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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
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
I reach Medicare age.
My question(s) is this: At what price will I be able to buy health insurance using my
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)
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
- 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
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'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
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
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
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,
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
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.
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
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
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
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.
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
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
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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