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Highlights for week ending September 6, 2003
Labor Day Message from Linda Guyer, President of the Alliance@IBM—We
September 1, 2003
It's Labor Day, 2003. Time to remember the workers that actually create the wealth of this
country. However - do you consider yourself a "worker"? What do you call yourself
at IBM? An employee? A professional? A resource? A "headcount"?
When I joined IBM in 1981, I was a college graduate and considered myself a white collar
professional - in the same league as an engineer, lawyer, manager, professor, and other educated
professionals. I felt a great deal of pride and dignity being in this group.
"Workers", I thought at the time, were blue collar - factory workers, janitors,
farm workers. They had dignity, too, but it was different. My parents were in unions - but
they had not gone to college.
I always thought of myself as part of the IBM company, responsible for its success. Never
did I think that professionals would need protections from their companies the way blue collar
workers did. Unions were good for them, but I didn't need one.
Once I finally realized, in 1999, that IBM management no longer respected its employees and
saw them as expenses to be managed for maximum return - just like machines and plants - I
knew we employees had to fight back, to organize to protect our rights and benefits. Since
U.S. laws that would protect workers are so weak, I knew that a union was our only viable
But I had to overcome the idea of being "just a worker" - I had to admit that being
a "professional" didn't mean anything anymore. As someone who once seriously considered
getting an MBA, and who was in IBM management for a time - this has been a definite shift
in how I see myself. And it's a shift that I think is critical for all non-managers at IBM
Not only do we see IBM management fighting against fair pensions, and churning employees
constantly and bringing job insecurity to new heights, but we recently just learned they are
planning to send thousands of our jobs to other countries, knowing full well that former IBM
workers in the U.S. will have little chance of finding another, comparable job, in the continuing
IBM executives have employment contracts, with separate generous retirement plans, millions
of dollars in stock, and other advantages that assure their wealth.
Do you still want to believe the delusion that you are somehow different from a "worker"?
Doesn't management call you a "headcount"?
Well, eventually I made the shift. I got over it. We are workers. We are just as manipulated
as the railroad workers of the 19th century, and others. We are an expense to be driven down,
even to the point of losing our jobs.
So fellow IBM employees/workers/headcount - Get over it! You aren't going to be rich. You
are being manipulated and driven down. You are a worker. And as workers together, we can have
some incredible power.
So make the shift - you are not alone, you are with us, your fellow workers.
Happy Labor Day!
New York Times editorial: Sick
Excerpt: While I.B.M. officials deny it, evidence is being offered by stricken employees that unusually
large numbers of men and women who worked for the giant computer corporation over the past few
decades have been dying prematurely. I.B.M. employees, and relatives of employees who have died,
are claiming in a series of very bitter
lawsuits that I.B.M. workers have contracted cancer and other serious illnesses from chemicals
they were exposed to in semiconductor and disk-drive manufacturing, laboratory work and other
very basic industrial operations.
If link is broken, view Adobe Acrobat version [PDF--22
Some of the stories are chilling. Gary Adams, a chemist, sadly offers the names of friends and co-workers
from the mid-1960's to late 1970's who were part of a small product development group in Building 13
at the I.B.M. complex on San Jose's South Side: John Wong, Ray Hawkins, Gordon Mol, Dewayne Johnson,
Al Smith, Dan Fields, Robert Cappell, Ken Hart. All of them died after contracting malignant illnesses,
most of them succumbing in their 30's and 40's. Incredibly, four of them died after developing brain
cancer, a rare disease in adults.
I.B.M. has vehemently denied all of the plaintiffs' claims, and is being represented by Jones
Day, one of the firms that represented R. J. Reynolds in the tobacco industry's fight against
a long line of lawsuits. I.B.M. officials have said all along — and repeated to me this week — that
they do not believe there is any scientific basis for any of the plaintiffs' claims. There is
they said, that any employee contracted cancer as a result of exposure to chemicals at I.B.M.
In a work force as large as I.B.M.'s, they said, many workers will die from many different illnesses,
Boston Globe: Cash
balance held in limbo. Ruling clouds future of retirement plan. Excerpt: As many as 93,000 people
working at almost half of Massachusetts's 25 largest employers are covered by cash balance retirement
plans and could
be affected by a
recent court ruling that found the plans rob many older employees of retirement benefits. ...
The legality of the plans was thrown into question in July when a federal court ruled in favor
of IBM Corp. employees who sued the company saying its cash balance plan short-changed older
workers. The decision goes further than earlier rulings and is the first to declare cash balance
This has left employers around the country in legal limbo and unsure of how or whether to act
on a court ruling, which conflicts with regulations proposed by the US Treasury Department.
With their individual accounts, cash balance plans were often promoted by employers as a "portable" pension
for today's more mobile work force. Private industry also saw cash balance plans as a way to
contain soaring or unpredictable costs of traditional plans. IBM's actuaries estimated its
cash balance plan
would save $500 million by 2009, reducing future benefits for older IBM employees by almost
50 percent, court documents show.
For Judge G. Patrick Murphy in Cooper et al. v. IBM Personal Pension Plan, the bottom line
was that older employees were treated unfairly, in violation of anti discrimination provisions
Employee Retirement Income Security Act of 1974, which regulates retirement plans. For example,
under IBM's plan, implemented in July 1999, the court said an employee who joins IBM at age
35 and leaves at age 50 would be entitled to a larger benefit when she reached age 65, than
would an employee who joins at age 50, at the same salary, and retires at 65. If link is
broken, view Adobe Acrobat version [PDF--29
- Remarks by AFL-CIO President
John Sweeney at Labor Day Reporter Roundtable. Excerpt: As we come to Labor Day 2003, working
America is facing a crisis. It’s a jobs crisis and it’s the number 1 issue facing
Americans. Despite our so-called recovery, far too many people are out of work and many have
been out of work for a long time. White collar as well as blue-collar employees are losing
jobs, and many of these jobs aren’t coming back. And executives are slashing health care and
President Bush has pulled the rug out from under America’s working people and rolled out
a red carpet for the wealthy and giant corporations. There has been more net job loss under
Bush than under any President since Herbert Hoover. One Nobel prize winning economist recently
called the Bush economic policies the worst in 200
years, adding that the Bush tax cuts that predominantly benefited a wealthy few will mean a
10-year budget deficit of nearly 6 trillion dollars.
- MSNBC News: Job stress, burnout on the
rise. Layoffs, long hours taking their toll on workers. Excerpt: With mass layoffs, pay cuts,
seemingly endless workdays and disappearing vacations, Americans are coping with an enormous
amount of job stress. Feeling unable to keep up with the demands of their jobs, many are reaching
levels. ... “The consequence of burnout is that productivity begins to slip,” says
Chaifetz. “The smart organizations are the ones that can balance the needs for increased
productivity with appropriate employee morale.”Jeffrey Pfeffer,
professor at the Graduate School of Business, Stanford University, says American companies
who want to compete in a global economy should follow the European model of
shorter workweeks and month-long
vacations.“There is no evidence that excessive hours are necessary for
competitive success,” says Pfeffer. “But
somehow we’ve gotten in our minds that to succeed in this world is to
work yourself to death.”
- MSNBC News: The tussle over overtime.
Wave of lawsuits energizes a movement to change the rules. Excerpt: Dan Gabel is calling
from the road — again. As an Oracle Corp. trainer, Gabel figures he has been traveling
on business for at least 11 of the past 12 weeks, routinely putting in 60 to 70 hours a week,
and he’s tired of it. GABEL, 54, MAKES good money traveling the country teaching customers
how to use Oracle’s database software. Including incentive pay, Oracle trainers earn from
$60,000 to $100,000 a year, he said. But the long hours and time on the road have taken a toll
on his health and personal life, he says, and finally this year Gabel and a colleague initiated
a class-action lawsuit seeking unpaid overtime wages from the past several years. Their lawyer
says the suit, covering about 500 workers, could be worth $75 million. “I’m not complaining
about my pay so much — that’s not the issue,” Gabel
said. “The issue is the time that we’re having to work for that pay.” Gabel calculates
that on an hourly basis he is making about the same wage as if he had stuck with
an earlier career as a public school teacher.
- According to CBS
MarketWatch, on May 20, 1998, former IBM executive Dennie Welsh was gifted 3,350,000
shares of IBM stock at a value of $206,862,500.00. "ibmaccountant" comments.
Full excerpt: Dennie Welsh WAS the REAL HEIR APPARENT to Gerstner. He became incapacitated due
to illness and retired. Of course, no expense was
spared on his medical, unlike the modern day slaves called IBM
employees. I am not surprised by the amount of money he got, Lou thought very
highly of him. Lou thought he was actually a very good businessman,
although he was much more ethical than most IBM executives. He would have made a much better
successor. Unfortunately, Lou had no backup plan, had to stay a little longer,
take the heat for the personnel changes and choose another player for
CEO. Unfortunately, dictators don't like succession planning and the
bench was very weak. The result? An intellectual giant.
Forbes: Union IG Metall wins
pay talks right at IBM Germany. Excerpt: Germany's powerful IG Metall trade union said on Tuesday
it had won a legal battle with U.S. computer giant International Business Machines Corp. to
negotiate on behalf of IBM's 26,000 employees in Germany. A Frankfurt tribunal ruled that IBM,
the world's biggest computer services company, must deal with the hardline engineering union
as well as the huge services union, Verdi, in negotiating
pay. The company had said it would only talk to Verdi. "IBM must finally accept reality," IG
Metall leader Juergen Peters said in a statement. (Editor's note: The IBM Workers International
Solidarity (IWIS) Web site maintains a world-wide
list of unions representing IBM employees.
The Street.com: The Seven
Deadly Sins of 401(k) Plans. Excerpt: America, we have a problem. With corporate pension
plans going the way of the dinosaur and the Social Security system looking weaker every year,
plans have become the central component of most individuals' nest eggs.
But these plans are peppered with flaws.
New York Times: Harkin
Sees Votes to Stop Overtime Change. Excerpt: A key U.S. Senate Democrat said Tuesday he believed
he had lined up enough votes to block proposed changes in federal work rules that critics say
could cost millions of Americans overtime pay. "I think we've got the votes," said Sen.
Tom Harkin of Iowa, who has helped lead the charge against the Bush administration's proposed
expansion of overtime
exemptions. But, he told a news conference, "It's going to be close." "This proposal
is anti-worker, anti-family and bad economic policy," Harkin said. "It
will take money out of the pockets of hard-working Americans and it will not create one new
- Representative Bernie Sanders (I-Vermont): The
Collapse of the Middle Class. Excerpt: There has
always been a wealthy elite in this country, and there has always been a gap between the rich
and the poor. But the disparities in wealth and income that currently exist in this country
been seen in over a hundred years. Today, the richest 1 percent own more wealth than the bottom
95 percent, and the CEOs of large corporations earn more than 500 times what their average
employees make. The nation's 13,000 wealthiest families, 1/100th of one percent of the population,
almost as much income as the poorest 20 million families in America. ... One of the manifestations
of the collapse of the middle class is the increased number of hours that Americans are now forced
to work in order to pay the bills. Today, the average American employee works, by far, the longest
hours of any worker in the industrialized world. And the situation is getting worse. According
to statistics from the International Labor Organization the average American last year worked 1,978
hours, up from 1,942 hours in 1990 -- an increase of almost a week of work. We are now putting
more hours into our work than at any time since the 1920s. Sixty-five years after the formal establishment
of the 40-hour work week under the Fair Labor Standards Act, almost 40 percent of Americans now
work more than 50 hours a week.
- Wall Street Journal: Warning
of Pension-Plan Shortfall Raises Pressure for Financial Fix. Excerpt: Business groups, meanwhile,
are pressing Congress for changes that could permanently ease their pension burden. They
want rule changes that allow
them to replace the 30-year Treasury rate as the basis for determining a plan's future liabilities
with a higher rate that is a blend of corporate bond rates. Such a higher rate could lower
companies' pension liabilities by billions of dollars, critics say.
If link is broken, view Adobe
Acrobat version [PDF--29 KB].
- AARP: Retiree
Health Coverage Jeopardized by Rx Drug Plan. Provision Would Be a Trojan Horse for Age Discrimination. Excerpt: Millions of older retirees
could be at greater risk of losing some or all of their employer-sponsored medical benefits
if an obscure provision of the Medicare bill passed by the Senate in June becomes law.
AARP Action Alert: Protect
Retirees' Health Benefit. Contact the EEOC. Excerpt: The Equal Employment Opportunity Commission
(EEOC) – the Federal agency charged with protecting the rights of older workers – has
proposed a new rule that would allow employers who offer retiree health to eliminate that benefit
for older retirees. The new rule would make it legal for an employer to reduce or deny retiree health
benefits if a retiree is eligible for Medicare or other public health plan, even if the employer’s
retiree health benefit is substantially better.
| Coverage on H1-B and L1 Visa and Outsourcing Issues
- Indian Public Affairs
Network (IPAN): Perot Systems Announced Agreement to Acquire Vision Healthsource, Inc.
and Vision Healthsource India Private Limited. Excerpt: With a client base of more
than 25 U.S.-based healthcare billing companies, Vision handles more than US$1 billion
in healthcare provider claims per year for physicians and hospital-based and physician
specialties across the United States. The company's ISO-9001 certified claims processing
centers and call centers in Chennai process more than 25 million transactions and 670,000
phone calls per year. Vision's approximately 500 employees will become a part of Perot
Systems' healthcare group, the company's largest industry group.
- Kansas City Star: Why
not offshore the CEOs? Excerpt: IBM has been in the news because it is adding thousands
of jobs overseas rather than filling the jobs here. There is no doubt you can save serious
money as a company by moving jobs to countries where the pay scale is a tenth or less of
what Americans earn. Indeed, the further up the pecking order you go, the more money that
can be saved. If a programmer in India makes $10,000, think how much Sprint or IBM or other
companies can save, even if
they are paying a contractor twice that amount for each job. Which leads us to executive
compensation. Top executives in companies outside the U.S. generally receive far less compensation
than their counterparts here.
The argument is often made that U.S. execs deserve more because the companies they manage
are larger. But Professor Kevin Murphy at the Marshall School of Business at the University
of Southern California says that when you factor in size, the big kahunas at U.S. companies
are still more richly compensated. So what do we get if we offshore executives? Consider
IBM. Samuel Palmisano, chairman, president and chief executive of IBM, received $25.4
million in compensation last year when his $18.4 million in stock option grants were
figured in. Think if you could find a replacement in India, just as smart, who would
do the job for $2 million. Wow. With just one position, IBM has hacked away more than
in expenses. Now for a company with 315,000 employees, sales of $81.2 billion and earnings
of $3.6 billion, $23 million may not seem like much. But if you offshored the entire
upper management group,
it would mean some real money.
- New Jersey Star-Ledger:
no longer. More tech jobs shift abroad, which only adds to workers' woes. Excerpt: Information
technology, one of the hottest sectors of the U.S. economy during the past decade, has
become one of its most downtrodden. Almost 560,000 tech jobs were lost from 2001 through
the end of
last year, according to the American Electronics Association. And the pressure to cut
costs continues: As many as one out of 10 technology jobs in the United States are expected
overseas by next year, estimates Gartner, a consulting firm in Stamford, Conn. ... Several
years ago, Miano founded the Programmers Guild, a group that promotes better working
conditions for U.S. software engineers. It has 1,500 members nationwide, and about 150
members in its New
Jersey chapter meet regularly, although some members no longer have jobs. "One of the unfortunate
things about programmers is they have not organized," said
Miano, who recently stepped down as the group's chairman. "Basically, they wait
until the train hits them before they do anything." ... Miano, who plans to
concentrate on technology issues as a lawyer, is blunter. "Our national policy now is
to export every technology job overseas," he said. "If
you get into technology now, you're stupid."
ABC KGO Channel 7 News (San Francisco): High-Tech
Workers Protest in Concord Over Loss of Jobs.
Full excerpt: Some thirty high-tech workers staged a Labor Day demonstration in Concord
to protest the loss of skilled jobs to overseas contractors.
The protesters paraded outside a Bank of America facility. They waved signs with such
messages as "Outsourcing is stealing billions from
America" and "Will code for food." Bank of America was chosen for the
protest because the banking giant uses low-wage technology workers in India and other
countries to save money. B of A spokesman Harvey Radin says the company has fewer than
1,000 tech workers overseas and denied those jobs resulted in cuts domestically.
- Forbes: Best Countries
For Outsourcing. Excerpts: By 2015, analysts predict that more than
3 million white-collar jobs in the U.S. will be farmed out to other countries, up from
about 300,000 today. If that shift is inevitable, the next question becomes which countries
the best choice. ... Companies like Citigroup and General Electric
were pioneers, having established specialized centers in
other countries and sending ever more complex and critical functions outside the U.S.
Companies like IBM acknowledge the trend and are reportedly hastening efforts to move
jobs outside the U.S. before its competitors do.