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    Highlights—July 24, 2004
  • Common Dreams: This is the Fight of Our Lives, speech by Bill Moyers. (Editor's note: This is a must-read article). Excerpts: But the class war was declared a generation ago, in a powerful paperback polemic by William Simon, who was soon to be Secretary of the Treasury. He called on the financial and business class, in effect, to take back the power and privileges they had lost in the depression and new deal. They got the message, and soon they began a stealthy class war against the rest of society and the principles of our democracy. They set out to trash the social contract, to cut their workforces and wages, to scour the globe in search of cheap labor, and to shred the social safety net that was supposed to protect people from hardships beyond their control. Business Week put it bluntly at the time: "Some people will obviously have to do with less....it will be a bitter pill for many Americans to swallow the idea of doing with less so that big business can have more."

    The middle class and working poor are told that what's happening to them is the consequence of Adam Smith's "Invisible Hand." This is a lie. What's happening to them is the direct consequence of corporate activism, intellectual propaganda, the rise of a religious orthodoxy that in its hunger for government subsidies has made an idol of power, and a string of political decisions favoring the powerful and the privileged who bought the political system right out from under us. ... To put political muscle behind these ideas they created a formidable political machine. One of the few journalists to cover the issues of class -- Thomas Edsall of The Washington Post -- wrote: "During the 1970s, business refined its ability to act as a class, submerging competitive instincts in favor of joint, cooperate action in the legislative area." Big business political action committees flooded the political arena with a deluge of dollars. And they built alliances with the religious right -- Jerry Falwell's Moral Majority and Pat Robertson's Christian Coalition -- who mounted a cultural war providing a smokescreen for the class war, hiding the economic plunder of the very people who were enlisted as foot soldiers in the cause of privilege.

    In a book to be published this summer, Daniel Altman describes what he calls the "neo-economy -- a place without taxes, without a social safety net, where rich and poor live in different financial worlds -- and [said Altman] it's coming to America." He's a little late. It's here. Says Warren Buffett, the savviest investor of them all: "My class won." Look at the spoils of victory: Over the past three years, they've pushed through $2 trillion dollars in tax cuts -- almost all tilted towards the wealthiest people in the country. Cuts in taxes on the largest incomes. Cuts in taxes on investment income. And cuts in taxes on huge inheritances. More than half of the benefits are going to the wealthiest one percent. You could call it trickle-down economics, except that the only thing that trickled down was a sea of red ink in our state and local governments, forcing them to cut services for and raise taxes on middle class working America. Now the Congressional Budget Office forecasts deficits totaling $2.75 trillion over the next ten years. If link is broken, view Adobe Acrobat version [PDF--43 KB].

  • Working for Change: Falling through the cracks. How I lost $20,000 as an insured patient in our nation's health system. Excerpt: In the past couple years I've been hearing others like it -- the constant being that an awful lot of people have "unique" situations, and an awful lot of people are ill-equipped to understand, let alone master, the Byzantine world of our health insurance system. The new Medicare drug discount cards are introducing far more of the same. When coverage depends on the fine print, you can bet it's the people who do this for a living that will come out ahead. The house always wins. The new Medicare drug benefit system is, by all accounts, a complicated fiasco. But then, it has to be. Hard wired into it -- as into all of our health coverage -- is the imperative that private insurers make money. Forget ideology; look at the results. For a lot of people, the system works reasonably well. But for the country's nearly 50 million uninsured, it doesn't. And then there's the rest of us -- who are insured, pay our bills, but some how, some way, fall through the cracks.


  • Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. Some sample posts follow:
    • "Inspiring BCS Team" by "ibmfree". Full excerpt: BM BCS Canada has recently created a team called "Inspiring BCS" to address people's concerns and build a 'high performance culture'. This is IBM's way of saying "Oh my God, how do we stop the flood of PwC Consultants currently leaving us?" I think this team, conducting focus groups and comprised of a cross-section of people, is an absolute insult to those PwC people who have been telling the IBM drone managers how things need to change. And it is pretty obvious that this is not designed to achieve change in IBM's draconian policies but simply to stem the tide of resignations. The team can't even get people to attend the focus group sessions. Last year, the head of IBM BCS was told at a meeting that if she did not do something about the way IBM was treating people she would be faced with a huge exodus of people. Her response was "Where will they go?". Guess she is finding out now. My big question here is: What IBM policy has pissed you off the most? There are lots to choose from,
      • losing a weeks vacation
      • the non-compete policy
      • 20% drop in per diems
      • forced to take flights at bed times
      • HR department lies
      • no reimbursement for MBA courses
      • pay cuts (including 2% reduction)
      • poor benefits coverage
      • the high deductible applied to prescription drugs before the % reimbursement is calculated
      • the 99% salary, 1% commission
      • the bureaucracy required to get anything done
      • the use of S&D to sell work they know nothing about (like process improvement)
      • getting a 0% bonus while partners and office stay get theirs
      • the loss of the $750 monthly travel allowance for being on projects where you are out of town 3 weeks out of 4 for more than 3 months
      • the use of resource managers to hound you to take projects that are well beneath your status (i.e. doing clerical work when you have been managing multi-million dollar engagements)
      • the lack of a boss or working for an IBM drone who does not know what you do?
      • the continued use of that lousy IBM corporate card while not being allowed to collect points
      • flying economy on long-term projects overseas because IBM does not grant business class on flights under 8 hours
      • being a pawn for hardware sales and outsourcing
      • being seen as a software implementer and not a management consultant
      • realizing that a PwC band 3 - made an IBM Band 7 - is far more qualified than many IBM bands 8 and up
      • the IBM attitude of moral superiority
      • the influence of IBM HR and IBM Legal in day-to-day business
      I could go on but I would love to here what others pick as their #1 IBM piss-off.


    • "Dose of reality" responds in "An excellent list". Full excerpt: Just think how easy it was for you to come up with your list of problems – you were probably drafting it as fast as you could type. Testimony to just how far away from viable and self-sustaining HR policy and employee-related business processes we have come. The focus groups are just another example of “red-herring” lip service. They must know what is causing the propensity to resign. The only ostensible benefit of focus groups would be to find out the relative pain from each of the daggers they have thrown in the last few years, perhaps to see if they can pull one or two out.

      The problem is that laws of inertia and motion work both ways. Until now, they relied on inertia, and a perceived bad employment market to stem the tide. Even if they were able to turn back the clock on the majority of these bad policy decisions, the anger and sense of having been cheated that is felt by the vast majority of staff will still lead them to seek employment elsewhere. The other problem is that the current business economics, revenue opportunities and resource capital that remain are woefully inadequate to enable a material give back of that which has been taken away from staff the past few years. Add to this the improving employment market, and it is game, set, and match, unless they can bring themselves to suck it up and let the quarterly numbers dip until they can regroup organizationally and strategically. That will never happen with the current regime that has been hanging on with their “gimmick of the month” strategy for years.

      It is a classic case of whipsaw perpetrated by a group of overmatched, overblown ex-consultants who are currently running BCS. While I keep my nose out of the business of the rest of the non-BCS organization, I would be interested in knowing if they are experiencing the same sense of dissatisfaction and revolt. If they are, we are really in trouble. As far as my #1 issue, it would have to be the lack of pay for performance, followed closely by the devaluation of salary levels that were supported by artificial “external” salary benchmark analyses.

    • "Mum is the word" by "TheGrumpyOne". Full excerpt: I'm a band D in IGS in the US. If I tell you anything more than that, I run risk of being identified and terminated. I will tell you that most of the IBM business units are a lot more worried about replacing current employees with offshore ones than we are about hiring new employees. It looks like it will continue that way through August. That would explain why so many people are bewildered by why they aren't getting responses from HR. If you aren't able to find a job somewhere else, check back with us at IBM in early September.


    • "Not Confused at All" by "midwest_al". Excerpt: To improve morale, the employee needs to feel valued and *rewarded*. Would having a manager talk to you more often really improve your morale if you knew your job was targeted for outsourcing? Also, having been the 'survivor' of outsourcing myself, the morale gets bad there too, because now those people wonder if their turn is next. When I worked in the BCS / Financial area, the managers talked to us a lot about delivering customer value, increasing utilization and so on with no focus on rewarding us for all the work we were expected to do. After a while, all you see is their lips moving and a lot of gibberish noise coming out. My morale did not improve by listening to them talk, especially the higher level management who communicate like politicians... big twists of facts, who make noise, but really say nothing. Last year, I traveled 100% of the time with 111% utilization and got no extra compensation for that. Needless to say I have left for another company that pays me more for doing the same thing. But since I now feel adequately compensated, my morale is doing quite fine. So when you have managers and executives who make their quarterly profits a priority, they could care less about morale, since that is not their motivating factor.

  • CNET News: IBM tries to hook computer science students. Excerpt: IBM will supply universities with free software and deeply discounted hardware, hoping to lure students away from Microsoft's popular Windows-based development software. Announced Tuesday, the IBM Academic Initiative is designed to create computer science curricula around IBM-backed technologies, notably the Java programming language and open-source software such as Linux. IBM is heavily invested in industry standards like Java and Web services, which form the basis of many of its products. It also sells servers with Linux, the open-source server operating system that has stemmed the growth of Microsoft's Windows.


  • New York Times: No Wonder C.E.O.'s Love Those Mergers. Excerpt: Shareholders like it when their companies are acquired, because their stocks rise in value. Chief executives like it, too, because their severance agreements kick in. And that means they can become truly, titanically, stupefyingly rich. Wallace R. Barr, the chief executive of Caesars Entertainment, is the latest to line up for his barrel of bucks. Last week, Harrah's announced it would acquire Caesars for $5.2 billion. Thanks to accelerated vesting of options and stock awards, Mr. Barr stands to receive almost $20 million under so-called change-of-control provisions in his contract. And if Mr. Barr resigns from Caesars "for good reason," the contract says, he is entitled to an additional $6.6 million after the two companies merge. ... One reason that shareholder outrage has been muted may be that few people, beyond the executives themselves and maybe the company's compensation committee, know how costly these pay deals are. Even with all the scrutiny of corporate governance in recent years, a full tally of what executives will earn in retirement or under a change of control is simply not disclosed. Not anywhere. ...

    And, my, how the list of goodies can go on. First comes the executives' severance pay, almost always nearly three times salary and bonus. Accelerated vesting of stock options and stock awards quickly follows; sometimes the options are granted with their full terms remaining - up to 10 years - giving them tremendous value. Then there are the three additional years of pension credits that get tacked on to an executive's pay, as well as the 401(k) match, years of health care benefits and the cash value of perquisites at the time of termination - such as use of the corporate jet, country-club memberships, allowances for financial planning advice, office space and secretarial services. All in one delightfully fat lump sum. AND don't forget that executives' pensions are often based on the unusually high severance pay, which ratchets the numbers way up. Of course, one downside to these enormous payments is that they generate stunning tax bills for executives. Good thing their contracts almost always require the companies to pay. And how! The so-called excise tax gross-up provisions can be so colossal that, according to one pay expert, a major merger was scuttled because the cost to cover executives' tax bills exceeded $100 million.


  • San Diego Union-Tribune: Company offers a cost-free benefit: days off. Excerpt: Like a lot of companies, Gen-Probe views employee benefits as a key to recruiting and keeping the best workers. But the San Diego biotech has found one unintended benefit from its 9/80 workweek program, which gives workers a day off every other Friday. "We have a rule that we don't have meetings on Friday," said Roy Burchill, Gen-Probe's senior director of human resources. "People look forward to working on Fridays now because they know they won't be interrupted by meetings and they'll be more productive." Burchill said workers don't seem to mind working 9-hour days when they know they'll be rewarded with a three-day weekend every other week. The 9/80 work scheduled is regularly identified as one of the company's most valuable employee benefits in worker surveys. ... At the law firm of Luce Forward Hamilton & Scripps, administrative officer Ray Berry said he has a budgeted a 15 percent increase for employee health insurance premiums, which will be assessed in October. "I don't know what it's going to be yet, but I certainly am praying that it stays under that," he said. Gen-Probe proudly touts that its employees don't have to contribute anything toward their health insurance premiums. Burchill said the company saves money by being self-insured, and the company's 800 employees seem to understand there is a direct relationship between their use of medical care and how much it costs the company.


  • Jim Hightower: The CostCo Model. Excerpt: Costco is different... and that really POs Wall Street. The nationwide retailer treats its 100,000 clerks, forklift operators, and other workers as valued assets to be invested in and nurtured – unlike the Wal-Mart model of paying the least you can to rank & file employees, squeezing the last ounce of toil out of each of them, busting any whisper of unionization, and causing a workforce turnover like employees are nothing but disposable coffee cups. How different is Costco? Starting pay is $10 an hour, workers typically earn $40,000-a-year after three years on the job, the company covers 92 percent of employees' health care costs, and the Teamsters union provides strong bargaining representation for the workers. Also, while CEOs at other major corporations average 531 times the pay of their lowest-paid employees, Costco's top boss takes only 10 times the pay of his typical rank & filer. His annual salary $350,000 – compared to some $5 million a year hauled off by Wal-Mart's honcho. "From day one," says the chief financial officer at Costco, "we've run the company with the philosophy that if we pay better than average, provide a salary people can live on, have a positive environment and good benefits, we'll be able to hire better people, they'll stay longer and be more efficient." It works. Costco's turnover is minimal, its profits are consistently strong, and its stock price has quadrupled in 10 years.


  • Washington Post: Democrats Warn of Medicare Drug Costs. Excerpt: Medicare recipients whose premiums for doctor visits cannot rise more than the annual cost-of-living adjustments in their Social Security checks won't enjoy that same protection when it comes to their medicine. Democrats have found that the Republican-written prescription drug benefit, signed into law last year and scheduled to take effect in 2006, has no premium caps tied to Social Security COLAs. "This is kind of a sneak attack on Social Security benefits," Rep. Pete Stark, D-Calif., said Wednesday at a news conference.


  • New York Times: More Jobs, Worse Work. Excerpts: By industry, the leading sources of hiring turn out to be restaurants, temporary hiring agencies and building services. These three categories, which make up only 9.7 percent of total nonfarm payrolls, accounted for 25 percent of the cumulative growth in overall hiring from March to June. Hiring has also accelerated at clothing stores, courier services, hotels, grocery stores, trucking businesses, hospitals, social work agencies, business support companies and providers of personal and laundry services. This group, which makes up 12 percent of the nonfarm work force, accounted for 19 percent of the total growth in business payrolls over the past four months. ... The Great American Job Machine is not even close to generating the surge of the high-powered jobs that is typically the driving force behind greater incomes and consumer demand. This puts households under enormous pressure. Desperate to maintain lifestyles, they have turned to far riskier sources of support. Reliance on tax cuts has led to record budget deficits, and borrowing against homes has led to record household debt. These trends are dangerous and unsustainable, and they pose a serious risk to economic recovery.


  • Washington Post: Corporate Reforms Reassessed. Excerpts: Nearly two years after Congress passed corporate reform legislation, the law still gets enthusiastic public reviews from chief executives. But behind the scenes, there is growing pressure to scale back some of its provisions. ... Rep. Paul E. Kanjorski (D-Pa.), a proponent of Sarbanes-Oxley, said a congressional vote this week on stock options was the first step toward repealing reforms enacted after corporate scandals. The House voted 312 to 111 Tuesday to override accounting standards-setters and modify a proposal by the Financial Accounting Standards Board that companies treat stock options for any workers as an expense. Just two years ago, in passing Sarbanes-Oxley, Congress cited the importance of having an independent body set accounting standards. "How in the world is this good public policy?" Rep. Carolyn B. Maloney (D-N.Y.), who opposed the change, said on the House floor earlier this week.


  • New York Times: When Politicians Write Accounting Rules, Reality Can Be Forgotten. Excerpt: Across the ocean, the House of Representatives voted 312 to 111 in favor of a bill that Warren Buffett has called "lunacy" but that the sponsors called the Stock Option Accounting Reform Act. The bill would overrule the Financial Accounting Standards Board and let companies go on ignoring the value of options they give out.


  • Health Affairs MarketWatch: Doughnut Holes And Price Controls. Excerpt: In 2003 citizens of Canada, the United Kingdom, and France paid an average of 34-59 percent of what Americans paid for a similar market basket of pharmaceuticals. If the Medicare program were to pay comparable prices for pharmaceuticals, it would be possible to eliminate the "doughnut hole" in its prescription drug benefit and keep Medicare drug spending within the overall limits established by Congress. This provides Congress with a clear choice: reduce the level of cost sharing and improve beneficiaries’ access to pharmaceuticals, or allow the pharmaceutical industry to use the higher prices to fund research and development and to engage in other activities.


  • Las Vegas Sun: Group Urges Universal Health Coverage. Excerpt: Rapidly rising costs, soaring numbers of uninsured and an epidemic of poor care have caused a health care crisis that only sweeping reform will solve, an alliance of business, labor, religious and civic groups said Tuesday. The National Coalition on Health Care said Congress should require that everyone have basic health insurance, with subsidies for those who can't afford it. It also called for holding down premiums for the basic package, simplifying health care administration and reducing medical errors by tying payments to quality, among other things. "Small changes, incremental changes are not sufficient," said coalition president Henry Simmons, a physician who served in three Republican administrations. "We've had 40 years of failure with experiments with that strategy." The coalition did not endorse any specific approach, but said the options could include a single-payer system, mandates on employers to offer insurance and expansion of public programs. The number of Americans without insurance is projected to top 51 million by 2006, up from 41 million in 2001, the group said. The average annual premium for employer-sponsored coverage for a family will be $14,565 in 2006, more than double what it was in 2001, the coalition said. The figures represent the total paid for the insurance by employer and employee combined.

Coverage on H1-B and L1 Visa and Off-Shoring Issues
  • Associated Press, courtesy of Yahoo! News: Software Engineer Wants Outsourcing Ban. Excerpt: A software engineer who twice lost jobs to foreign workers is hoping Coloradans will get a chance to vote on whether to bar the state from relying on workers overseas. Richard Armstrong, 40, of Parker is leading a corps of volunteers to collect enough signatures to place the issue on November's ballot. Armstrong, a self-described "independent progressive" who has never gotten involved in politics before, said he began working against "outsourcing" to foreign workers in 2000 after he was laid off twice and saw co-workers going through the same thing. At US West, which is now Qwest, Armstrong said he trained his replacement. "We feel that taxpayers have the right to decide where their taxpayer dollars are spent," said Armstrong, who runs the Web-based National Hire American Citizens Society. Armstrong's initiative would bar the state from hiring temporary workers overseas and hiring temporary foreign workers in the United States. Legal U.S. residents could still be hired.


  • Orlando Weekly News: Mike Emmons is Mad as Hell. Excerpt: For Michael Emmons, the road from well-paid I.T. worker to anti-outsourcing activist began on a sweltering June afternoon in 2002 when his Lake Mary employer, Siemens ICN, summoned the entire I.T. department to a meeting. In less than 30 minutes, nearly 20 highly skilled, white-collar employees and contractors were asked to pack their belongings and get out. Many of the workers had been with Siemens for decades. Emmons was a contractor. He'd been working with the company developing software applications for six years. What had the employees done to deserve their pink slips? Absolutely nothing. It was the company that had an epiphany: Flying technically savvy workers into the United States from India would save a lot of money. The foreign replacements were willing to work for a fraction of the salary their American counterparts earned, and since they were contractors, they didn't qualify for benefits. Before they left, the Siemens exiles were given a choice: train their Indian replacements and get severance pay, or walk away and get nothing. Two of the 20 fired chose the latter. ... "My anger is not directed toward the foreign workers themselves, it's directed toward our flawed system," says Emmons. "Every knowledge-based job is in danger, and all the young college graduates need to wake up because corporatism is influencing our government. They took my job and they took my livelihood. You don't do something like this to someone and expect them to turn a blind eye."


  • CWA: Offshore Contractors Target State Government Work. Excerpt: State governments increasingly are contracting with foreign outsourcing firms, sending millions of dollars in state taxpayer funds overseas. In many cases, states don't even realize the extent to which taxpayer-funded information technology work is being performed offshore. Those are the findings of a new report by the Corporate Research Project of Good Jobs First, a Washington, D.C. based research group. The report, "Your Tax Dollars at Work...Offshore," was conducted for CWA Local 37083, the Washington Alliance of Technology Workers, and released during a telephone news conference on July 14. WashTech President Marcus Courtney stressed that there is a real need to document how IT work for social service programs and other state functions is being sent offshore. "This issue is generating a lot of attention and controversy in the states, and as legislatures take up this issue, they need the hard facts on how offshore contractors are positioning themselves to target the work of state governments," he said.

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