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    Highlights—February 1, 2004
  • Forbes: IBM cuts 300 computer systems group jobs in U.S. Excerpt: IBM said on Tuesday it cut 300 jobs in its computer server and storage group, mostly in its San Jose, California location, as part of an effort to revamp it workforce to match skills with jobs.


  • Forbes: IBM cuts about 250 U.S. computer services jobs. Excerpt: International Business Machines Corp. cut about 250 jobs within its U.S. services division as part of its efforts to match its work force to the skills it needs, a company spokesman confirmed on Thursday. ... The cuts came just a few days after the company said that it had eliminated 300 jobs in its computer systems group. It said on Thursday that it was combining that systems group with its technology division.


  • USA Today: IBM retiree mounts campaign aimed to lower costs. Excerpt: Sandy Anderson is a retired 61-year-old IBM "lifer" who jokes about revering the company enough to tattoo its initials on his haunches — but that loyalty soured after his health-care costs jumped this year. Anderson is drumming up support on the Internet and, with his congressman, planning to take his case to the Vermont courts and to IBM, which he says has breached its promise of free health care. "I staunchly believe, as an IBM manager, that I got up and told people that they could rely on this, and so this is a violation of the social contract," Anderson said. ... "It's substantial out of pocket cost for the retiree," Anderson said, pointing to feedback from his Web site, www.benefitsrestoration.org, that indicated premiums tripled last year for some ex IBM-ers. The premium for Anderson and his wife is more than doubling, even after he decided to drop his college-aged daughter from his policy. After paying $189 last year per month, he'll pay $433 per month this year for his Vermont health maintenance organization, or HMO. ... John Kotson, a 69-year-old IBM retiree from Fort Collins, Colorado, who worked for 30 years at the company until 1989, said his health-care premiums rose by 20% this year. Kotson is part of a lobbying group called the National Retiree Legislative Network that includes retirees from other companies such as Lucent and Raytheon that are fighting to restore pension and health-care benefits.


  • SiliconValley.com: IBM doctor: I didn't give false diagnosis to plaintiff. Excerpt: As attorneys for IBM opened their defense Thursday in the trial over workers' exposure to toxic chemicals, an IBM physician denied giving a fraudulent diagnosis to a worker who is suing the company alleging a medical coverup. But Dr. Peter Lichty admitted sending the worker, Alida Hernandez, back to work with toxic chemicals against the advice of an outside specialist.


  • Raleigh News & Observer: More interest in IBM union. Fears of job losses may fuel activism. Excerpt: A group that's trying to unionize IBM's U.S. work force has seen its rolls swell by 1,000 in the past six months largely because employees are concerned about the migration of jobs overseas. Traffic on the Web site of Alliance@IBM, which now has 6,000 full and associate members, including 280 in the Triangle, has more than quadrupled in the past year, said Lee Conrad, the group's national coordinator. "That is unusual. We credit that to the offshoring phenomenon," he said, referring to the practice of shifting work to low-cost countries. People are afraid of "losing their jobs and not being able to find another similar job in the [information technology] field in this country," Conrad said.


  • Business Day (South Africa): IBM SA Pensioners Once Again Out of Pocket. Excerpt: IBM SA pensioners are once again out of pocket, this time because the company has made stringent cuts to their medical aid benefits. Last year, IBM SA pensioners threatened legal action against their former employer over what they alleged was improper use of their pension fund surplus. Now the pensioners are furious with IBM SA for cutting back on their medical aid benefits. IBM SA is also attempting to merge its in-house medical scheme, the IBM SA Medical Aid Society, with Discovery Health.
    • "eleanordavie", a retired IBM South Africa employee comments. Excerpt: We have 2 pensioner action groups here in SA, one to fight IBM on pension issues, now another to take on IBMSA on a second front - the medical aid. (sounds like World War 11) The medical aid action group has a site on Yahoo groups called ibmsamaag, if you want to read about how we are slugging it out with IBMSA. The IBMSA Pensioner Action group can be contacted by email. IBMSA wants to get its grubby paws on the substantial surplus 200 million+ rands in the IBMSA pension fund, and, it now also wants to grab the millions of SA rands sitting in the IBMSA Medical Aid - the retiree prefunding. In addition, South African IBM retirees will have to pay for their medical aid, which benefit was free on retirement, as per IBMSA's employee handbook and has been the case since my husband retired from IBM in 1985. The 2004 IBM medical benefit plan has also been cut to ribbons, providing very very basic health care needs, nothing approximating the previous level of health care benefits.


  • CBS MarketWatch: Posters enraged by report on IBM. Excerpt: That was the chant echoing throughout cyberspace Tuesday after a report in the Wall Street Journal detailed IBM's plans to save $168 million by moving thousands of programming jobs abroad. The sore subject of exporting jobs, which has been in focus for months in the chat rooms, just got a bit sorer. ... How do you feel about IBM's plans? Share your thoughts in CBS MarketWatch's "IBM" discussion group .


  • Washington Post: Pension Perniciousness. Excerpt: NOT FOR THE first time, Congress has muscled up to an important problem, taken a good long look at it and resolved to make it worse. The problem is the vast hole in the nation's corporate pension schemes, and the perverse rules that helped create them. Congress's solution, championed in the Senate by an alliance of Sens. Charles E. Grassley (R-Iowa), Judd Gregg (R-N.H.), Max Baucus (D-Mont.) and Edward M. Kennedy (D-Mass.), is to reward the hole-diggers with what amounts to a $16 billion loan from taxpayers.


  • CNET News: Don't mention the 'O' word! Excerpt: Like poor Fawlty, IBM these days finds itself forced to employ the oddest of circumlocutions to prop up the pretense that plans to shift thousands of high-paying programming jobs overseas are anything but. I find that awfully curious. That a global company such as IBM is trying to save money by exporting jobs to Asia and Latin America is hardly a showstopper. The only real news is the size of the number of jobs affected, expected in this case to number in the thousands. But somebody in upper management apparently believes this is a political hot potato. Ever since this story first began to leak out late last year, IBM has shucked and shimmied and done whatever else it can in order not to mention offshoring. ...

    So why the spin? A couple of reasons. In an election year, one of the other major parties--or both?--may play to voters by decrying the loss of skilled jobs to other parts of the globe. An image-conscious company like IBM naturally is anxious not to wind up starring in any campaign commercials this fall. What's more, any big offshoring announcements could pry open the door to further unionization. With few exceptions, unions have failed to make major headway with computer and software companies. That could change because American jobs are clearly at stake when U.S. companies go searching for less-expensive skilled labor in other regions of the globe.


  • New York Times: Senate Passes a Bill to Cover Pension Plans. Excerpt: The Bush administration has repeatedly expressed skepticism about such pension breaks for individual companies or sectors. Last week, three cabinet members issued a warning against pension legislation that "encourages firms to underfund their pensions."


  • Socialist Worker Online: Corporate America’s pension rip-off. Don’t let them steal our future. Excerpt: Overall, companies with traditional, or "defined-benefit," pension plans, are underfunded by a staggering $350 billion. During the boom years of the late 1990s, pensions at many big corporations were "overfunded"--meaning that the investments to cover pensions brought returns far beyond what was needed to cover retiree benefits. But companies like General Electric simply counted the extra cash from pension investments as income to look good to Wall Street--and refused to improve retirees’ miserable benefit levels.


  • The ERISA Industry Committee ("Advocating the Employee Benefit and Compensation Interests of America's Major Employers"): ERIC Praises Senate Passage of Pension Funding Bill Urges Agreement with House. Excerpt: The bill has been a major ERIC initiative since virtually all of the Association’s members sponsor defined benefit plans. The business community has argued that if the defunct rate is not replaced now, companies will be forced to use an interest rate to calculate their liabilities that will require them to put as much as hundreds of millions of dollars more into their plans than is reasonably necessary. That money would otherwise be used to increase spending on employment and on plant and equipment that would further fuel and support economic recovery in 2004.


  • The Hawk Eye: Congress readies pension break. Companies likely to see reduced contributions to retirement plans. Excerpt: Companies struggling to meet staggering pension obligations are in line for some immediate help from Congress — reduced contributions to their retirement plans. It's a $26 billion break over the next two years, with additional relief for the airlines and steel industry. The Senate began debating the measure Thursday after more than 200 companies, including AT&T Corp., Exxon Mobil Corp. and IBM Corp., wrote senators last week urging quick passage.


  • Dow Jones News Service: SBC Employee Lawsuit Adds To Company's Pension Woes. Excerpt: SBC, the nation's second-largest local phone carrier, kicked $1.6 billion into its pension and retiree benefit plans last year to help close a funding gap. Now, it's being sued by a group of former employees who say they're owed about $ 123 million in retirement benefits. In a suit filed Monday in U.S. District Court in Hartford, the plaintiffs say they were hurt when the company, then Southern New England Telephone Co., converted its traditional pension to a cash-balance plan.


  • Watson-Wyatt Worldwide: Cash Balance Debate Continues in Congress and the Courts. Excerpt: In an unpublished opinion, the Ninth Circuit Court of Appeals ruled on CBS’ adoption of a cash balance plan and the conversion method it used. The court held that the plan and conversion method do not violate ERISA’s fiduciary standards, do not result in an impermissible cutback of benefits and do not violate federal age discrimination laws. This is the first time a federal appellate court has considered whether cash balance plans violate the age discrimination standards. The court’s decision certainly refutes the charge that federal courts view cash balance plans as inherently violating age discrimination standards, a charge that has served as a rallying cry for cash balance critics. However, the fact that the decision is unpublished means it has less precedental value than if it were published. Moreover, the analysis supporting the decision is much less in-depth than that in Onan v. Eaton, a district court decision that held cash balance plans were not inherently age discriminatory, or in Cooper v. IBM, which held that they were.


  • BenefitsBlog: Cash Balance Plan Litigation Developments. Excerpt: Some of you may have read a recent article in a newsletter from a major benefits consulting firm which discussed developments in the cash balance plan litigation arena. The article states that "[t]he first appellate court to consider whether the plan design violates federal age discrimination laws has ruled in favor of the plans." The article later describes how in an unpublished opinion, the "Ninth Circuit Court of Appeals ruled on CBS’ adoption of a cash balance plan and the conversion method it used" and "held that the plan and conversion method do not violate ERISA’s fiduciary standards, do not result in an impermissible cutback of benefits and do not violate federal age discrimination laws." Here is what the unpublished opinion in Godinez et al. v. CBS Corporation et al., 81 Fed.Appx. 949, 2003 WL 22803700 (9th Cir. 2003), actually said...


  • Minnesota Public Radio: The State of the Unions. Excerpt: ground they lost in the changing realities of the modern work world. At one time, half of American workers were in a union. Now the number is just one in eight. Minnesota Public Radio's Mainstreet Radio team examines "the State of the Unions," in this series of stories looking at how unions have changed their organizing strategies. The laws governing strikes are different and that's affected who and how unions are trying to organize. We'll also look at how union workers feel their unions are representing them, and whether unions are relevant in the high-tech economy of the 21st century.
    • The blue collar workers of the 21st century. Excerpt: And at IBM, workers organized over changes to their pension plan in 1999. The uprising became Alliance@IBM, also a CWA unit. Garrett Lanzy is a national vice president of the Alliance and works for IBM as a software designer in Rochester. "Initially, people started looking at (pension) numbers and thinking, 'This doesn't look like a good thing.' A couple people started a discussion group on the Internet, and word of it spread like wildfire and started employee activism, which was kind of unusual at IBM up to that point," Lanzy says. Lanzy says the group helped spur U.S. Senate hearings on the pension change, and older employees won the right to stay in the old plan. Alliance@IBM claims only a tiny portion of IBM's 150,000 employees. Of nearly 6,000 workers in Minnesota, just 30 are dues-paying members. Lanzy says the group is far from having the number of members it would need to negotiate a contract or go on strike. "Our strategy at this point is more one of getting out, getting information to the press, so people in the communities where IBM does business can find out what's happening, and see if we can get some pressure from outside to affect what the company does," he says. Lanzy says the union has publicized layoffs IBM hoped to keep under wraps. Members have spoken up at shareholders' meetings. And they recently published the transcript of an internal conference call, in which managers discussed moving jobs to India and China. IBM declined to comment on the Alliance, or the topic of IT offshoring. Other Minnesota companies with offshore technical workers in India that declined comment for this story include Best Buy and UnitedHealth.


    • Will work for health insurance. Excerpt: If you grew up in Virginia, Minnesota, you might know Paul Thomas. He's about 50 now -- getting a bit thicker in the waist -- with frosty hair and a closely trimmed goatee. His wife says he's just a big kid. You can often spot Thomas at the SuperOne grocery. "So, I come up to you and I ask you if you want paper or plastic," Thomas says. "And I found myself saying, 'Geez, this is almost as bad as McDonalds,' and saying, 'You want fries with that?'" It's a big change for Thomas. He'd put in more than 20 years at LTV Steel Mining. Thomas made good money and earned generous benefits. He looked forward to a comfortable retirement, with a good pension and a health plan. But LTV is gone now, and with it the health plan for thousands of retirees. Now, Thomas is bagging groceries -- a job that comes with health insurance.

  • Durham Herald-Sun: Man who invented computer key combination retiring. Excerpt: David Bradley spent five minutes writing the computer code that has bailed out the world's PC users ever since. The result was one of the most well-known key combinations around: Ctrl+Alt+Delete. It forces obstinate computers to restart when they will no longer follow other commands. Bradley, 55, is getting a new start of his own. He's retiring Friday after 28 1/2 years with IBM.


  • Economic Policy Institute: Economic growth not reaching middle- and lower wage earners. Excerpt: The trend reveals two notable facts: first, those in the middle of the earnings scale and below (at or below the 50th percentile) are losing ground—their weekly earnings were lower, after adjusting for inflation, at the end of 2003 than one year earlier. Second, the pattern of earnings changes is highly skewed: the losses are greatest for the lowest earners, while the weekly earnings of those at the top of the scale (the 90th percentile) grew by 1.1%. This pattern of earnings growth suggests that while the economy is expanding, the benefits of growth are flowing to those at the top of the wage scale.


  • The Center for Public Integrity: The Buying of the President 2004. Who Bankrolls Bush and his Democratic Rivals? A look at the presidential race.


  • In These Times: Working the System. Agency advises employers how to duck overtime pay. Excerpt: When the Bush administration announced plans last year for a controversial “reform” of New Deal-era wage and hour regulations, it assured Congress and labor unions that the proposal would make overtime pay available to some 1.3 million low-paid workers—even as it removed many high-paid employees from overtime protection. It now turns out that the administration’s Department of Labor (DOL), in a little-noticed report on the proposed regulations published in the Federal Register, actually was offering alert employers a set of instructions on how to avoid paying overtime to many of those long-suffering low-paid workers.


  • National Public Radio: Bush Offers Plan for Health Care Reform. Excerpt: President Bush's State of the Union address includes plans to overhaul the nation's health care system. The president calls for computerized health records, curbs on "wasteful and frivolous" medical lawsuits and tax breaks for those who buy their own health insurance. Economists say the proposals as a package could reduce costs. Hear NPR's Joanne Silberner.


  • Center on Budget and Policy Priorities: President's Savings Proposals Likely to Swell Long-Term Deficits, Reduce National saving, and Primarily Benefit Those with Substantial Wealth. Excerpt: In his upcoming federal budget plan, the President is likely to promote a proposal contained in last year’s budget to establish new savings tax breaks. This proposal — to establish tax-favored “Lifetime Savings Accounts” and to replace existing Individual Retirement Accounts with “Retirement Savings Accounts” — is ill-advised for at least five reasons.


  • Seattle Times editorial: The shame of Kaiser. Excerpt: On Jan. 12, Kaiser Aluminum & Chemical Corp. said it intends to cancel the medical and pension benefits for all employees, union and nonunion, and retirees. The pension benefits are federally insured, but the medical benefits are not. It is a sorry thing to end medical benefits to employees because the business can no longer afford them. What is happening here is more than a sorry thing; it is a shameful thing. Under cover of bankruptcy law, a company is taking away benefits from its retired workers who already have earned them and who have no chance to earn them again. Only part of this has to do with the plight of the aluminum industry in the Pacific Northwest. Because of the rise in power costs here and competition in developing countries, our industry has become marginal at best. Of 10 plants, eight are closed, and none operates at capacity. But only two of the closed plants are Kaiser's. Other owners dealt with the same problems, and in generally better ways.


  • Washington Times commentary: Rx bill's fine print. Excerpt: Now that Congress has finally released the details of the Medicare prescription drug bill, it is worse than one's remotest fears. A coalition of 50 conservatives groups had opposed the bill for its $7 trillion unfunded price tag, its lack of market reforms and its incentives for employers to throw retirees on to the government plan to reduce their own costs. Well, the trillions of liability survived the final drafting and market reforms were few and mostly limited to impractical demonstration tests, but billions of new subsidies were written in at the last moment to buy off big business.

    Does it surprise that it takes a month after the congressional vote to know what was in the bill? One of the few truthful books on the legislative process was authored by a state senator named H.L. Richardson and called, "What Makes You Think We Read the Bills?" Of course we do not. It was generally known the drug bill would provide an employer reimbursement for 28 percent of the drug costs spent for retirees insurance plans, up to $1,330 per employee. What the midnight language added was that the subsidy would be calculated on the basis of both the employer and employee health insurance premium contribution.

    Get it? The employer can shift the premium costs to the employee and still receive the whole subsidy for itself — quite a deal. The tendency has already been for employers to shift costs to their retirees, but this new incentive will cause an avalanche. The Wall Street Journal reported that benefits consultants were already designing plans for the 65 percent of large firms that now pay for senior health coverage to transfer the costs to retirees and nevertheless rely upon the subsidies to build corporate profits. Employers now will have the option of taking the 28 percent subsidy without paying any of the premium costs or saving 72 percent more by throwing the retirees entirely on the government plan.


  • San Francisco Chronicle: Lazarus at Large. State must lead the way. Excerpt: More than 43 million Americans may now be uninsured, but no one expects a national health care system similar to Canada's to be adopted any time soon. The obstacles, not least the fierce opposition of the $300 billion insurance industry, make such an enormous change politically untenable. If universal coverage is to come to the United States, most experts agree, it will be introduced gradually, state by state. And California is positioning itself to be among the first out of the gate with a workable plan. ... A pair of Harvard Medical School researchers determined last week that $45 billion of the $163 billion spent on health care in California last year was eaten up by administrative expenses. With a single-payer system in place, the researchers found, California health care spending would be reduced by almost $34 billion -- enough to cover every uninsured person in the state and improve treatment for others.


  • Congressional Budget Office: Limiting Tort Liability for Medical Malpractice [PDF--116 KB]. Excerpt: Evidence from the states indicates that premiums for malpractice insurance are lower when tort liability is restricted than they would be otherwise. But even large savings in premiums can have only a small direct impact on health care spending—private or governmental—because malpractice costs account for less than 2 percent of that spending. Advocates or opponents cite other possible effects of limiting tort liability, such as reducing the extent to which physicians practice “defensive medicine” by conducting excessive procedures; preventing widespread problems of access to health care; or conversely, increasing medical injuries. However, evidence for those other effects is weak or inconclusive.


  • Los Angeles Times: More Workers Are Likely to Retire Without Company Health Benefits. Excerpt: Increasing numbers of Americans are likely to learn in the next three years that they will retire without any health-care benefits, according to a survey of some of the largest U.S. companies that was released Wednesday. Citing the rising costs of health care, 71% of 408 companies surveyed by the Kaiser Family Foundation and Hewitt Associates said they had made retired workers shoulder a bigger share of insurance premiums in the last year. About 10% said they had eliminated subsidized health benefits for future retirees, and 20% said they probably would eliminate the benefits by 2007. If employers follow that path, more Americans who retire could join the growing ranks of the underinsured. "This is a retreat from the promise that companies have made to workers since World War II," said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica. "It's an abrogation of a social contract."


  • Institute of Medicine of the National Academies: Insuring America's Health: Principles and Recommendations. Lack of health insurance causes roughly 18,000 unnecessary deaths every year in the United States. Although America leads the world in spending on health care, it is the only wealthy, industrialized nation that does not ensure that all citizens have coverage. To help policy-makers, elected officials, and others judge and compare proposals to extend coverage to the nation's 43 million uninsured, the Institute of Medicine of the National Academies offers a set of guiding principles and a checklist in a new report, Insuring America's Health: Principles and Recommendations.


  • New York Times: Proposal Would Tax Businesses That Do Not Insure Workers. Excerpt: Two powerful interest groups, health workers and hospitals, are proposing an audacious and costly effort by New York State to cover one million people without health insurance and modernize hospitals. The proposal would be financed by a tax on businesses that do not insure their workers and by a billion-dollar state bond act. ... The core of the plan is what in Albany has been called play-or-pay, a $3,000 tax on employers for each worker they do not insure, with a smaller levy for small businesses that pay low wages. No state imposes such a tax of any significant size, health care advocates say. Some of the money would be used to increase the number of people in New York's state-subsidized health plans like Medicaid, Family Health Plus and Healthy New York, which together already constitute the most expansive such system in the country.


  • The Commonwealth Fund: Mirror, Mirror on the Wall: Looking at the Quality of American Health Care Through the Patient's Lens. Excerpt: Health care leaders in the United States often claim that the American health system is the best in the world. Based on both per-capita spending and the percentage of national income spent on health care, our nation is certainly far and away the leader. But are Americans really getting what they pay for? A report from The Commonwealth Fund that examines how well the health system works from the perspective of patients confirms what several other recent studies have shown—that the U.S. performs worse than its peer nations on several dimensions of quality.
    • Patient Safety: U.S. Ranked Last
    • Patient-Centered Care: U.S. Ranked Second-to-Last
    • Timeliness: U.S. Ranked Third
    • Efficiency: U.S. Ranked Last
    • Effectiveness: U.S. Tied for Last
    • Equity: U.S. Ranked Last for Lower-Income Patients

  • Fort Worth Star-Telegram: Pension idea would cash in on teachers' deaths. Excerpt: Under fire for its sheer ghoulishness, an unorthodox proposal before state leaders would raise money for teachers' pensions by banking on their deaths. The plan has drawn questions about its feasibility, its macabre nature and the involvement of former U.S. Sen. Phil Gramm, who floated the idea on behalf of his investment bank. ... Gramm has pushed the idea on behalf of UBS Investment Bank, of which he is vice chairman, in recent meetings with Perry's staff, Insurance Commissioner Jose Montemayor and pension officials. Gramm's involvement has prompted an ethics complaint by the Texas Democratic Party, which alleges that the former lawmaker engaged in improper lobbying. UBS, a Swiss company, declined to comment on the ethics complaint or the overall proposal. Two phone calls to Gramm were not returned. The UBS proposal, in theory, would add income to the Teacher Retirement System through the purchase of life insurance policies on retirees ages 75 to 90.


  • Towers-Perrin HR Services: Is It Time to Take the “Spin” Out of Employee Communication? [PDF--1.2 MB] Excerpt: A Towers Perrin survey of 1,000 working Americans suggests that many companies may be losing the credibility battle when it comes to communicating with employees. Specifically, the survey responses indicate that companies may be trying too hard to “spin” their internal communications and, as a result, may be undermining their credibility with many employees. While other research shows that Americans in general have become increasingly cynical and suspicious of major organizations, both public and private, most corporate leaders would likely be concerned to learn that only half of employees believe what their companies tell them — and almost 20% do not believe that their employers usually tell them the truth.


  • John Mellon has posted a document titled IBM'S U.S. Employee Internal Appeals Program on his Web site. It is in Microsoft Word format and may be downloaded here.
Coverage on H1-B and L1 Visa and Outsourcing Issues
  • Sydney Morning-Herald (Australia): Lees expresses concern about Telstra outsourcing. Excerpt: An independent senator, whose vote could determine the sale of Telstra, today expressed anger at the telco's plans to outsource 450 jobs to India. Meg Lees said the move would do little to win Senate support for the government's plans to sell its remaining majority share in the telco. The furore surrounds an agreement between Telstra and US-based IBM Global Services to extend their IT outsourcing arrangement under which IBM manages and develops software applications for Telstra. IBM has said that to be competitive the work would be carried out by its Indian and Australian operations. The move offshore has been on the cards for several months and is part of Telstra's plan to slash $957 million in costs by sending 1500 jobs offshore over the next few years. ... Lees said she had retained an open mind about the possible full sale of Telstra, but its actions and those of the government were difficult to defend. "I reject Telstra's spin that any loss of jobs as a result of this contract is the responsibility of IBM rather than Telstra," she said in a statement. "Telstra is the Australian company, not IBM, and with an Australian majority shareholding, it is Telstra that should be acting in the interests of Australians.


  • Information Week: High-Tech Degrees Don't Guarantee Jobs. As graduation approaches, college students who focused on IT are finding that offshore outsourcing has cut the number of available jobs. Excerpt: While there are hopeful signs outside the technology sector, outsourcing of computer programming and customer service jobs to China, India, and other countries with cheaper labor costs have dimmed prospects for seniors like computer-science major Andrew Zhou, said Richard White, director of career services at Rutgers. Eager to ride the high-tech tide, Zhou double-majored in computer science and finance when he arrived at Rutgers University in 2000. But as graduation approaches, Zhou is pinning his hopes on finance and dropping the idea he once had that computer know-how guaranteed him a job. "Four years ago, it seemed like an awesome major," Zhou said as he waited to speak with a recruiter for a telecommunications management firm at Rutgers' annual career day. "Now, nobody wants to get in because all the jobs are going to India."


  • Information Week: Bush Calls For Funds To Boost Job Training. Excerpt: In the State of the Union address last week, the president called for a $250 million investment to fund partnerships between community colleges and employers to help furnish Americans with the knowledge they need to succeed in the job market. "This country of ours must also recognize that the workforce needs to be constantly trained to stay up with the technological advances," Bush said after his speech at a job-training panel at Owens Community College in Perrysburg, Ohio. (Editor's note: I guess Zhou should have gone to a community college instead of Rutgers).


  • Associated Press: Moving jobs abroad: More interest than ever from corporate America. Excerpt: More than 150 corporate executives, many paying $1,400 a head, listened intently for tips on how to move jobs overseas effectively. Outside, on a frigid Manhattan sidewalk, a group of fewer than 20 spirited demonstrators protested the "offshore outsourcing" conference that opened Wednesday. ... One speaker unexpectedly decided to bar the press from his presentation. His topic: Is offshore outsourcing unpatriotic? "I'd prefer not to comment," the speaker, Jeffrey Cohen of the big consulting firm McKinsey & Co., said when asked why the session had been closed.


  • New York Times: Education Is No Protection. Excerpt: In Mr. Barrett's view, "Unless you are a plumber, or perhaps a newspaper reporter, or one of these jobs which is geographically situated, you can be anywhere in the world and do just about any job." You want a national security issue? Trust me, this threat to the long-term U.S. economy is a big one. Why it's not a thunderous issue in the presidential campaign is beyond me. Intel has its headquarters in Silicon Valley. A Mercury News interviewer asked Mr. Barrett what the Valley will look like in three years. Mr. Barrett said the prospects for job growth were not good. "Companies can still form in Silicon Valley and be competitive around the world," he said. "It's just that they are not going to create jobs in Silicon Valley." He was then asked, "Aren't we talking about an entire generation of lowered expectations in the United States for what an individual entering the job market will be facing?" "It's tough to come to another conclusion than that," said Mr. Barrett. "If you see this increased competition for jobs, the immediate response to competition is lower prices and that's lower wage rates."


  • ComputerWorld: Save the Coders. Excerpt: If you had any doubts about the effects of offshoring on IT pay, you can stop doubting. According to a January report from Foote Partners, the bonuses that programmers once received for specialized knowledge are evaporating -- off 25% over the past two years and still sinking. Yes, things are tough all over, but the numbers for application development are much worse than the average for IT specialties -- and the app dev falloff coincides with the uptick in offshore outsourcing of many software projects. For programmers, it's starting to look like the end for big paydays -- and maybe for any paydays at all.


  • The Business Times (Singapore): Top White House aide defends outsourcing. Call against Bill to prohibit government jobs from being sent overseas. Excerpt: Contracting jobs overseas is 'simply the latest manifestation of free trade', a top White House economic aide said in defence of a practice used by American companies. 'Public policy needs to help workers find new jobs, not retreat from the principles of free trade that have benefited the US and economies around the world,' Greg Mankiw, chairman of President George W Bush's Council of Economic Advisers, said in a question-and-answer forum on the White House web site.


  • PBS's "I, Cringely": Thick as a (Campaign) Plank. U.S. Leaders Either Don't Understand or Prefer Not to Understand the IT Outsourcing Crisis, So Here's the Cliff Notes Version. Excerpt: Last year, I wrote a pair of columns on information technology outsourcing to countries like India, suggesting that the practice was generally not a good idea. It was a smokescreen for age discrimination, and was not in the long-term interests of either the American employees or their companies. Then in my 2004 predictions column, I said that this outsourcing or offshoring or whatever you want to call it would become an issue in the coming Presidential election. ... Shipping work overseas saves money that drops to the bottom line as profit. Stock prices are today keyed to earnings-per-share as is, to a certain extent, executive compensation. Now look at the average time that an institutional investor actually holds a given stock. This can be measured in months, sometimes in weeks, but hardly ever in years. So the investor timeline is short and the CEO timeline -- with average tenancies in those positions at less than five years -- is not much longer. So offshoring works great for these two groups. The stock goes up and along with it, the CEO's bonus and stock options. By the time the long-term effects of this policy are felt, both the investors and the CEO are long gone. And even if the CEO is still around, it is with a golden parachute negotiated long before that often pays him more to go away than he might have got to stay. (Editor's note: This is a "must read" article).


  • TechsUnite: House Committee Considers New Worker Protection Bill. Excerpt: Olympia, Wash. — Two House lawmakers intend to send a message to Washington companies that fire their employees without notice after compelling them to train their foreign replacements. The message: notify the state and the employees who are about to be laid off 10 days before the layoff, or face fines and civil damages. Rep. Zack Hudgins, D-Tukwila and Rep. Sandra Romero, D-Olympia, are primary sponsors of House Bill 2352, which is one of a handful of measures they've authored in an effort to define the rights of Washington state workers — particularly technology workers — in an emerging global economy.


  • TechsUnite: Lawmakers Eye New Call Center Regulation. Excerpt: Olympia, Wash. — Washington state lawmakers are considering a measure that will require call center. The purpose, said one of the bill’s sponsors, is to make call centers more responsive to their customers. "The aim is to give customers more information,” said Rep. Zack Hudgins of Tukwila. "The beauty of modern technology is you can bounce calls all over (the world). But it’s a problem if you want to do business with somebody that respects your laws." Hudgins said the issue first captured his attention when he heard about New Jersey’s welfare call center that was moved to India.


  • The Motley Fool: A Passage to India. Excerpt: Legal and financial publishing giant Thomson Corporation recently launched a pilot program to outsource many of its legal jobs to India, continuing a trend towards U.S. companies moving professional jobs offshore. Foolish international attorney Rich Smith takes a look today at the causes and consequences of moving legal work -- and legal bills -- offshore.


  • CNET News: H-1B visas going fast. Excerpt: Information technology services companies with much of their operations in India may be among the biggest applicants for the visas, according to Lakshmi Narayanan, CEO of Cognizant Technology Solutions. Cognizant, an IT services company, is based in New Jersey, but most of its employees work in India. "Companies like us are applying like crazy…to get a greater proportion of the cap," Narayanan said in a recent interview with CNET News.com. India-based companies with operations in the United States are significant users of the H-1B visa program as well as the L-1 visa program, which allows companies to temporarily bring in employees from other countries for managerial or executive work, or for work that entails specialized knowledge.


  • Tech Central Station: Jobs Across the Water. Excerpt: Sitting at a computer talking into a head-mike advising the British traveling public of train timetables from Leighton Buzzard to Birmingham New Street Station, and calculating how long they'll have to wait for a connection up to Scotland, doesn't sound like much in the way of career moves. Yet to employees of the British rail network inquiries call center in Calcutta, it's a well-paid job opportunity and one rife with glamour. Not only do they spend the day chatting with people in the wealthy, faraway West, they make, in local terms, good money and are the envy of their friends. Icing on the cake, the British companies that have exported around 10,000 call center jobs so far tutor their Indian employees in how to chat about the weather -- a peculiarly British obsession -- and brief them on the developments in British soap operas and sporting triumphs so they can respond if a caller in England, bored with listening to keys clacking in cyberspace, decides to initiate a discussion.


  • The Economic Times (India): Hue and cry over BPO 'temporary hardship': US Senator. Excerpt: Terming as ‘temporary hardship' the hue and cry over business process outsourcing (BPO), US Senator John Cornyn and Congressman Joseph Crowley on Thursday said the Indo-US efforts should be focussed on free trade and encouraging global economy. "There has to be a give and take approach... Outsourcing has added to the competitive edge by uplifting standards in India and made US companies efficient and competitive," Crowley , co-chair of Congressional Caucus on India and Indian Americans, said while addressing the CII Partnership Summit here.


  • CNET News: Bush immigration plan could affect techies. Excerpt: Details of President Bush's plan to tackle illegal immigration remain fuzzy, but the program could create a new way for technology employers to bring in foreign workers. If so, the stage will be set for another round of debates about the practice of temporarily importing guest workers for tech tasks--already a sore spot for critics of the H-1B and L-1 visa programs. "Should the Bush proposal be implemented, it would be disastrous for American programmers, engineers and everyone in the country who can't make a living on the stock market alone," said John Miano, founder of software programmer advocacy group the Programmer's Guild.


  • The Economic Times (India): Washington senators to bring bill against BPO. Excerpt: Furious about Washington state contractors shipping tech jobs to India and other countries, two lawmakers in Seattle have announced they will bring legislation to ban outsourcing. Zack Hudgins, a Democrat from Tukwila and a former Amazon.com employee, and Sandra Romero, a Democrat from Olympia, said they will introduce legislation this month to prevent state government contracts from being awarded to companies that send jobs to India , which is becoming a forerunner for back-end office support . What provoked the politicians is that the Washington state Department of Corrections is negotiating with a company to send part of the agency's $20 million Offender Management Network Information system to India. Besides this, in the past two years the Washington State Health Care Authority and the state Department of Social and Health Services have signed contracts with US companies that then hire Indian subcontractors to do the work. ... The Health Care Authority is not the only state agency whose work is being shipped overseas. About 18 months ago, the Department of Social and Health Services (DSHS) received word from Chicago-based Citicorp Electronic Funds that it was moving the agency's call centre functions to a subcontractor with operations in Pune, India, Bangalore, India, and Tijuana, Mexico.


  • Links to many other articles about offshore outsourcing are available at Your Job is Going to India.
Now on the Alliance@IBM Site:
WashTech logoNow on the WashTech site:
  • Tell '60 Minutes' to Cover Both Sides of the Offshoring Story. Excerpt: On January 11, 2004, The CBS News show 60 Minutes ran a segment called “Out of India”, reported by Morley Safer. In case you missed it, the transcript can be found here. This segment was not objective in its coverage of this important issue. It did not report how outsourcing has negative effects on the US economy and American workers, nor did it say how the entire IT industry is being devastated by this unethical practice. Instead, It showed outsourcing as boon for American business. It may be a great for American companies but American workers and their families pay the price. Help us tell CBS News they need to do their homework before airing such a one-sided piece.
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