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    Highlights for week ending December 27, 2003

    Scroll down for a special notice concerning this Web site...

  • New York Times opinion: Bracing for the Blow. Excerpt: I.B.M. has sent a holiday chill through its American employees with its plans to ship thousands of high-paying white-collar jobs overseas to lower-paid foreign workers. Years ago, when concern was being expressed about the shipment of factory jobs to places with slave wages, hideous working conditions and even prison labor, proponents said there was nothing to worry about. Exporting labor-intensive jobs would make U.S. companies more competitive, leading to increased growth and employment, and higher living standards. They advised U.S. workers to adjust, to become better educated and skillful enough to thrive in a new world of employment, where technology and the ability to process information were crucial components. Well, the workers whose jobs are now threatened at I.B.M. and similar companies across the U.S. are well educated and absolute whizzes at processing information. But they are nevertheless in danger of following the well-trodden path of their factory brethren to lower-wage work, or the unemployment line.

    I.B.M. officials are skittish to the point of paranoia on this matter, which has powerful social and political implications. Pulling the plug on factory workers is one thing. A frontal assault on the livelihood of solidly middle-class Americans - some of whom may be required to train the foreign workers who will replace them - is something else. James Sciales was the first of the company spokesmen to respond to my inquiries this week. He was reluctant to even tell me his name and nervously refused to answer any questions. Another spokesman was willing to talk but asked that I not refer to him by name. ... Most of the millions of white-collar workers who could be affected by this phenomenon over the next several years are clueless as to what they can do about it. They do not have organized representation in the workplace. And government policies overwhelmingly favor the corporations. Like the employees at I.B.M. whose holiday cheer has been dampened by uncertainty, these hard-working men and women and their families have little protection against the powerful forces of the global economy.  

  • Jim King, a former IBM manager in RTP, writes an open letter to IBM CEO Sam Palmisano. Full excerpt: Dear Mr. Palmisano: I was very disappointed when I opened my Enrollment Package for 2004 Benefits. I had hoped that once you took over your present position you would review and make corrections to the benefits that have been stolen over the last several years. I retired in 1996 and was an IBM manager for more than 22 years and the last 6 years of my career managed the PC production in RTP with several hundred employees and 66 first and second line managers. In an effort to slow the attrition of our best employees in the late 1980's and on into the 1990's numerous communications from Armonk were passed down to all levels of managers to make sure employees understood our total compensation included not only salary but also lifetime pension and medical benefits that were totally paid for by IBM.

    Employees where told that salary was just one part of total compensation and non contributory pension and medical benefits for the employee and family made up the total compensation package. I conducted meetings with hundreds of employees and conveyed that message believing it was true. What has happened in the last 12 years has amounted to broken promises to the people who made IBM successful. When I retired, I did not expect IBM to renege on the promises it had made to me over my 31 year career.

    I am appalled at the options offered this year and have received many calls from former employees and friends at IBM. There are numerous activities seeking a huge class action lawsuit against IBM and that is sure to happen. There is no question managers at my level and above lied to employees about "total compensation" many, many times and that is all sure to come out in court. It is clear that IBM management condones this and doesn't care about the commitments made to retirees. While IBM's top executives have padded their retirements with millions of dollars our rank and file that gave the best years of their lives are being deprived of what they were promised by guys like you and me and with devastating consequences. We kicked thousands of them out of the business in their peak earning years and are now depriving them of what we promised.

    I would suggest that you personally intervene into the current through stock options, TDSP and other opportunities that are available today. I was a high paid manager, participated in TDSP for all the years it was available and retired financially secure but that is not the case with thousands of IBM retirees that never had the opportunity to accumulate enough wealth to make up for what is now being unfairly and I believe unlawfully taken from them. The vast majority of retirees rely on personal savings and company promises. For IBM to break those promises puts many retirees in a no win position with little or no recourse. Returning to work is not even an option for most because of age and health problems.

    Thousands of retirees are waiting for you to do the right thing before the courts make a great company the laughing stock of American industry. I don't think you want that to be your legacy.

    Jim King

  • A new organization, BenefitsRestoration@IBM, has been formed to "ensure that fair and equitable benefits exist for all IBM retirees." Excerpt: We are an organization of IBM retirees growing in size, possessing a significant IBM share voting strength and representing IBM retirees nationwide. We are united in our belief that over the years IBM has committed lifetime medical benefits to employees who stayed with them until retirement. We are united in our resistance to IBM’s recent actions that greatly reduced their SHARE of the cost of our medical benefits. We are united in our demand that IBM honor its contract with us and restore the medical coverage that was promised. We are united in our belief that IBM recruited employees with the promise of providing a “total compensation package” (salary and benefits) from cradle to grave and agree that IBM has since broken that promise. We welcome and encourage you to join us in our efforts. Please review our Mission Statement and Tactical Plan.

  • Boston Globe editorial: Bush's 'ownership' scam. In President Bush's upcoming State of the Union address, we will hear a lot about something called an "ownership society." The idea is that American workers aspire to be owners -- of stock for their retirement, homes, businesses, good health insurance, and skills they need to navigate multiple changes of jobs and careers. ... How does Bush propose to create this "ownership society?" Mainly through more tax credits. If people lack reliable health care, there are tax-favored savings accounts to buy health insurance. If corporations are abandoning good pensions, there are new tax incentives to set aside retirement savings. If jobs are precarious, there are tax credits to purchase retraining when your job moves to China. ... Look at how America actually became a society of broad middle-class ownership in the years after World War II. Wages went up (thanks in part to unions), so it became possible for working people to imagine buying cars, homes, and the other material trappings of the good life. Corporations started paying decent pensions and health insurance benefits. Radical conservatives think that government help undermines individual initiative. But government programs like the GI Bill, FHA loans, Pell grants, community colleges, and federal aid to public schools allowed a lot of individual hard work to pay off. Social Security institutionalized the custom of retirement, which stimulated supplemental retirement plans. Guess who opposes all this?

  • Denver Post: OT plan bad for workers. Excerpt: If the Bush administration gets its way, about 8 million workers - 153,000 in Colorado - stand to lose overtime pay and protection under long-established labor rules that are in the process of being rewritten. Quite frankly, we can't afford such policies skewed toward employers and against the American workforce during these changing economic times. That's right. Bush and his Department of Labor say some workers don't need overtime protections. Such workers will likely include health-care employees, some police officers and firefighters, and many others who are accustomed to overtime pay. Anyone with a degree, specialized training or even on-the-job knowledge would be at risk. Even low-wage, manual laborers who supervise others on occasion can lose overtime protections. Such workers would be classified as "learned professionals."

  • Newsweek commentary by Jane Bryant Quinn: The Drug Bill's Hidden Costs. Contrary to myth, private insurers add to the cost of Medicare. Steering seniors into the private plans just hastens the day Medicare goes broke. Excerpt: Most Americans assume that the government wastes money while private business gets the job done for half the price. Well, not always—at least, not if you look at Medicare HMOs, where health care is managed by private insurers. Contrary to myth, the private insurers add to Medicare's costs because they're so heavily subsidized by us taxpayers. Steering seniors into private plans, as the president intends, hastens the day that Medicare goes broke ... In traditional Medicare, which pays doctors and hospitals for services, overhead runs at a superlow 2 percent, leaving 98 cents out of every dollar for patient care. By contrast, publicly traded HMOs show an average overhead of up to 16 percent, due to such things as administrative costs, sales and advertising, taxes, profits and the dividends paid to shareholders, says Brian Biles, a professor of health policy at George Washington University. In many cases, HMOs also pay more to doctors and hospitals than traditional Medicare does. After all costs, they spend only 76 cents of every dollar on care.

  • AccountingWeb: PwC to Settle Travel Expenses Lawsuit for $54.5 Million. Excerpt: PricewaterhouseCoopers LLP has agreed to pay $54.5 million to settle its part of a class-action lawsuit that contends the accounting firm overcharged its clients for travel-related expenses. ... The lawsuit details the practice of professional-service firms negotiating significant rebates with travel companies and credit card companies, overcharging their clients, and pocketing the difference without revealing the practice. The firm stopped accepting airline rebates on Oct. 1, 2001, amid complaints by some partners that the practice was unethical. The firm says it had no knowledge of the Department of Justice probe or plans to file the Texarkana lawsuit at the time. PwC says it now charges clients flat administrative fees when billing for travel expenses, and that all volume discounts are passed along to clients, the Journal reported.

  • Bonny Berger (full extract): am a former employee of AT&T, who was outsourced to IBM in February 1999, when I had 21 years of AT&T service and was age 41. IBM then sent my IT programming jobs to India and to Canada, and downsized me in May 2002, after my achieving 24 years of combined AT&T/IBM service. Previously, in 1997, AT&T converted from a traditional pension plan to a cash-balance one, under the leadership of new CEO Mike Armstrong, a former IBM retiree with 30 years of IBM service (and undoubtedly a close friend of Lou Gerstner)!

    This conversion was just "Step 1" in a planned, methodical sequence of actions designed to eliminate long-time employees without providing them with their earned benefits:
    • Step 1 - 1997 - Convert (and destroy) the pension plan. Create wearaway periods of AS MUCH AS 13 YEARS (in my case)!
    • Step 2 - 1999 – In a "handshake deal" between Armstrong and Gerstner, outsource employees to IBM (and send many employees, in the other direction, from IBM to AT&T, to suffer the same fate below.) Wearaway periods will thus never be overcome and surpassed.
    • Step 3 - 2001 to 2004 - Terminate employees, after offshoring their jobs. Define them as "new" employees (e.g. fewer than 5 years of IBM service), and provide severance pay based on that much-decreased amount of service.

    Even though AT&T converted to cash-balance 2 years earlier than IBM, its employee class-action lawsuit is not as far along as IBM's. Although I am not a named plaintiff, I am an active member and participant in the class. Here is a link to the class-action website - http://www.erisapensionclaims.com/AT_T/index.html. If you click on the "expert actuarial report dated October 3, 2003", and read the report, you will see me mentioned several times (I am Bonny Berger). Although the report doesn't mention this, my loss of pension benefits has been thus far identified as the worst-case scenario of wearaway, since I was relatively young with so many years of service. I was also deposed by AT&T because of this fact (see the link of the "docket" and search for my name), and the complaint has been amended to state this fact (see item # 24 in the link to the complaint – "AT&T knew that for some older workers, their cash balance accounts would not "move ahead of the old plan" for 13 years.").

    Because of Kathy Cooper's efforts, and the efforts of everyone involved in IBM's and Xerox's class-action suits, AT&T's suit has wonderful case law precedent! Thank you all so much for your efforts! The next step after we win these suits is to initiate another suit against AT&T and IBM to determine both companies' liability to re-calculate pension benefits for those employees who were outsourced between the two companies, which terminated their accrual of years of service, and thus prohibited the employees from surpassing their long wear-away periods! I hope that this new case will be named "Berger v. AT&T and IBM"! (And before you ask - No, I am not related to the David Berger in "Berger v. Xerox"!)

  • New York Times: The White-Collar Blues: I am surprised at how passive American workers have become. A couple of million factory positions have disappeared in the short time since we raised our glasses to toast the incoming century. And now the white-collar jobs are following the blue-collar jobs overseas. Americans are working harder and have become ever more productive - astonishingly productive - but are not sharing in the benefits of their increased effort. If you think in terms of wages, benefits and the creation of good jobs, the employment landscape is grim. ... I.B.M. has crafted plans to send thousands of upscale jobs from the U.S. to lower-paid workers in China, India and elsewhere. Anyone who doesn't believe this is the wave of the future should listen to comments made last spring by an I.B.M. executive named Harry Newman: "I think probably the biggest impact to employee relations and to the H.R. field is this concept of globalization. It is rapidly accelerating, and it means shifting a lot of jobs, opening a lot of locations in places we had never dreamt of before, going where there's low-cost labor, low-cost competition, shifting jobs offshore."

    An executive at Microsoft, the ultimate American success story, told his department heads last year to "Think India," and to "pick something to move offshore today." These matters should be among the hottest topics of our national conversation. We've already witnessed the carnage in manufacturing jobs. Now, with white-collar jobs at stake, we've got executives at I.B.M. and Microsoft exchanging high-fives at the prospect of getting "two heads for the price of one" in India. It might be a good idea to throw a brighter spotlight on some of these trends and explore the implications for the long-term economy and the American standard of living.

    "If you take this to its logical extreme, the implications for the entire middle-class wage structure in the United States are terrifying," said Thea Lee, an economist with the A.F.L.-C.I.O. "Now is the time to start thinking about policy solutions." But that's exactly what we're not thinking about. Government policy at the moment is focused primarily on what's best for the corporations. From that perspective, job destruction and wage compression are good things — as long as they don't get too much high-profile attention. "This is a significant problem, much greater than we believed it was even a year ago," said Marcus Courtney, president of the Washington Alliance of Technology Workers, an affiliate of the Communication Workers of America. If link is broken, view Adobe Acrobat version [PDF--45 KB].
Coverage on H1-B and L1 Visa and Outsourcing Issues
  • Reuters: U.S. Companies Moving More Jobs Overseas. Excerpt: U.S. corporations are picking up the pace in shifting well-paid technology jobs to India, China and other low-cost centers, but they are keeping quiet for fear of a backlash, industry professionals said. Morgan Stanley estimates the number of U.S. jobs outsourced to India will double to about 150,000 in the next three years. Analysts predict as many as two million U.S. white-collar jobs such as programmers, software engineers and applications designers will shift to low cost centers by 2014. But the biggest companies looking to "offshoring" to cut costs, such as Microsoft Corp., International Business Machines Corp. and AT&T Wireless, are reluctant to attract attention for political reasons, observers said this week. ... Multinationals find that when they trumpet expansion overseas, they cause problems at home. When Accenture Ltd. executives in India this month announced plans to double their staff to 10,000 next year, they triggered a flood of calls to the company's U.S. offices about U.S. job losses. Offshoring companies "are paying Chinese wages and selling at U.S. prices," said Alan Tonelson, of the U.S. Business and Industrial Council, a trade group for small business. "They're not creating better living standards for America."

    While there have been reports that IBM intends to ship 4,700 high-end jobs to India and China next year, they mark a rare instance when figures "have been reported in black and white," said Linda Guyer, president of Alliance@IBM, a union that has tried to organize IBM employees. Those numbers were not released by IBM, but rather disclosed by the Wall Street Journal, which had obtained an internal memo. The company has declined to comment. Guyer believes as many as 40,000 of IBM's 160,000 U.S. jobs will be transferred overseas by 2005, a figure she says was gathered from phone calls by IBM employees. Previously, IBM has pointed to a report by the McKinsey Global Institute that concludes the U.S. economy ultimately will benefit. The report was commissioned by Nasscom, a group made up of Indian tech companies as well as IBM's Indian services unit -- showing an effort by those invested in offshoring to sway public opinion. s

  • WorldNetDaily commentary by Patrick Buchanan: Bushite betrayal of working America. Excerpt: How are the Bushites shafting American workers? Let me count the ways. Under Bush's free-trade zealotry, the United States has lost manufacturing jobs for 40 straight months, the longest stretch since the Great Depression. Under Bush, hundreds of thousands of high-tech workers have been brought into the United States to take jobs at wages one-half or a third of those commanded by the U.S. workers they replace. Under Bush, the "outsourcing" and "off-shoring" of U.S. jobs has accelerated, with tens of thousands of jobs once held by high-paid white collar and information-technology workers going to Asia. ... What are the consequences for American workers? In a Post column, "Un-American Recovery," Harold Meyerson says it all. U.S. corporate profits have been rising for 7 months. In the third quarter of 2003, the economy grew at 8.2 percent, productivity at over 9 percent. Have our workers shared equally in the good times? Writes Meyerson: "Since July, the average hourly wage increase for the 85 million Americans who work in non-supervisory jobs in offices and factories is a flat 3 cents. Wages are up just 2.1 percent since November 2002, the slowest wage growth we've experienced in 40 years." That's right. According to Meyerson, the wages of Americans have gone up three cents since the economy took off on a tear in July. Let it be said: Working America has no powerful voice in politics. Both Democrats and Republicans are open-borders, free-trade zealots, who troll for cash from corporate America and burn their incense at the altars of the global economy.
This week on the Alliance@IBM Site:
  • ThinkTwice December 2003/January 2004 Newsletter [PDF--243 KB]. Articles in this issue include:
    • IBM Retirees Shocked by Health Care Increases
    • An open letter to The IBM CEO
    • New Band Changes to Affect IGS Employees
    • The Utimate Takeaway—Your Health
    • Former IBM Employees File Suit on Age Discrimination in Job Cuts
    • Legislative Actions Relating to Off Shoring
    • Rollback Health Care Increase
    • Australia IGS employees bring IBM to negotiation table.

A special notice concerning this Web site...

This week's summary highlights will be the last published on www.ibmemployee.com. Why? I feel these highlights are no longer needed; the information presented here is now available elsewhere, including in the main-stream press. Please read the following questions and answers for more details...

Q: How did this site get started?
A: I, like nearly all my IBM colleagues at the time, had no idea of the impact of IBM's switch to a cash balance pension plan would have on our retirement. I started following the discussion on Yahoo!'s Pension message board. I used David Finlay's Excel spreadsheet to calculate my own pension losses because of the switch. I talked to people at work about the change, and quickly discovered that hardly anyone understood what IBM had done to us. I started to send e-mails to my friends and colleagues, pointing to posts on the Yahoo! board. As time went on, I went from sending e-mails to a few friends, to a free Web site on GeoCities, to the full-fledged Web site you see today.
Q: Who runs www.ibmemployee.com? Is it the Alliance@IBM?
A: My name is Jim Askew. Although I'm a member of the Alliance@IBM, this site is independent of the Alliance. I've maintained the site on my own time, using my own resources. Although I didn't believe so in the beginning, I now feel that the best way to protect the rights of IBM workers in the United States is to have union representation, as do many of our brethren elsewhere in the world. I consider myself an active organizer for the Alliance@IBM.
Q: Why do you hate IBM so much?

I'm sorry you've misinterpreted my intentions. I love IBM. I love my job at IBM. I am very fond of my IBM managers and respect them enormously. I've been lucky to have had the same management team for several years now, and to have managers that care deeply for their people and for the work we do.

Like many of my colleagues that started with the company in the 70's and before, I knew I was working for the best company in the world when I joined IBM. I've worked diligently for IBM for many years, putting in a lot of overtime, all of it unpaid. Through it all, IBM assured me that I would be rewarded in the end with a decent pension and with free, lifetime medical coverage. I remember well conversations with my managers about "total compensation"--that IBM may not pay as well as the competition, but that our benefits, including our retirement benefits, more than made up the difference. I worked hard for IBM, and I trusted IBM to keep its promises.

Still today, that's all I want. I don't care to be rich. I just want to get my kids through college, and to have a comfortable retirement. That's what most of us that have been active in this campaign want. We don't want to harm IBM--our future depends on the continued success of the company. But, many of us are rightly angry that at the time our pension and retiree medical plans were being "robbed", former CEO Lou Gerstner managed to personally take hundreds of millions of dollars out of our company. (See http://www.aflcio.org/corporateamerica/paywatch/ceou/database.cfm?tkr=IBM&pg=1).

Q: Why are you no longer updating this site?
A: At the time I started this site, there was little, if any, coverage of cash balance conversions in the press. The Alliance@IBM did not yet exist. Today, there is extensive coverage of pension and retirement issues, outsourcing issues, and other issues covered by this site...and this coverage is in the mainstream press, including traditionally pro-business publications such as the Wall Street Journal, Business Week, Forbes, Fortune, New York Times, Washington Post, and so on. Labor organizations such as the Alliance@IBM, WashTech, and TechsUnite are now persuasive advocates for IBM and other tech employees. They are regularly quoted in the press, and often break news stories themselves. Frankly, these major sources are now doing a great job at exposing the issues that at one time were covered only in Internet message boards.
Q: I rely on your site to keep informed. What do I do now that you're going away?
A: The best way of staying informed is to join the Alliance@IBM. When you do so, you'll be sent regular e-mail updates covering issues of concern to IBM employees, retirees, and ex-employees. You can join for free as a "subscriber" or for $10.00 per month you can become a voting member. In addition, these Web sites and organizations are highly recommended:
Q: What will happen to this site?
A: Don't worry, all of the content of this site will remain in place. In fact, I hope to redesign the site in the next few months to make it easier to find archived content, including the addition of a "search" feature.
Q: I've signed up to receive weekly e-mails from you with the highlights. Will you give my e-mail address to someone else?
A: No. Your e-mail address will not be given to any other organization, including the Alliance@IBM. If you wish to receive mailings from the Alliance@IBM, you need to contact them directly with your request.
Q: How do I contact you, the site owner for www.ibmemployee.com?
A: Please send an e-mail to


"The test of our progress is not whether we add more to the abundance of those who have too much; it is whether we provide enough for those who have too little." — Franklin D. Roosevelt
This site is designed to allow IBM Employees to communicate and share methods of protecting their rights through the establishment of an IBM Employees Labor Union. Section 8(a)(1) of the National Labor Relations Act states it is a violation for Employers to spy on union gatherings, or pretend to spy. For the purpose of the National Labor Relations Act, notice is given that this site and all of its content, messages, communications, or other content is considered to be a union gathering.