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Highlights—August 14, 2004
- New York Times: I.B.M.
Agrees to Take Steps to Clean Up Polluted Soil. Excerpt: I.B.M. has agreed to a consent
order with the state that binds the company, founded in this upstate village, to a course
of action to clean up an underground plume of industrial pollution, decades old, that
has sent chemical vapors wafting into hundreds of basements. ... I.B.M. agreed to the
consent order on Aug. 4 without admitting wrongdoing. "We are fully committed to
this project," said Todd Martin, a spokesman for I.B.M., which has reduced its work
force here to 1,700 from a peak of 12,000 in the mid-1970's through the 80's. The order
states that the company disagrees with the department's assessment that the pollution
poses "a significant threat to public health and the environment."
- PlanSponsor.com: Rules/Regs: Tootle
Do? One step forward, one step back on cash balance plans. Excerpt: Plan sponsors trying
to determine the best course of action for their corporate cash balance policies were faced
with the regulatory equivalent of bipolar disorder in June. While a circuit court of appeals
issued a ruling favorable to a cash balance conversion from a traditional defined benefit
plan on June 14, the very next day, the Bush administration formally announced it was withdrawing
support for a cash balance policy in the halls of Congress, postponing, for this legislative
session at least, its efforts to provide plan sponsors with some clarity on the issue.
In a direct refutation of the US District Court of Southern Illinois ruling in Cooper v.
IBM (see “Off Balance,” October 2003),
US District Judge Catherine Blake of the US District Court for the District of Maryland
read ERISA’s age-discrimination
provisions as being applicable only to employees who have reached normal retirement age.
Thus, in Tootle v. ARINC Inc, Blake found ERISA’s age-discrimination provisions “do
not bar all cash balance plans.”
- Dr. Nelson R. Manohar, IBM T. J. Watson Research Center: Request
for Investigation for Insider Trading Against Louis V. Gerstner, CEO of the IBM Corporation.
Excerpt: Dear S.E.C. Authorities, I am writing as a stockholder of the IBM Corporation
and concerned citizen to you in regards to insider transactions on 11/16/2001. In particular,
it highly concerns me a transaction involving the exercise and immediate sell of half a
million shares of IBM stock by then IBM Chairman and CEO, Mr. Louis V. Gerstner, as this
transaction occurred exactly on the same date (11/16/2001) of the letter I wrote as a Research
Staff Member of IBM Research to IBM Board members regarding very serious and criminal wrongdoing
against me during my tenure at IBM and which I also reported to the Federal Bureau of Investigations.
It should be noted that the nature of these accusations include extensive and unjustified
invasion of privacy used to sabotage every effort to seek out justice against the parties
involved in the malfeasance.
- New York Times, courtesy of Der Spiegel: Admit
We Have a Problem by Bob Herbert. Excerpts: While the president sings from his economic
hymnbook, American workers are hurting. I suppose there are people who still believe
that enormous tax cuts for the very wealthy will lead to the creation of millions of
good jobs for working people. In the twilight of his first term, the president, stumping
for votes in regions scarred by the demon of unemployment, continues to sing from the
tattered pages of his economic hymnbook: "The economy is strong,'' he says again
and again and again, "and
it's growing stronger." ... The true believers were jolted Friday by the news from
the Bureau of Labor Statistics that employers added a meager 32,000 jobs in July. In
an economy the size of America's, that's roughly equivalent to no jobs at all. July's
poor job-creation performance was widely described as unexpected. But it's important
to keep in mind that it didn't occur in a vacuum and that there is no quick fix coming.
American workers are hurting. ... Despite the rosy rhetoric that comes nonstop from the
administration, millions upon millions of American families, including many that consider
themselves solidly in the middle class, are in deep economic trouble. Friday's Wall Street
Journal featured a page-one article with the ominous headline: "New Group Swells
Bankruptcy Court: The Middle-Aged." Personal bankruptcy filings in the U.S. are at
an all-time high. The Journal story focused on "an emerging class of middle-age,
white-collar Americans who make the grim odyssey from comfortable circumstances to going
broke." Among the villains
of this disturbing piece are the unstable job market and staggering amounts of personal
- AccountingWEB.com: New
Faces in Bankruptcy Court: The Middle-Aged. Excerpt: Just when many baby boomers expected
to be settling into their comfortable homes earned from a lifetime of hard work, they’re
finding themselves in bankruptcy court instead. The reasons are numerous; the circumstances
complicated. Bankruptcy attorneys are accustomed to helping young people who have overextended
themselves with credit card debt and the expenses of starting a new home and family.
The faces they see now, however, are lined with a history of hard work and the burden
of caring for both their children and their parents. A shaky job market and soaring medical
costs have also taken their toll on the middle-aged. "These people didn't take their
credit cards to Atlantic City," says Gabriel
Del Virginia, a New York bankruptcy attorney. "It's largely because people lost
their jobs or had a catastrophic illness."
- Business Insurance: 401(k)
balances for older workers below 1999 levels. Excerpts: Despite
strong investment gains enjoyed last year, older employees’ 401(k) account balances,
on average, still are less than they were four years ago, a reflection of the battering
that account balances took during the bear equities market, according to a new analysis.
- Hampton Roads (Virginia) Daily Press: Bush
campaign holds rally in Va.; Dems sense weakness.
Excerpts: President Bush stumped for votes and touted tax cuts Monday in northern
Virginia, drawing more than 600 supporters and a few dozen Democratic protesters who
said his presence in traditionally Republican Virginia is a sign his campaign is in trouble.
... Bush criticized Kerry's plan to eliminate the tax cuts for those making more than
$200,000 a year, saying that the "the rich in America happen to be the small business owners" who put
people to work. Bush also said high taxes on the rich are a failed strategy because "the
really rich people figure out how to dodge taxes anyway."
- Jim Hightower: Unveiling the
Corporate Greed Market. Excerpt: The official line of the
Powers That Be is that corporations simply do what their customers want. It's nothing but "supply
and demand" action they tell us, the glorious free market in excelsius deo . Nice theory,
but reality is another story. For example, thanks to insider tapes from Enron that George
Bush's justice department was recently forced to release, we can hear the free-market thoughts
of one Enron trader talking to another about all the money they "stole
from those poor grandmothers in California" by manipulating the energy market in
2001: "Yeah, Grandma Millie, man. But she's the one who couldn't figure out how to
[blankety-blank] vote on the butterfly ballot. Yeah, now she wants her [blankety-blank]
money back for all the power you've charged right up––jammed right up her
[blankety-blank] for [blankety-blank] 250 dollars a megawatt hour." Enron executives
used market-manipulation techniques that they colorfully dubbed "sidewinder," "Russian
roulette," "ping pong," and "donkey punch." Charming, huh? Other
Enroners brag on the tapes about cheating still more "poor
grandmothers," about shutting down an Enron-controlled power plant to drive up electricity
prices, and about how "awesome" it will be if Enron's honcho, Kenny-boy Lay,
is chosen by his pal Bush to be the new energy secretary.
- Vault's IBM
Business Consulting Services message board is a popular hangout for IBM BCS employees,
including many employees acquired from PwC.
- New York Times: Pilots
at United Promise to Fight Pension Change. Excerpts: Yesterday, the Air Line Pilots
Association, which represents the airline's 8,800 pilots, warned that terminating pension
plans "has the potential to destroy the career of every pilot, and potentially plunge
labor relations at United into years of hostility and chaos." ... "The pilots
of United Airlines have the following message for the company, the media and the financial
markets: We will use every resource at our command and every legal means available to
prevent the company from destroying the pilot pension program," said Mark Bathurst,
chairman of the master executive council of the United pilots' union. Mr. Bathurst, a
United captain, criticized airline executives for taking aim at the retirement plans
when the airline's operating costs remain 25 percent higher than those at American, which
won cuts from its unions last year under the threat of a Chapter 11 filing.
- Workers World: Pension theft
is monstrous crime. Dump the UAL scoundrels. Excerpt: According to UAL top brass,
these huge union sacrifices were necessary to save the company. The truth: UAL was in
collusion with Citigroup, J.P Morgan Chase, Bank One--which recently merged with J.P.
Morgan Chase--and CIT to fund operations during the bankruptcy. UAL guaranteed their
investments and fees--profits--by savaging the union contracts. During the last 18 months,
these Wall Street allies, including the bankruptcy court, continued to defraud the workers
of their resources. They demanded more concessions, approved by the trustee of the court--in
work rules, restructuring and downsizing airplane maintenance, fur loughing flight attendants,
cutting health care for retirees, and forcing pilots and flight attendants to work longer
hours. ... This is scary to the seriously underfunded PBGC. It has picked up the tab
for 3,200 failed pension funds in its 30-year life. Yet the pension law Congress passed
in 1974 clearly states that any company that promises pensions to its workers would be
required to set aside funds to pay them. And ERISA guarantees a grievance and appeals
process to fight violations. Breaking the law to suit their class interests is nothing
new for Wall Street corporate and banking institutions. The pension swindle is a critical
issue that the entire labor movement must meet head on. It can spread to other airlines,
which can also claim they can't meet their pension obligations, as well as to the rest
of corporate America, only too anxious to dump pension funds.
- The Henry J. Kaiser Family Foundation: Views
of the New Medicare Drug Law: A Survey of People On Medicare. Excerpt: A national Kaiser Family Foundation/Harvard School of Public
Health survey of people on Medicare finds nearly twice as many people on Medicare have
an unfavorable view of the law as have a favorable view. Conducted from June 16 to July
21, 2004, the survey of 1,223 people on Medicare finds that most don’t think the
law will be helpful to them personally. Two out of three people on Medicare say that lawmakers
in Washington should work to fix problems in the law, while much smaller numbers favor
repealing the law or leaving the law alone.
- Communications Workers of America: BellSouth
Settlement Secures Jobs, Health Care. Excerpt: The new five-year contract package
boosts across the board wages by more than 10.5 percent over the contract term, with
an additional 4 percent lump sum this year. It also provides for pension increases of
12.5 percent and team incentive awards of 12 percent over the contract term. CWA District
3 Vice President Jimmy Smith said the CWA bargaining team "worked
very hard and successfully accomplished the goals our members set out earlier this
year: improving job security, gaining access to new jobs in the growth areas of BellSouth,
and of course, maintaining our quality health care for active and retired members." ...
The tentative settlement preserves fully paid health care premiums for active workers
and retirees. It includes some increases in health care co-payments for medical services
and prescription drugs, but overall, at a much lower level than BellSouth was initially
seeking from workers and retirees.
- World Socialists Web Site: Crime
pays: CEOs rake it in as stocks and jobs evaporate. Excerpt: According to the annual
BusinessWeek survey of executive pay, first at the corporate trough during 2001 was Lawrence
Ellison of the high-tech firm Oracle Corporation. While receiving neither salary nor
bonuses, he cashed in stock options worth $706 million in January 2001, just before Oracle
stock took a dive. Eight other executives earned over $100 million in 2001, while another
16 received over $50 million. Sixth on the list at $127 million was Louis Gerstner of
IBM Corp, who exercised $115 million in stock options. The price of IBM stock has dropped
50 percent so far in 2002. The IBM CEO retired in March with a multimillion-dollar regular
pension, a $2 million annual “Supplemental Executive” pension, a $2 million
annual consulting contract, plus 10 years’ entitlement to use IBM aircraft, cars,
offices, a luxury apartment and financial planning and home security services. In addition,
he retains unexercised stock options valued at $382 million as of earlier this year.
Gerstner’s retirement package stands in stark contrast with the treatment he
meted out to IBM’s regular employees in 1999, when he introduced a defined contribution
pension plan to replace the defined benefit plan, saving the company an estimated $200
million a year at its workers’ expense. ... The researchers found that the 23 companies’ CEOs
were paid a combined total of over $1.4 billion from 1999 through 2001, or an average of
$62.2 million apiece over the three years. By comparison, CEOs at the top 500 US corporations
earned an average of $36.5 million over the same period. At least for corporate executives,
it seems, crime pays. While the CEOs at the 23 companies were raking it in, since January
2001 their shareholders have lost $530 billion in stock value—more than 73 percent—and
162,000 of their workers have lost their jobs.
- In a discussion on a Yahoo! message board started by a "rebadged" IBM employee from Sprint, "lexibmer" comments
on the reality of working for IBM Global Services. Full excerpt: I have been at IBM
for almost 15 years now after spending 23 years
at quite a few other companies before that. I would say without a
doubt that IBM is one of the worst companies of the bunch.
You cannot get any training. They schedule tons of classes which
nobody can register for. The few people who can wrangle customer
funding for a class get those classes cancelled due to lack of
enrollment. Some areas of the company DO have a minimum billable hours
requirement. Basically you end up having to work an hour for every
hour of holiday or vacation time you take. Plus some have a
required minimum of 10% overtime on a regular basis, regardless if
you have realistic work to do or not.
If you are 25 and HIGHLY motivated you can probably
do fairly well
at IBM. But when you hit 35 you'd better start looking for a
different employer because IBM will dump you sometime after 45. Try
to get a new job THEN!!!
You will hear almost daily about all the great new contracts and
business deals that have occurred that will bring the company mega-millions and enhanced
standing in the business community. But then
you look at the "report card" for your annual bonus and you will
read just how badly the company is doing!! B/S!!!!!
And when it's time for you to find a better opportunity in the
company, forget it. Due to the lack of education and training you
have stagnated in your position and EVERY available opening requires
the latest and greatest skill sets that are impossible to acquire
without a realistic training program. The best I can figure is that
they expect you to attend education and training on your off hours
and at your own expense.
So that means you have to work 10% overtime and make up any time
away for vacations and then go to class 10-15 hours a week on top of
that. hmmm.. What's a family? Who cares if you see your wife or
husband more than once or twice a month? IBM sure doesn't.
I'd rather quit this company. But I am almost 50 now and have
family in this area. IBM's just about the only game in town. So I
have to try to stick with it until they decide to "redeploy" me. Do I sound
bitter. Absolutely. I try not to be but things are so
out of hand right now with IBM it's really tough to keep an even
keel about it.
- Reuters: CBO Report: Bush
Tax Cuts Tilted to Rich. Excerpt: One-third of President Bush's
tax cuts have gone to the wealthiest 1 percent of Americans, shifting more burden to
middle-income taxpayers, congressional analysts said on Friday. The report by the nonpartisan
Congressional Budget Office and calculations by congressional Democrats
based on the CBO findings fueled the debate over the cuts between Bush and his Democratic
challenger in November, Sen. John Kerry. Using the CBO's figures, Democrats in Congress
said the top 1 percent, with incomes averaging $1.2 million per year, will receive an
average tax cut of $78,460 this year, and have seen their share of the total tax burden
fall roughly 2 percentage points to 20.1 percent. In contrast, the report showed that
households in the middle 20 percent, with incomes averaging $57,000 per year, will receive
an average cut of $1,090 while their share of the tax burden would move to 10.5 percent
from 10.4 percent. The CBO report said about two-thirds of the benefits from the cuts
went to households in the top 20 percent, with an average income of $203,740.
- USA Today: Study:
Tax burden growing heavier for middle class. Excerpts: President Bush's
tax cuts since 2001 have shifted more of the tax burden from the nation's rich to middle-class
families, according to a study released Friday by the Congressional Budget Office. The
tax rate declined across all income levels — but more so in the top brackets,
the report said. People in the top 20% of incomes, averaging $182,700 a year, saw their
share of federal taxes decline from 65.3% of total payments in 2001 to 63.5% this year,
according to the study by congressional budget analysts. In contrast, middle-class taxpayers — with
incomes ranging from $51,500 to $75,600 — bear
a greater tax burden. Those making an average of $75,600 had the biggest jump in their
share of taxes, from 18.5% of all payments in 2001 to 19.5% this year. ... The study
found that the effective tax rate for the top 1% of taxpayers dropped from 33% in 2001 to
26.7% this year, a decline of 19%. The middle 20% of taxpayers saw a decline of 4%.
- New York Times Opinion, by Paul Krugman: Bush's
Own Goal. Excerpts: A new Bush campaign
ad pushes the theme of an "ownership society," and concludes with President Bush
declaring, "I understand if you own something, you have a vital stake in the future
of America." ... But there's a political imperative behind the "ownership society" theme:
the need to provide pseudopopulist cover to policies that are, in reality, highly elitist.
The Bush tax cuts have, of course, heavily favored the very, very well off. But they
have also, more specifically, favored unearned income over earned income - or, if you prefer,
investment returns over wages. Last year Daniel Altman pointed out in The New York Times
that Mr. Bush's proposals, if fully adopted, "could eliminate almost
all taxes on investment income and wealth for almost all Americans." Mr. Bush hasn't
yet gotten all he wants, but he has taken a large step toward a system in which only
labor income is taxed. The political problem with a policy favoring investment returns
over wages is that a vast majority of Americans derive their income primarily from
wages, and that the bulk of investment income goes to a small elite. How, then, can
such a policy be sold? By promising that everyone can join the elite.
- BusinessWeek: The
Personal Side of Success. Excerpts: Work hard. Play hard. Stay fit.
That's a mantra for today's executives. Whether it's driving a Porsche 996 GT3, fishing
at the Drynachan Lodge in northern Scotland, or eating a great rib eye at Mahogany Prime
Steak House in Omaha, a rich, balanced life is a life worth having. But it is one that
is increasingly difficult to attain. Rarely have executives faced so many uncertainties
in their professional and personal lives. Stress is ubiquitous and often overwhelming.
It can threaten performance and undermine health. BusinessWeek's new Executive Life issue
is a guide to restoring some fun and balance to an exec's harried reality. You'll find
tips on hiring a trainer to get the body fine-tuned and doing meditation to clear the
mind. There are out-of-the-way places to visit, including the very private Fisherman
Island, off the coast of Maine, and faraway places to stay, such as the private villas
and palaces of Morocco, with their own cooks and housekeepers. For execs looking to upgrade
their own spaces, BusinessWeek offers advice on building a home theater, putting together
a private gym, and even remodeling the entire manse. The dog days of summer are upon
us, but there's still plenty of time to have fun.
|Coverage on H1-B and L1 Visa and Off-Shoring
- Communications Workers of America: N.J.
Could Lose a Half Million Jobs to Offshoring.
Excerpt: A think tank's new report, commissioned by CWA, says that nearly a
half million of New Jersey's white collar jobs - customer service, software
creation, data entry and even such fields as architecture and health care
support - ultimately could be lost to low-wage workers overseas. "These are
high-paying jobs and the people who have them thought their education would keep
them safe," Jon
Shure, head of the New Jersey Public Policy Perspective, told the Newark
the technology is such that a lot of this work can be done anyplace, and
employers are shopping the world to find the cheapest labor." The analysis
found the average wage for jobs vulnerable to offshoring is $47,389. CWA is among
the leaders in fighting to keep good jobs in New Jersey, pushing for pending bills
that would require state contract work to be performed in the United States and
another that would give customers the right to know where call center workers are
located, an issue pending at the federal level as well as in a bill introduced by
Senator John Kerry.
- CNET News: Tough talk on
offshoring. Excerpts: Q: What was your reaction to the
recent U.S. Department of Labor report that only a small fraction of mass
layoffs earlier this year stemmed from offshore relocations? Does it contradict
your projection of 3.4 million services jobs going overseas by 2015? A: No.
People do not suddenly do mass layoffs around most offshore activities. They
involve a series of pilots. They cut people who are contract employees, who
therefore they don't even have to report in that model. So I think it underreports
the overall offshore activity. It accurately reports the number of large-scale kind
of layoffs that are part of it.
Q: So there could be a lot of these dribs and drabs of jobs going offshore.
A: Right. We know what people do--they cut contractors. Those technically
aren't full-time employees. So even if they cut 100 contractors, they
wouldn't have to report those. And it grows much more incrementally,
where most people probably don't hit that threshold of 50, where they
have to report it. Or they may not even know they were supposed to report
Q: IBM seems to have stopped talking about outsourcing when it describes what is essentially
outsourcing work. It talks about "business process transformation services" as opposed
transformation outsourcing." A: Right. Q: Do you think that fits into that pattern of
outsourcing being kind of a four-letter word these days? A:
I think so. I think they are also trying to differentiate themselves. Q: Right. But you are
saying overall there is just less willingness for companies to discuss what they are doing?
A: People aren't doing any less offshore work but they are sure as hell talking about it less.
Q: Are your clients saying that that is becoming a policy for them? A:
Oh, yeah. For sure.
on the Alliance@IBM Site:
- ThinkTwice for August/September 2004 [PDF].
Articles this month include:
- Organizing IBM — Rev it up!
- The Employee Free Choice Act
- Take Action! Help us Strengthen Workers’ Right to Form Unions!
- New IBM Program to Help Employees
Whose Jobs are Offshored
- The Value of a Union Contract
- Offshore Contractors Target
State Government Work
- Editor and Publisher: Guild
Challenges Reuters Over Offshoring. Excerpt: The Newspaper Guild of New York
plans to take the Reuters Group to court over the company's decision to outsource
editorial jobs to India. According to a press release, leaders of the guild
told the U.S. arm of Reuters that they are violating the collective bargaining
agreement between the company and the guild. The union represents about 500
employees at Reuters. ... On Monday, London-based Reuters announced plans to
eliminate 20 editorial jobs -- including 12 guild-represented positions --
in the U.S. in favor of 60 employees in Bangalore, India. The process started
in April when Reuter's CEO Tom Glocer, looking to cut costs, started outsourcing
jobs to India. The Bangalore bureau, according to the release, only reported
on companies not covered by U.S.-based journalists. The latest announcement,
however, intends for Indian employees to follow companies on U.S. turf. In a memo
posted on Romenesko, Reuter's Global Managing Editor David Schlesinger explained
to employees that the move is part of the drive "to make sure editorial
is as good and as efficient as possible." And that the most "interesting
opportunities will be in covering U.S. equities, where Reuters has struggled
to put enough staff resources on that huge market for years."
- Economic Policy Institute update on Overtime
Rule Changes [PDF].