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    Highlights for week ending August 2, 2003
  • New York Times: Judge Says I.B.M. Pension Shift Illegally Harmed Older Workers. Excerpts: A federal court ruled yesterday that I.B.M. violated age discrimination laws in the way it changed its traditional pension plan in the 1990's. The decision could cast doubt over similar changes hundreds of companies have made in plans covering millions of workers, and I.B.M. said it would appeal. Judge G. Patrick Murphy of Federal District Court in the Southern District of Illinois ruled that I.B.M. had discriminated against its older workers in several ways when it converted its pension plan because the changes would leave them with smaller benefits at retirement than younger workers would have when they eventually retired. ... The lawsuit has been certified a class action, covering about 130,000 I.B.M. workers and retirees in the United States. Court documents show that I.B.M. projected it would save billions of dollars in pension costs over the years after the changes took effect. Some of that was to be used to create pensions for executives.

    Judge Murphy also pointed to I.B.M.'s practice — found at other companies as well — of including earnings from the pension fund in its corporate profits. This practice is permitted under existing accounting rules but has increasingly troubled securities analysts and others, who say companies may be taking advantage of the pension accounting rules to make their business performance look better than it really is. In his decision, Judge Murphy noted that I.B.M.'s pension earnings made up 7 percent of the company's profit in 1997, and 13 percent in 2001, after the conversions were in place and the plan was less costly. Janet Krueger, a former I.B.M. programmer and the leader of a group of employees who joined the lawsuit, said that the ruling gave her a feeling of exoneration. She recalled in an interview that at an I.B.M. shareholders' meeting she had publicly asked the company's chief executive at the time, Louis V. Gerstner Jr., why the employees' lawsuit was not mentioned in the annual report. "He said, `Because we feel this lawsuit has no merit,' " Ms. Krueger said. "In some ways, I feel exonerated because I've had so many people telling me that I.B.M. didn't really do anything wrong, and you shouldn't be wasting your time." If link is broken, view Adobe Acrobat version [PDF--34 KB].

  • Wall Street Journal: IBM Pension-Plan Changes Are Ruled Discriminatory. Finding Is Viewed as Boon To Older Workers in U.S. Excerpts: Employers had been quietly converting to cash-balance plans since the 1980s. The conversions have been popular with employers because they typically reduce company liabilities and reduce annual pension cost. That is because instead of calculating a pension by multiplying years of service and final average salary, the company provides a hypothetical annual contribution, say 5% of pay, as in IBM's case, which grows with interest. This leads to smaller pension growth for longer-serving, older workers, who no longer benefit by a rapid build-up in pension value in their later years. IBM's conversion to a cash-balance plan in 1999 led to a fire storm of protest from longtime employees, who estimated their pensions would fall by 20% to 40% or more. In response, the company relented and allowed people older than 40 with 10 years of service to remain in the prior plan if they wished. Employees nonetheless filed suit in 1999, saying the company's pension practices discriminate against older workers. If link is broken, view Adobe Acrobat version [PDF--38 KB].

  • Text of Judge's Order in IBM Cash Balance Plan Conversion Case [PDF--847 KB] 24 pages. Entered July 31, 2003. (U.S. District Court for the Southern District of Illinois, courtesy of the American Benefits Council).

  • Associated Press, courtesy of the San Jose Mercury-News: IBM Loses Closely Watched Pension Lawsuit. Excerpts: "It's awesome - I knew we had a case," said the lead plaintiff, Kathi Cooper, 53, of Bethalto, Ill., a 24-year IBM veteran who filed the case in 1999. "When IBM converted to a cash balance plan, it hurt almost every single employee over the age of 40, 45, because it reduced our accrued benefits. The law says you cannot reduce benefit accruals on account of age. ... That formula was part of the greed from the 1990s - it's all about greed."

    "IBM's plan became ... the poster child for cash balance abuse," said Norman Stein, a pension expert at the University of Alabama. "This was the very kind of employer that you wouldn't expect this kind of action from and I think the employees regarded this literally as an act of betrayal." Stein said Thursday's ruling appears to reject arguments IBM and numerous other companies have made in defending their shift to cash balance plans. In doing so, it could force lawmakers to tackle an issue they have been so far reluctant to touch, he and others said. "The judge, in very plain English says the laws says that these cash balance plans ... discriminate against older employees and are unlawful. His reasoning is so crystal clear, it's so consistent with the language of the law that it would apply to every cash balance conversion," said Karen Ferguson, director of the Pension Rights Center, a Washington, D.C.-based worker advocacy group.

    Cooper, who performs internal reviews for IBM's Global Services division, acknowledged that working for the company has been strained since she sued, but she said she was happy she put up the fight. "I love that company. It's like having an errant teenager on drugs, and you'll do anything to make it right," she said. "This is bad behavior. It's got to be stopped."

  • "torch_r" posted the memo sent by Randy MacDonald, Senior Vice President, Human Resources, to IBM employees after the announcement that IBM had lost in the Cooper v. IBM lawsuit. Full excerpt:
    Dear IBMer:

    In late 1999, a lawsuit was filed which alleged that IBM violated age discrimination laws when it changed its U.S. pension plan in 1995 and 1999. IBM has been defending this lawsuit to preserve our pension plan. Despite our efforts, earlier this afternoon, the U.S. Federal District Court in Illinois ruled that IBM's current pension formulas violate the age discrimination provisions of federal pension law. We strongly disagree with this ruling. IBM will appeal, and we believe we will prevail.

    Let me reassure you that IBM's pension plan does not discriminate on the basis of age -- or any other factor. Indeed, to suggest that our pension plan is age discriminatory is an affront to this company and every employee. IBM has a longstanding record of providing industry-leading benefits for employees and has continued to do so in the face of sweeping changes in this company, this industry and this country.

    This ruling threatens not only IBM's pension plan, but also the plans of hundreds of other companies who have adopted similar formulas. Indeed, the court's reasoning would go farther and invalidate scores of other pension plans, some of which have been in existence since the 1930s. The ruling is also contrary to other district court decisions.

    We are continuing to analyze the ruling to fully understand all its ramifications. I ask for your patience and understanding as we work through these complex and technical issues. In the meantime, we will provide regular updates on w3.

    Like many of you, I hope for a successful conclusion to this case. We are confident that the underlying illogic of this ruling will be acknowledged as we move through the appeal process.

    Randy MacDonald
    Senior Vice President, Human Resources

  • Linda Guyer comments on Mr. MacDonald's letter. Full excerpt: MacDonald's letter clearly shows he is angry. He did get punched twice in the last two weeks by employee activists - first with the offshoring article in the NY Times, now with this lawsuit ruling. Nevertheless, at his level in IBM, I think his letter should have been more professional and less threatening in tone. His arrogance shows in his statement about how this ruling threatens all pensions. There was a recent quote by the plaintiffs' attorney that every pension conversion must be looked at separately, that this case would not necessarily apply to others.

    Somehow I think that the attorney on this case would know better its applicability to others than an HR professional would. But he's applying the official IBM spin - spreading fear that we'll lose what we have - with a very angry tone. You can almost infer their thinking --- "We executives have the power and you little morons are lucky you have what we give you. If you keep fighting us, we'll take away your money". Even more worrisome is the fact that this letter shows how hopelessly out of touch he is with ordinary employees (aka "what planet are you from?"). I have not talked to a single employee yet who did not feel insulted by this letter.

    Another mistake they made was to have the "Values Jam" scheduled at the same time as when the court ruling was expected. This gave a unique opportunity for employees to express their displeasure with his note in a forum for all to see.

  • Janet Krueger comments on this statement in Mr. MacDonald's letter: "This is a situation where a few have spoiled it for millions of U.S. workers." Full excerpt: I thought the meaning was obvious—a few [greedy executives] have spoiled it for millions of U.S. workers. After all, before the greedy executives intervened, companies like IBM contributed to their pension funds each year on behalf of their current employees, and used the excess pension funds to pay COLAs to the retirees. You didn't see the press printing messages of doom and disaster each time the companies contributed to the pension funds—it was normal, expected behavior! But once the greedy executives intervened, COLAs ended, contributions ended, and in order to get more virtual profits for the bottom lines, companies had to periodically slash the pension formulae just to stay ahead. Then, when simple changes weren't enough to generate the desired amount of vapor profit they had to start cutting benefits with these new hybrid plans, like pension equity and cash balance plans. How can anyone look at the sequence of events, and not understand that the greedy executives are at fault? I wonder if the communications person who pulled the press release together knows yet just how much of a truism s/he wrote.

  • Barre-Montpelier Times Argus (Vermont): IBM workers in Vermont welcome ruling on pension plan. Excerpts: IBM workers and others in Vermont are hailing a recent ruling by a federal judge in Illinois that IBM Corp. had illegally discriminated against 140,000 older employees when it changed its pension plans in 1995 and 1999. “This was a great victory for IBM employees and for millions of employees at other companies which will probably think twice before they switch to other plans and rip off their employees,” James Leas said Friday. Leas is an attorney in South Burlington and a former IBM employee who helped spearhead the fight against the pension plan switch both in Vermont and nationally. ... Friday, the Vermont plant's executives distributed a memo that blasted the ruling and promised to fight to the end. “The note was almost a slap in the face. It almost seemed like it should have been directed to stockholders,” said Paul Sala, who works in Global Services in Vermont. “Everyone in the halls is talking about how inappropriate it was.”

  • Janet Krueger comments on what might happen next following Judge Murphy's ruling. Full excerpt: On the surface, it (the ruling) means that the plaintiffs and IBM would sit down and negotiate a fair settlement in front of the judge, and there would be a new non-discriminatory formula put in place, with the pensions of anyone who left since 1995 recalculated, with interest added in for the late payments... Additionally, because of the age discrimination charges, the judge would have the ability to add damages to the recalculated pensions. However, I'll be surprised if there are any active settlement discussions before the case is appealed. My prediction is that IBM won't accept a ruling from the federal appeals court, either, and that there will be an appeal to the Supremes before we are through and see any signs of a settlement. That should make all of you care a little bit more about whether any new Supreme Court judges being appointed are worker-friendly, or so much in favor of 'capitalism' and 'free trade' that they will support whatever big corporations like IBM have chosen to do!

  • IBM Press Release: IBM To Appeal Lower Court Decision in Pension Case.

  • Wall Street Journal: Pension Rulings Roil Hundreds of Businesses. Companies Seek U.S. Role In Cash-Balance Plans. (Editor's note: This is an excellent article. It provides a good historical perspective and explains the implications of the Cooper v. IBM ruling, and explains why corporations such as IBM embraced cash balance plans.) Excerpts: Two landmark court rulings against companies that sought to profit by revising employees' pension plans have unsettled hundreds of companies that have adopted similar programs and are likely to force Congress and the Treasury Department to decide how to regulate so-called cash-balance pension plans. The separate rulings, against International Business Machines Corp. and Xerox Corp., sliced through the arcana of pension rules to conclude that cash-balance plans discriminate against older workers, cut older workers' benefits and serve to lower the costs and bolster the profits of employers that use them. ... The judges in both of last week's cases refuted a key defense of employers, that cash-balance plans aren't pension plans that should be subject to the usual pension regulations because they are "hybrids" that are modeled on 401(k) plans controlled by employees. No dice, said Judge Richard Posner, one of the three-member panel in the Seventh Circuit Court of Appeals that decided against Xerox: "For 'hybrid,' " he wrote, "read 'unlawful.' " ...

    Throughout the 1990s, companies adopted cash-balance plans because they were a valuable way to boost earnings. With the aid of consulting firms, employers increasingly understood that pension accounting rules reward companies that cut pensions. That is because when the return on pension assets is greater than the annual cost of the benefits, the excess is reported as income, almost as though it were profit from goods and services. Thus, companies had an incentive to cut pension benefits, even though their pension plans were robustly overfunded. While any kind of pension cut can achieve this result, cash-balance plans were one of the most popular ways to cut pensions, because benefits and costs could be reduced, beyond the simple cost of future payouts being lower.

    After a conversion, for instance, older workers often stop building benefits for months or years, a phenomenon called "wearaway," because employers established "opening account balances" that were of lower value than what the employees had earned. If someone's pension were valued at $100,000 had it been converted to an immediate cash payment, for example, a company might establish an opening balance at $80,000. The employee then would have to wait until his annual pay credits and interest built back up to $100,000 until he actually began building a new benefit. In contrast, a new or young worker would begin to build a balance right away. Another reason employers liked cash-balance plans was that employees could rarely tell that their pensions were being cut. That changed in 1999 when IBM employees noticed, and sued. If link is broken, view Adobe Acrobat version [PDF--43 KB].

  • Wall Street Journal: IBM Pension Ruling Likely To Fan Flames Of Debate. Excerpt: The federal court ruling, which IBM has already said it will appeal, directly contradicts key elements of a proposal the U.S. Treasury is preparing. The Treasury proposal addresses questions about whether cash-balance plans are age discriminatory. Some experts say that arguments over cash-balance plans will eventually be decided outside of the current realm of debate. "It is likely that the issue will ultimately be resolved neither by the appellate courts nor by the executive branch but by the Congress," said J. Mark Iwry, a senior fellow at the Brookings Institution and the former benefits tax counsel at the Treasury Department. The Treasury Department said it's studying the IBM ruling. ... In general, cash-balance pensions came under scrutiny in part because of the IBM case, a class-action suit brought in 1999 that represents about 130,000 workers. "IBM was the poster child for this issue; it was IBM's cash-balance plan and the reaction of its workforce that really first touched off the public debate over this issue," said David Certner, director of federal affairs at the AARP. If link is broken, view Adobe Acrobat version [PDF--32 KB].

  • Poughkeepsie Journal: Judge hits IBM pensions. Plan called discriminatory. Excerpts: ''IBM, like many other corporate plan sponsors, proceeded with open eyes and was fully informed of the consequences of the litigation that was sure to come,'' he wrote. Federal age discrimination laws cover all employees age 40 or older. ... The judge noted that the 1995 pension changes were successful in reducing what had been a generous early retirement benefit, and by the close of 1997 the pension trust fund had a surplus of $8 billion. Even so, IBM opted to further reduce pension benefits in 1999 at an annual savings that would reach almost $500 million in 2009. The pension savings boosted the company's profits and represented 7 percent of the company's earnings in 1997.

  • Pension Rights Center Press Release: Pension Rights Center Hails IBM Decision as “Victory for Employees” [PDF--35 KB]. Excerpt: IBM created the controversy by moving from a traditional defined benefit pension plan, that promised pensions based on all of an employees’ years of work and final pay, to arrangements where contributions and interest credits were paid to hypothetical accounts. By switching to the new inferior plans, with different rules and different payment formulas, IBM made the missteps that caused it to run afoul of provisions of pension laws that protect older employees.

  • Journal News (Westchester, Rockland and Putnam Counties, New York): Ruling on IBM pension plans causes stir. Excerpt: The greater peril to IBM might be in the court of public opinion, said James E. Lukaszewski, chairman of The Lukaszewski Group Inc. of White Plains and an expert in crisis management. "This has upset a lot of people. This is IBM country," Lukaszewski said. IBM employs about 9,000 people in Westchester County, where corporate headquarters executives and research scientists both toil. In Dutchess County, IBM has about 11,000 employees who manufacture microchips and mainframes, among other tasks. Widely criticizing the judge's ruling isn't the smartest move for IBM, Lukaszewski said. "I have a feeling that they are going to tone down their rhetoric as they get closer to the appeal date because judges read the newspaper," he said. Debate on the topic was active yesterday on Internet message boards and on television. It was almost enough to dampen Cooper's good mood as she watched CNBC. "They're lying," she exclaimed as she listened to one analyst warn that the ruling could threaten pensions at hundreds of companies. "It's a false threat that they're hoping people will buy." As far as her own hopes go, Cooper said she wants the pension promised before the first set of changes in 1995. "I want to be restored to what IBM promised me before all the shenanigans started," she said. Cooper said she's still loyal to IBM — though she hasn't had a raise in pay since she filed her suit. She blames the pension reductions in part on a corporate culture of greed. "I think we had a catastrophic failure of capitalism in the 1990s."

  • Kathi Cooper, lead plaintiff in Cooper v. IBM, comments on the results of the lawsuit. Full excerpt: I want to thank everyone that has supported this case. It was never my case. It was always our case. We worked hard. Why? Because we are special people. IBM only hires the best, and the best of us were there to help do what was the right (and legal) thing to do. I thank everyone for your calls and notes and ask that we each in turn give one another a virtual group hug. WE WON! CONGRATULATIONS! (Editor's note: Thank *you* Kathi for your incredible courage and the long hours you've spent for the cause. You're a class act!).

  • Janet Krueger comments on who is affected by the Cooper v. IBM lawsuit. Excerpt: If you were employed at IBM, but left or retired before 1995, then this lawsuit will not impact you. The class was certified for something called "Injunctive Relief" which means that all people who were employed at IBM from 1995 on are officially part of the class; there is no opting out or opting in. Once IBM loses their appeal, they will have to fix the plan for *EVERYBODY* who has earned pension benefits at IBM since 1995. This *DOES* include groups of employees whose pensions were cashed out when they were sold to companies like AT&T, Celestica, or Hitachi. IBM's settlement would include a recalculation of their cash-out amounts, with the difference, plus interest, and possibly damages, being paid to the impacted employees, in a form that can be rolled over to their IRA accounts.

  • Representative Bernie Sanders (I-VT) Hails Federal Court Ruling that IBM Cash Balance Plan is Age Discriminatory. Excerpt: Sanders said, "Today's ruling is a victory for employees at IBM and at the hundreds of other companies that have converted to age discriminatory cash balance plans. The court recognized what I and others have been saying since IBM's conversion, namely that these cash balance plans - which slash the pension benefits of older workers by as much as 50% -- are illegal. My hope is now that IBM will not drag this out in court but instead will give their employees the pension benefits they were promised."

  • CBS Evening News video: IBM's Day In Court. A judge ruled IBM's Cash Balance Pension Plan discriminates against older workers who have fewer years to build value than younger ones. IBM plans to appeal, Richard Schlesinger reports. (Editor's note: We recommend you have a broadband connection to the Internet to watch this video. Janet Krueger is prominently featured).
    • Janet Krueger reports that she received an "interesting comment regarding the CBS report from a staffer on Capitol Hill". Excerpt: "As usual, Janet, you ruled! Way to go! I don't have to tell you what a fight we'll have on our hands when Congress gets back in session in September. Look out for Portman-Cardin as the vehicle that every CEO in America will be looking at to legalize age discrimination in cash balance plans. They may have to call in the Capitol Police again! Have a great weekend."

      Ms. Krueger then adds "So, stay tuned -- we'll have some critical calls to action this fall!!! We have an extremely good chance of winning the appeal, *IF* the laws are left as is. But if IBM executives and their cronies succeed in retroactively changing the legal definition of defined benefit plans to include all the age discriminatory hybrids, then we all lose. If you have a chance to talk to your representative and Senators this summer, tell them how important pension protection is, and let them know that you don't want them meddling with our right to a day in court!!!"

  • Wall Street Journal: Xerox to Pay $300 Million In Suit Over Pension Plan. Excerpt: Xerox Corp. lost its case in the 7th Circuit Court of Appeals, where it hoped to reverse a lower court's ruling that the company had underpaid employees in its cash-balance pension plan, and will have to pay $300 million in damages. The decision comes a day after a federal judge concluded that International Business Machines Corp. discriminated against older workers when it changed to a cash-balance plan in 1999.

  • Washington Post: Overtime Plan Draws Angry Letters. Excerpt:The letters and e-mails from nurses and prison guards, from stay-at-home moms and corporate executives, fill dozens of bound white plastic folders on shelves in a Labor Department reading room, part of more than 80,000 comments on the Bush administration's effort to change the rules that govern payment for overtime work.

Coverage on H1-B and L1 Visa and Outsourcing Issues

  • iSeries Network: Are Unions the Answer to IT Workers’ Outsourcing Worries? Excerpt: In March, Harry Newman and Tom Lynch, IBM’s outgoing and incoming directors of employee relations, respectively, held a live Internet broadcast with Big Blue’s 2,000 human resource managers around the globe. At the time, they probably didn’t foresee that their electronic pow-wow would become the subject of a July 22 New York Times story that would quickly spread across the business and IT press and community. But spread it has — like wildfire. The hour-long discussion was recorded and stored in digital form on an internal IBM Web site. An employee with access to the recording, who was reportedly upset about the contents of the discussion, “outed” the company by passing a copy to the Washington Alliance of Technology Workers (WashTech), which, in turn, passed a copy to the New York Times. The cause of the furor is IBM’s clearly stated intention to move thousands of white-collar jobs from the U.S. to other countries, most notably, India. WashTech quotes Lynch saying during the meeting, “We don’t want to sit back and say ‘Don’t do it.’ because it’s going to be a problem. Our competitors are doing it, and we have to do it.” If link is broken, view Adobe Acrobat version [PDF--31 KB].

  • The Journal News (Westchester, Rockland and Putnam Counties, New York): Flow of jobs overseas has human toll. Excerpt: The first two times that IBM Corp. asked Bonny Berger to train a foreign worker to take over her job, she didn't mind because another position was waiting. "I wasn't worried for my job, so for me it was fine. Maybe there were people who were less naive than I was," said Berger, a wife and mother from East Brunswick, N.J. Berger felt secure largely because of her track record at AT&T, where she was employed as a programmer for 21 years before IBM took over the telecom giant's computer operations in 1999. Berger said colleagues were happy to join IBM because Big Blue had a reputation for hiring. "We found out later that they're hiring in India and other countries," she said. In January 2002, Berger learned for the third time that her job was being sent "offshore." This time there wasn't another position waiting.

  • Gartner: 1 in 10 Tech Jobs May Move Offshore. Excerpt: Offshore outsourcing" is the euphemism the computer industry uses to describe the transformation of software development, computer services and customer call-center work. As a global economic downturn has bit hard over the past two years, U.S. companies have embraced as never before a decade-old trend to hire educated workers abroad who can be employed for one-tenth the cost of U.S.-based professionals.

  • ABC News: White-Collar Exodus. High-Paying Jobs Are Moving Overseas, U.S. Workers Replaced by Foreigners. Excerpt: Michael Emmons thought he knew how to keep a job as a software programmer. "You have to continue to keep yourself up to speed," he said. "If you don't, you'll get washed out." Up to speed or not, Emmons wound up being "washed out" anyway. Last summer, he moved his family from California to Florida for the Siemens Co., makers of electronics and equipment for industries. Not long after, Emmons and 19 other programmers were replaced by cheaper foreign workers. Adding insult to injury, Emmons and the others had to train their replacements. "It was the most demoralizing thing I've ever been through," he told ABCNEWS. "After spending all this time in this industry and working to keep my skills up-to-date, I had to now teach foreign workers how to do my job so they could lay me off."

  • Electronic News: Offshore Outsourcing Saves Dollars, But Costs Talent, Gartner Warns. Excerpt: "To many CIOs and business executives, the decision to outsource activities offshore is fiscally sound -- the cost, quality, value and process advantages are well-proven," said Diane Morello, VP and research director at Gartner, in a statement. "At a time when IS organizations are struggling with poor credibility and IT is being scrutinized, offshore outsourcing is becoming a tool for improving service delivery and a source of highly qualified talent in greater numbers." However, Gartner analysts said that CIOs and other business executives can't ignore the impact of offshore outsourcing on their business strategies, their organization or their employees. Three areas of concern that Gartner noted are loss of future talent, loss of intellectual assets and loss of organizational performance.

  • Time Magazine: Where the Good Jobs Are Going. Forget sweatshops. U.S. companies are now shifting high-wage work overseas, especially to India. Excerpt: Little by little, Sab Maglione could feel his job slipping away. He worked for a large insurance firm in northern New Jersey, developing the software it uses to keep track of its agents. But in mid-2001, his employer introduced him to Tata Consultancy Services, India's largest software company. About 120 Tata employees were brought in to help on a platform-conversion project. Maglione, 44, trained and managed a five-person Tata team. When one of them was named manager, he started to worry. By the end of last year, 70% of the project had been shifted to India and nearly all 20 U.S. workers, including Maglione, were laid off.

  • Linda Guyer comments on IBM's outsourcing plans. Full excerpt: I can tell you what we've been told by a very good source. I cannot name the source nor prove it is true, so with that disclaimer: IGS plans to move 30,000 US jobs, or approx. 25% of its employees, overseas by end of 2004. The plan is to ultimately move EVERY job that supports an internal account. I also hear they are behind schedule at the moment.

  • Daily Freeman (Kingston, NY): IBM 'outsourcing' indicative of trend. Excerpt: "In the Northeast, it's been something we've been experiencing for years ... with the moving of manufacturing first to south then to South America and the Far East," said Chester Straub, president of Ulster County Development Corp. Straub also said advances in telecommunications and greater utilization of the Internet are making white-collar jobs more portable. "In the case of IBM, it's part of their continuing effort to maximize profits while maintaining market position," he said. Union organizer Lee Conrad, with Endicott-based Alliance@IBM/Communications Workers of America Local 1701, a union not recognized by IBM, put it more bluntly. "I think it has more to do with greed, plan and simple," Conrad said. "Companies like IBM are going where the lowest costs and wages are."

  • Boston Globe: Double standard on globalization. Excerpt: If you get into a conversation with a billing representative of your credit card provider or phone company, you may notice a faint Indian accent. That's because the services industry is shifting more back room operations to India, where labor costs are a fraction of those in the United States. IBM, likewise, will soon move several thousand computer programming jobs to India, where programmers get far lower salaries. This decision has angered IBM employees and is contributing to a rare unionization drive at the high-tech giant, a company that once prided itself on never laying anyone off. ... In these cases, industry defends the moves as cost-effective and economically logical. If productive English-speaking workers in India can perform the jobs, why not move the work there and pass the savings along to shareholders and consumers? Most economists, enthusiasts of free commerce, agree that these shifts help both India and the United States.

    But hold on a moment. India figures in another controversy. Indian pharmaceutical labs make prescription drugs at a fraction of the cost that American drug makers charge consumers. In this case, however, it is illegal for American consumers to benefit. The politically powerful pharmaceutical industry contends that imports of cheaper foreign drugs violate patent rights and safety regulations. The industry is also battling legislation that would allow consumers to import cheaper drugs from Canada, which legally manufactures or purchases the drugs under license from the US pharmaceutical companies and conforms to US safety standards or better. If you notice a double standard here, you're right.

  • The White House: President Bush Discusses Top Priorities for the U.S. Press Conference of the President, including a question concerning overseas outsourcing. Excerpt: Question. Thank you, Mr. President. Staying with that theme, although there are some signs of improvement in the economy, there are sectors in the work force who feel like they're being left behind. They're concerned about jobs going overseas, that technology is taking over jobs. And these people are finding difficulty finding work. And although you're recommitted yourself to your tax cut policy, do you have any ideas or any plans within the administration of what you might do for these people who feel like there are fundamental changes happening in the work force and in the economy? THE PRESIDENT: Sure. Listen, I fully understand what you're saying. In other words, as technology races through the economy, a lot of times worker skills don't keep up with technological change. And that's a significant issue that we've got to address in the country. I think my idea of reemployment accounts makes a lot of sense. In essence, it says that you get $3,000 from the federal government to help you with training, day care, transportation, perhaps moving to another city. And if, within a period of time, you're able to find a job, you keep the balance as a reemployment bonus. I know the community colleges provide a very important role in worker training, worker retraining. I look forward to working with our community colleges through the Department of Education, coordinate closely with states, particularly in those states in which technology is changing the nature of the job force. I've always found the community college -- and this is from my days as the governor of Texas -- found the community college to be a very appropriate place for job training programs because they're more adaptable, their curriculums are easier to change, they're accessible. Community colleges are all over the place. And -- but you're right. I mean, I think we need to make sure that people get the training necessary to keep up with the nature of the jobs, as jobs change.

  • Institute of Electrical and Electronics Engineers (IEEE): President Blames Unemployment on Lack of Skills! Engineers Must Correct this Mistake. Excerpt: It is essential that engineers tell the President that the unprecedented levels of unemployment in the high-tech sector are not the fault of American workers. But if we are to be heard, we need as many engineers as possible to e-mail the President and express their concern. These e-mails MUST be received in the next few days, no later than Friday, August 1st, to be effective. When you write the President, tell him that unemployment in the high-tech sector has very little to do with the competency of American workers, and a great deal to do with the low cost of using foreign workers. American electrical engineers are as good as their counterparts in other countries. But it is difficult to compete with engineers from Asia and Eastern Europe who are paid 20% to 50% less than the prevailing wage in the US.

This week on the Alliance@IBM Site:

  • Attention Boulder area employees: A meeting with the subject "Offshoring your Job!" will be held Thursday, August 7, at 5:30 pm. at the Shepard on the Hill Church, 71st and Lookout Rd in Gun barrel (near the IBM Boulder location, east of King Soopers). We will be meeting in the fellowship hall.

  • A new page with information about the Cooper vs. IBM lawsuit has been added. Content on this page includes:
    • Summary of Judge Murphy's ruling
    • Full text of Judge Murphy's ruling
    • Who is included in the class action?
    • Excellent article in the NY Times
    • IBM's Press Release in response to the ruling
    • Letter from J.R. MacDonald, Sr. VP of Human Resources, to employees
    • Consultant Watson Wyatt, not surprisingly, takes IBM's side.

  • Offshore Lore - Myths and facts of white-collar out-sourcing.
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