Disney president Michael Ovitz and Disney shareholders enters its final phase this week. Ovitz contends that his $140 million severance package, after only 15 months at Disney, is justified.

In fact, Ovitz’s lawyer Larry R. Feldman contends that had Disney directors denied payment on the basis of "gross negligence" or "malfeasance", the company might have been forced to pay out additional "hundreds of millions of dollars" in damages for fraud, defamation and breach of contract.

With millions either already handed out or pending for the Disney upper echelon, let’s see how far down the line that corporate largess extends.

Last month the Orlando Sentinel reported in its story titled "For Many Disney Jobs, the Future is Part Time," (by Sean Mussenden), that Walt Disney World is determined to continue expanding its part-time labor force at the expense of full-time employees.

In the past decade, in what reporter Sean Mussenden calls part of a "national trend toward temporary work," the number of part-time employees at the Disney hotels and theme parks has grown ten times as fast as full-time employees.

Since 1994, Disney has added 9,400 part-time employees—and increase of 140%. Full-time staff over the last decade increased by only 5,000 employees or 15%.

Disney, who promised Wall Street that it would control increases in labor costs to maximize profits at its parks and resorts division, vigorously defends its switch to part-time employees.

Although Disney World Senior Vice President Jerry Montgomery admits that full-time workers "cost more than part-time workers, " President Al Weis claims that the bulk of Disney’s part-time workers are students or others who do not want full-time jobs.

And Weis further claims that Disney has no need to provide health insurance or other similar benefits to its part-time staff because they are either students covered by their parents’ insurance or adults covered by their spouses’ plans.

On an Internet website devoted to Disney issues, "The Disney Blog, “this comment was posted regarding Disney’s part-time future:

"It saves the company money on OT pay, health care costs and other benefits. But will it cost the company in the long run as the quality of its workers could be affected by turnover and lack of commitment to the usually high Disney standards.

This is not just something Disney is doing. It's a national trend as well. A few years ago there was talk about how the USA would become a leisure society with workweeks of 32-35 hours a week. I don't think anyone expected those jobs to be on the low end of the pay scale, however."

Disney, like other multinational giants, has added to its domestic middle management team through extensive use of H-1B visas.

According to a database maintained by www.zazona.com, Disney and its divisions have 36 H-1B employees earning from $36,000 annually for a trade analyst to $150,000 for a Vice President of the Glendale Disney store.

The average salary for the Disney H-1B employees is $85,000

Studying the Disney pattern of wages and hiring practices is sobering.

But it explains how in America the rich get richer, the poor stay poor and the middle class is slowly but steadily vanishing.

Joe Guzzardi [ email him], an instructor in English at the Lodi Adult School, has been writing a weekly column since 1988. It currently appears in the Lodi News-Sentinel.