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    Highlights for week ending October 25, 2003
  • Reuters: U.S. Senate hits cash balance pension rules. Excerpt: The U.S. Senate on Thursday voted to block the Treasury from issuing pension rules on cash balance plans, following the House of Representatives in trying to stop changes that can reduce payouts to older workers. On a voice vote, the Senate moved to stop the Treasury finalizing the proposed regulations it issued last year allowing U.S. companies to convert from traditional pensions to cash balance plans. "Withdraw this regulation," Iowa Democrat Sen. Tom Harkin said as he introduced his amendment to an annual spending bill that funds the Treasury department. "We must not let this age- discriminatory practice resume." ... The House of Representatives last month forbade the Bush administration from trying to overturn a court ruling against a switch to a cash balance plan by International Business Machines Corp. ... A federal judge in Illinois ruled in August that IBM's switch to such a pension plan in the 1990s discriminated against older employees.


  • Poughkeepsie Journal: Many local ex-IBMers involved in bias suit. Excerpt: A group of 135 ex-IBMers have sued the company in federal court, claiming IBM Corp. laid off older workers at a higher rate than younger ones and violated laws banning age bias.
    Their attorney said Thursday many of the plaintiffs are from the Hudson Valley and that potentially thousands more laid-off employees around the nation in the last two years could join the suit. IBM had no comment Thursday. Among the named plaintiffs is Paul Gromkowski, a Town of Fishkill man who worked for IBM 24 years and nine months until the ax fell in early 2002, despite high performance ratings. ''The funny thing about it is my job didn't go away,'' he said. ''My job wasn't being replaced. It's still there. I was selected to leave.''


  • Janet Krueger answers questions about IBM's Future Health Account (FHA). Excerpt: Question: I am a "near 30 year" IBM employee. I have a FHA that states it is in excess of $25k. If I retire from IBM soon and start to use the FHA, since I am in my early 50s, I expect it to run out long before I reach Medicare age. My question(s) is this: At what price will I be able to buy health insurance using my FHA using the FHA the same (in benefits and cost) as I am now paying as an employee or is it more? (I suspect it to be more) account $$? Answer: It will be much more... How much more depends on how many people you need health insurance more, what type of plan you want, and where you are in the country. Full health insurance for a family can easily cost you $1000/month.


  • USA Today: Investigation of General Mills' accounting hits hard. Excerpt: General Mills' revelation late Wednesday that its books are being investigated by regulators is a harsh reminder that potential bookkeeping land mines may still lurk in even the most innocuous industries. ... The Feb. 27 letter also questioned the company's assumption its pension plan would earn more than 10% a year, which is higher than the 9% figure the SEC has generally used as a threshold, Gavin says.


  • CBS News: Boomers Unprepared For Retirement. Excerpt: "Boomers, as a generation, have really grown up in a time of prosperity," he says. "They've really not been called to sacrifice for their country the way the previous generations have. And so it's a little bit of a self-centered generation, and one that maybe has not had in the experience they've had so far, to really think much about sacrificing today for the benefit of tomorrow." How large should that sacrifice be? Financial planners strongly suggest having at least 70 percent of your current income saved up for every retirement year you think you'll have. It's a lot of saving, but a recent study by the U.S. Census Bureau showed that about 41 percent of workers between the ages of 25 and 64 had any kind of retirement account. And half of those who did had balances of less than $33,000.


  • Workforce Management: 401(k) Matches Cut in Bad Times Are Slow to Be Restored. Excerpt: Times must be tough when a preeminent 401(k) plan service provider suspends its own 401(k) match. But in March, the Charles Schwab Corp., which holds approximately $101 billion in client retirement-plan assets, did just that. Until then, the stock brokerage firm generously had matched employee contributions 200 percent up to $250, then 100 percent up to 5 percent of pay.


  • Jobs with Justice: For several years, JwJ coalitions across the country have held local 'Grinch of the Year' elections to determine the most deserving greedy Grinch in their hometowns. This year, national Jobs with Justice will sponsor the fourth annual online Grinch of the Year election to determine the national figure who does the most harm to working families. Please submit your nomination for the national Grinch of the Year award below. Be sure to include a few sentences on why you think your nominee is deserving.


  • ABC News: Third of Nation's Workers Without Health Insurance Are Employed by Large Companies, a Study Says. Excerpt: Thirty-two percent of all uninsured workers in 2001 were employed by big companies, up from 25 percent in 1987, according to the report released Tuesday by The Commonwealth Fund. Researchers cited as factors soaring health care costs, declines in manufacturing and union jobs and the changing structure of large corporations those with more than 500 employees and the benefits they offer.


  • New York Times editorial: Class-Action Showdown. Excerpt: Under the phony banner of "tort reform," this act is a legislative gift to wealthy special interests. It would make it harder for Americans to win redress in court for corporate violations of state civil rights, health, consumer and environmental protection laws. The act's core provisions would permit big polluters and other companies to delay justice, or even escape justice entirely, by moving most class-action lawsuits from state courts to the overburdened federal courts, which are less familiar with the disputed legal and factual issues. The act would also impose new litigation hurdles and burdens on plaintiffs.


  • Foundation for Taxpayer and Consumer Rights:13 of 16 Bush Cabinet Members Have Ties to 'Class Action' Targeted Companies. Excerpt: A new report, "Class Action Cabinet," released today by the Foundation for Taxpayer and Consumer Rights (FTCR) shows that 13 of 16 Bush Cabinet members have been employed by, served on the board of, or have significant financial interest in corporations that have been targeted by consumer class-action lawsuits. Deliberations on the bill could start as early as tomorrow. Condoleeza Rice and Andrew Card, top advisors to President Bush, though not part of the Cabinet, were also found to have ties to companies targeted by class action lawsuits as was President Bush himself. The report by the consumer advocacy group comes as the US Senate is set to debate Bush-backed legislation, S 274, to limit consumers' rights to file class action lawsuits.


  • Salt Lake Tribune: Paul Wellstone: Marking the passing of a happy warrior. Excerpt: Paul Wellstone took family values seriously by fighting for the things that families need most: Good jobs and good education. He also fought for easier access to health care, a clean environment and for the civil and human rights we all should be able to take for granted. He fought, as he often said, for the little fellers, not the Rockefellers. If Paul Wellstone were alive today, he would be in the vanguard of those fighting for bread-and-butter issues. He was a national treasure, and he is missed.


  • Business Week: The Great 401(k) Hoax, Continued. The retirement system's biggest failure, however, lies with business itself and with the way in which Wall Street manages money. It's important to understand that the 401(k) is a retirement system on the cheap. Theresa Ghilarducci, a Notre Dame University pension whiz, estimates that the 401(k) system costs business only about 50% of what a defined-benefit system would cost. And as the decline in the value of 401(k)s during the stock market slide showed, employees bear a significant risk that market underperformance over an extended period of time will undermine the value of the eventual pension. Defined-pension benefit plans have no such risk. ... The dirty little secret of the 401(k) industry is that workers don't gain as much as you might think when the market does well. Mounting evidence shows that 401(k)s provided paltry returns during the great stock market boom of the 1980s and 1990s, when the benchmark Standard & Poor's 500-stock index quintupled in value. The data that show this best have been compiled by New York University professor Edward N. Wolff. His numbers show that, adjusted for inflation, the total pool of money set aside for retirement didn't increase in the 15 years from 1983 to 1998. Over that period, 65% of American households headed by a person from 47 to 64 years old had either the same or less pension wealth in 1998 than they had 15 years earlier.

Coverage on H1-B and L1 Visa and Outsourcing Issues
  • InformationWeek: Precious Connection. Companies thinking about using offshore outsourcing need to consider more than just cost savings. Excerpt: That's because there are so many ways an offshore project can go sour. Despite the enticing tales of Ph.D. engineers who will work for $10 an hour and pristine, Six-Sigma offshore-programming facilities, the risks are greater and more complicated than they appear on the surface. Even those bullish on offshore outsourcing have their concerns, according to a new InformationWeek Research survey of 300 business-technology executives. Among the 40% of respondents who are considering or already using offshore outsourcing, what weighs most heavily on their minds is the quality of the work performed, unexpected costs, and project delays. ... So far, the most-popular IT tasks to move offshore have been routine or predictable software work. Offshore companies want to move up the value chain to strategic-consulting and business-process outsourcing (see story, "Opportunity On The Line"). Yet Meta analyst Davison says some of his clients have bypassed offshore outsourcing because they believe their business processes change too quickly and need more flexibility than an outsourced relationship can deliver. "A good candidate for offshoring is legacy code," he says. "It's very stable and doesn't require a lot of changes. The knowledge transfer is doable." A poor candidate might be Web content, Davison says. "Most companies frankly don't have [solid] business strategies for the Web, and there can be an uncomfortable amount of change."


  • Kansas City Star: Technology jobs heading overseas as companies look to cut costs. Excerpts: Tim Barton could hire topnotch programmers in India, China and other far-off lands for a fraction of what he is paying in the United States. But the chief executive of Freightquote.com, an Overland Park Internet company, doesn't want his information technology staff in another building, let alone another country. ... "You could definitely save money on the raw cost of IT developers" by hiring overseas, Barton said. "But in my business it's not about the money you're paying; it's about what you're getting out of it." Barton said he wouldn't sacrifice the constant communication and close collaboration of having his IT staff in-house for the money he would save by going offshore. But thousands of U.S. companies are choosing otherwise. ... The growing reach of offshore outsourcing has sparked a growing grassroots movement to curb the trend. "I still don't think the awareness of this issue is what it needs to be," said Jim Fusco, a 49-year-old application developer in New Jersey whose job at IBM recently was transferred overseas. "That's the only way I see it turning around." Linda Guyer, president of the Communications Workers of America local representing IBM workers in New York, said people were beginning to stand up against corporations because they saw that offshoring was going to go well beyond the technology sector. "It's going to affect financial jobs. Accounting. Stock analysts...It's going to affect the entire U.S. middle class," she said. "I don't think the entire U.S. middle class is going to sit back and let this happen." If link is broken, view Adobe Acrobat version [PDF--29 KB].


  • Computerworld: H-1B visa cuts might not have big effect in U.S. Excerpt: The cut in H-1B visas will not affect offshore service companies, as there are already a large number of H-1B visas issued, and these are valid for three years, and are renewable for another three years," said John McCarthy, group director for research at Forrester Research Inc. in Cambridge, Mass. ... Over the next 15 years, 3.3 million U.S. services industry jobs and $136 billion in wages will move offshore to countries like India, Russia, China and the Philippines, according to a Forrester study in November of last year. The IT industry will lead the initial overseas exodus, the study said. A large number of U.S. companies, including IT companies, have already moved software development, call centers, and back-office functions offshore either to service providers or to their own subsidiaries in low-cost locations like India. "Large corporate IT customers appear increasingly to want an offshore component in IT solutions," Cohen said. "For many years, ITAA has argued that the threat to American workers is not the H-1B visa holder, but the IT jobs themselves being sent offshore. Once this happens, you lose not only the IT job, along with the economic benefits of spending and taxes of that worker, but also the jobs that might be related -- financial management, operations, middle management, sales and marketing, etcetera."


  • Atlanta Journal-Constitution: Revenge of the unemployed. Excerpt: Upset with the loss of U.S. jobs to India, Russia and beyond, a group of unemployed white-collar Atlantans vowed this week to target Georgia politicians, governments and businesses they deem responsible for sending jobs overseas. Atlanta is behind the outsource outrage curve that has hit Denver, Seattle, San Francisco and other cities stricken by huge white-collar job losses. But local organizers plan to meet Oct. 23 in Marietta to map out their anti-offshoring campaign. One of their targets: the state of Georgia, which employs an outsourcing firm to handle calls from the state's food stamp recipients. "Tax dollars should not be going outside the country.


  • CBS Evening News: Imported Workers Filling U.S. Jobs. Excerpt: Last year, Phil Marraffinni earned a salary of $100,000 as a computer programmer. Today he is a handyman because he says workers imported from India took his job. "They started bringing them in because, obviously, they would work for less money," he says. And when the Indian programmers arrived at the First Data Corporation in Coral Springs, Florida, Marraffinni had to teach them the system -- effectively training the people who later replaced him. "I had to give classes. And I wasn't the only one," he says. An estimated 400,000 American high-tech workers have either lost their jobs -- or are working for less. While at the same time, 460,000 immigrants brought to America are working in jobs in computer related fields, reports CBS News Correspondent Wyatt Andrews.


  • Press Associates Union News Service: White-collar job flight concerns lawmakers. Excerpt: The flight of white-collar jobs overseas, never to return, is catching lawmakers' attention. But measures to deal with it face opposition from the information technology industry's lobby group. Those views emerged at an Oct. 20 House Small Business Committee hearing, the second on the issue. It featured a former Silicon Valley worker telling lawmakers about the human impact of the white-collar job flight--and the information technology association's’s lobbyist claiming the problem is overstated. Studies show up to 3.3 million high-tech and white-collar jobs--those of call center workers, computer software engineers, automotive engineers, financial services workers and the like--will be exported from the U.S. to developing nations such as Russia, China and India during the next decade. Those jobs would take $136 billion in payroll with them. Such job exports also cut or eliminate opportunities for U.S. high-tech workers and graduates of U.S. universities, Committee Chairman Donald Manzullo (R-Ill.) said.


  • InTheseTimes: White-Collar Blues. Professional jobs shifting overseas. Excerpt: Indeed, the big story in coming years may be how corporations are “offshoring” the very jobs pro-globalization politicians and academics have long said are the American laborer’s salvation. “People always had this class bias,” says Marcus Courtney, president of the Washington Alliance of Technology Workers in Seattle, a unit of the Communications Workers of America that is attempting to organize workers at Microsoft and other technology companies. “They’d say, ‘Geez, of course blue-collar jobs will go overseas. Those workers are just caught in the past. If they’d just go back to school they’d be fine.’ But what do you say now to the X-ray technician, the accountant or the engineer with a master’s degree when their jobs go overseas?”

    IBM recently told employees it was planning to shift thousands of white-collar jobs to other countries. That should come as no surprise: besides contracting out many of its own back-office operations overseas, IBM is a leading provider of corporate outsourcing services. The company recently announced it was taking over most back-office operations of Procter & Gamble’s, with much of that work going overseas to an IBM outsourcing subsidiary. IBM’s outsourcing operation also handles much of the finance department operations for BP, one of the world’s largest oil companies. ... Indeed, one particularly ugly aspect to this new phenomenon is that U.S. companies fly in foreign workers, have their American workers train them, and then send them back to their overseas homes with the American trainer’s job. “People put up with this without complaint because they’re afraid if they complain it may hurt their severance payment or job recommendation,” said the CWA’s Courtney. ... “Congress and elected officials just have failed to grasp that this is a threat to America’s middle class,” Courtney said. “This is not about free trade; it’s about job exportation.”


  • Press Associates Union News Service: MD State Lawmaker to Fight Export of Jobs. Excerpt: Pauline Menes wants to stop export of white-collar jobs from Maryland before an exodus starts. And the way to do so, the state delegate believes, is to put the weight of the state government behind the Free State's white-collar workers. Menes, a Democrat from College Park, met Oct. 15 in its city hall with unionists concerned about the issue, to discuss strategy for and details of legislation on the issue that she will introduce in the state capital of Annapolis next year. Her legislation, like measures in other states, would ban state agencies and contractors from exporting white-collar jobs -- computer techs, data processing, engineering and the like -- to other countries. Those exports deprive U.S. workers of jobs.
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