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    Highlights for week ending October 11, 2003
  • Wall Street Journal: Lucent's Former CEO To Defend Cuts to Retirees. Excerpts: Moves that have inflamed retiree anger include Lucent's decision to stop reimbursing some 50,000 management retirees for Medicare B premiums, eliminate dental coverage, and discontinue health-care insurance subsidies for many retiree dependents, according to the Lucent Retirees Organization, a group that formed earlier this year after the company said it would cut death benefits for spouses. In a letter to Mr. Schacht, LRO president Ken Raschke voiced criticism of the cuts in light of the large salaries Lucent executives still receive. "Lucent executives continue to draw multimillion-dollar salaries, retention bonuses and pensions -- all on the backs of its retirees, without whom there would be no Lucent," Mr. Raschke wrote in the letter.


  • Wall Street Journal: High Court Deals Setback to Xerox Over Pension Case. Excerpts: In the latest blow for employers with cash-balance plans, the Supreme Court denied Xerox Corp.'s application for a stay in Berger v. Xerox, a case the company lost in the Seventh U.S. Circuit Court of Appeals this summer. ... In the suit, originally heard in U.S. District Court for the Southern District of Illinois, plaintiffs said the pension plan incorrectly calculated "lump sum" retirement payments given to departing employees, resulting in lower payments than the workers were due under federal pension-benefits rules. Cash-balance pension plans are controversial because they typically save companies millions of dollars by reducing pensions for older workers, and because in some cases, companies including Xerox have paid lump sums to departing employees that were smaller than pension laws would have required. If link is broken, view Adobe Acrobat version [PDF--35 KB].


  • AARP Action Alert: Protect Retiree Benefits! Eliminate Section 631 from Senate Rx Bill! Excerpt: We want to thank the 40,000+ members who contacted the EEOC on protecting retiree health benefits. We now need your help again. A last-minute addition to the Senate prescription drug bill -- Section 631 -- would amend the Age Discrimination in Employment Act to expressly allow employers to eliminate ALL retiree health benefits (not just prescription drugs) for retirees eligible for Medicare or state health plans. (As many of you know, the EEOC is trying to do the same thing through a new regulation.) If this provision becomes law, there will be nothing to prevent employers from altering, reducing, or even eliminating the health benefits of any retiree over the age of 65. Please contact your Members of Congress immediately to let them know that Section 631 of the Senate bill must not be part of the prescription drug bill! Editor's note: AARP makes it easy for you to contact your members of congress. Just supply a ZIP code to get started!


  • Wall Street Journal: For Employees, Fight Over Pensions Creates Uncertainty. Excerpt: Rebecca Cornell earns more than $100,000 as a systems engineer at AT&T Labs after working there 30 years. Her annual pension when she retires: $21,000. That nest egg would have been about 47% bigger, she says, if AT&T Corp. hadn't shifted to a cash-balance pension in 1997. Cornell isn't the only one who thinks older workers lose out when companies convert to cash-balance plans, which combine elements of traditional retirement vehicles with 401(k)s. Employees have waged a long war over the pensions in class-action suits against International Business Machines Corp., Xerox Corp., Cigna Corp. and AT&T. Now, a court ruling against IBM has brought the fight to a critical point. In July, a federal district court sided with 150,000 employees in a suit against IBM that claimed the company's pensions don't pay older workers their fair share of benefits. "It's a turning point," said Jane Banfield, a retired AT&T sales manager who took away a $15,000 cash-balance pension after more than 20 years at the company. "Up until the IBM case, corporations, the American Business Council, accounting firms all felt as though they were going to win if this could be dragged out long enough," Banfield said. If link is broken, view Adobe Acrobat version [PDF--24 KB].


  • CBS MarketWatch: Cash-balance commotion. From court to Congress, pension reform stirs conflict. Excerpt: The U.S. Treasury is set to issue rules governing these hybrids of traditional pensions, but a congressional amendment would prevent those rules being published. Meanwhile, a federal district court ruling calling all such plans illegal is likely to be appealed. "Treasury is in the process of issuing regulations, Congress is throwing out amendments, judicial cases are being decided," said Lynn Dudley, vice president and senior counsel at the American Benefits Council, an industry trade group. "It's very difficult for plan sponsors, let alone individual participants, to know what's happening," she said. In July, a judge ruled that IBM's cash-balance plans and all such plans discriminate against older workers (see full story). About one-third of companies that provide defined-benefit pensions use cash-balance plans, experts said. ... "I'm sure IBM would like nothing better than to wave around a Treasury interpretation of the law which conforms to their view and not the plaintiffs," said Jeff Weaver, chief of staff for U.S. Rep. Bernie Sanders, I-Vermont. Sanders' amendment, successfully attached to a recent House appropriations bill, prohibits the Treasury from spending money this fiscal year on any effort that could help overturn the ruling in the IBM case, including issuing its cash-balance rules.


  • The Onion (humor): IBM Emancipates 8,000 Wage Slaves. Excerpt: Wall Street Journal analyst J. Craig Hoffman praised the emancipation. "In a truly modern capitalist nation, letting people go is the only right thing to do," Hoffman said. "Certainly, IBM could have kept those poor wretches slaving away for the company, as some have been doing for the past 30 years. But, we must ask, at what cost?" "Actually, $47,643 average annual overhead per worker, counting salary, benefits, and projected cost of pension or 401K co-payments, adjusted for inflation over the wage-slaves' useful lifespan, as it turns out," Hoffman added.


  • Forbes: Judge bars death records from suit against IBM. Excerpt: California judge barred a jury that will hear a cancer lawsuit filed against IBM from seeing any reference to 30,000 death records which plaintiffs referred to as a key piece of evidence, an IBM spokesman said on Thursday. Judge Robert Baines of the Santa Clara County Superior Court granted the motion of International Business Machines Corp. to exclude any reference to the death records known as the Corporate Mortality File, said IBM Spokesman Bill O'Leary. The judge cited the records' questionable relevancy and possibly misleading content, O'Leary said.


  • Washington Post: The Uninsured Problem Grows. Excerpt: Much to nobody's surprise, this year's census shows that the number of Americans who lack any form of health insurance grew in 2002, to 43.6 million -- more than 15 percent of the population. In part, these figures reflect the economic slowdown, which has left fewer workers employed, and the double-digit rise in health care costs, which has left fewer employers and workers able to afford health care. They may also reflect some deeper changes. Health care analyst Gail Wilensky suggests, for example, that the growing number of uninsured may be connected to the long-term shrinking of the manufacturing sector, which traditionally provides full benefits, and the growth of the service and small-business sectors, which traditionally do not. If so, economic recovery may bring less improvement than in past years.


  • BankIndex.com: A Sobering Exposure of the Carlyle Group. Excerpt: A few weeks ago, James Baker publicly offered advice to the Bush Administration on how they should proceed with their war on Iraq. What he and every newscaster or commentator failed to mention was that Baker is now employed by the highly-influential Carlyle Group, which is the eleventh largest defense contractor in the United States. In essence, then, we have a man trying to influence public policy while privately employed by a company that has a vested interest in activating America’s War Machine. If you’re not familiar with them, the Carlyle Group has become a powerhouse in affecting the direction in which our foreign policy takes, especially in regard to war. They accomplish this by hiring former government officials, then investing in private companies that are subject to government change (i.e. the military and telecommunications). Editor's note: Former IBM Chairman and CEO Louis Gerstner is now Chairman of the Carlyle Group.

Coverage on H1-B and L1 Visa and Outsourcing Issues
  • ComputerWorld's Special Coverage on H-1B Visas page provides links to many excellent articles on outsourcing issues. For example, we highly recommend Q&A: Congressman explains his opposition to H-1B visas.
  • Excerpt: Rep. Tom Tancredo (R-Colo.) explains his opposition to H-1B visas, which has distanced him from the Republican Party and the White House. ... Q: Please tell us about your proposed legislation and why you filed it. A: It's a very simple bill. It simply abolishes that category of visas which has been so abused. In the last five, six years, the use of H-1B visas has exploded because industry has discovered it's a way to cut labor costs, to displace American workers and reap financial rewards. We've got 800,000 to 1 million people in this country with H-1B visas. The INS [Immigration and Naturalization Service of the U.S. Department of Homeland Security] doesn't keep track of them; we don't really know how many are here. Out best guess is that very few have returned home. Another 500,000 to 700,000 jobs have been exported overseas by the IT industry. The IT industry has taken a huge hit. We've exported jobs and reduced the pay of those that are left -- all this because companies have seen a loophole that allows them to displace American workers.

  • The Oregonian: U.S. calls, India answers. Excerpts: Gaurav Mendiratta stammers through a sentence he wrote for a class assignment. "This customer is going through a spay-shal process," reads the tall 22-year-old college graduate, clad in a white T-shirt emblazoned with a Ray-Ban logo. Meinka Sharma, barely 5 feet tall, perches herself atop the counter behind him, cranes her neck over his shoulder and yells: "SPE-SHUL! OPEN YOUR MOUTH. WHAT'S WITH YOUR MOUTH?" Sharma, an instructor for training company Hero MindMine, is the drill sergeant for a boot camp in U.S. Culture 101. She berates Mendiratta and 15 other students from 6:30 p.m. to 3 a.m. every day of this late August week as she coaches them on handling U.S. customer-service calls. If they don't get it right, they face her wrath. Their reward? Jobs with Hero MindMine's sister company, making less than $2 an hour working nights. ... Outside her family's New Delhi row house, a company-paid driver in a blue van waits to ferry Thukral along a congested, cattle-lined highway toward LiveBridge's call center in Gurgaon, 10 miles south. There, she'll dub herself Kristy Grover and try to drop her Punjabi accent as she calls Americans to verify credit-card applications. Her pay: less than $2 an hour. ... Like most of her peers, Thukral learned English as a child and speaks it almost as well as Hindi. But for her job, she took weeks of "accent neutralization" training to learn which syllables to emphasize and how to use U.S. lingo. Her Indian accent is still detectable. But Thukral is prohibited, even when asked, from confirming she is calling from India. Some customers refuse to speak with her, demanding instead to talk to an American, she said. If link is broken, view Adobe Acrobat version [PDF--56 KB].


  • Asia Times (Hong Kong): The rich world's disappearing jobs. Excerpts: In the developed world and particularly in the United States, the scope of jobs disappearing overseas is widening beyond all imagining, to professions that almost nobody expected to be hit, and with far higher incomes than anybody thought possible as globalization bonds with the law of unintended consequences. The catalyst is the Internet. As instant communication becomes more ubiquitous, the developed world's white-collar professions, from CAD/CAM (computer-aided design/computer-aided manufacturing) to accounting to medicine to architecture to aircraft design to research and development to engineering to equity research and financial management to knowledge management to revenue-cycle management - a whole panorama of high-income employment - are inexorably going.


  • Wall Street Journal: Skilled Workers Mount Opposition To Free Trade, Swaying Politicians. Excerpts: A new anti-free-trade movement is emerging in the U.S., comprising highly skilled workers who once figured they would be big winners in the globalized economy but now see their white-collar jobs moving overseas in growing numbers. The new opponents to lowering trade barriers are especially vocal, and their complaints already are getting the attention of Congress and the White House. Their concerns got an unexpected boost Thursday when Intel Corp. Chairman Andy Grove, a pioneer in the American high-tech industry, warned that the U.S. could lose the bulk of its information technology jobs to overseas competitors in the next decade, largely to India and China. ...

    The Communications Workers of America union is pressuring politicians. In May, Rep. Jay Inslee, a Seattle Democrat, told Indian officials during a trip to New Delhi that he supports outsourcing deals. "Protection is a knee-jerk action," he told his hosts. But following several sessions with CWA lobbyists after the lawmaker returned home, Mr. Inslee joined with a fellow Washington Democrat in the House two months later to ask for a Congressional study of the economic impact of outsourcing. Nine states are considering measures to ensure that information processing work required by state contracts is done in the U.S. Last year, a bill in the New Jersey Legislature to limit state computer work to U.S.-based employees stalled because of lobbying by multinational companies. Still, New Jersey forced a computer-services contractor to relocate an 11-employee help-center to Camden, N.J., from Bombay -- at an additional cost to the state of nearly $1 million a year. Says Virginia's technology secretary George Newsome: State officials don't dare "say 'offshore outsourcing' out loud." If link is broken, view Adobe Acrobat version [PDF--31 KB].
This week on the Alliance@IBM Site:
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