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    Highlights—August 21, 2004
  • ComputerWorld: IBM plans fewer U.S. layoffs to compensate for offshoring. Excerpt: IBM, adopting new policies to take some of the sting out of job offshoring, expects to lay off fewer U.S. employees this year because of work being transferred overseas. IBM became a lightning rod for critics of offshoring earlier this year after internal documents revealed plans to send nearly 5,000 jobs to India, Brazil and other developing countries over two years to save on labor costs. Many of the jobs were highly skilled programming positions that pay 75% less abroad. Now, according to new internal documents made available to The Wall Street Journal, the company has adopted new internal-transfer policies aimed at filling more open positions at IBM with employees who would otherwise get a pink slip due to offshoring. IBM Vice President of Learning Ted Hoff confirmed the changes and called them a major personnel policy shift. Hoff wouldn't say how many fewer offshoring layoffs IBM expects this year as a result of the changes. But a person familiar with IBM's plans said it now expects that 2,000 U.S. workers will lose their jobs as a result of offshoring, down from the 3,000 the company predicted in January.
    • Linda Guyer comments on IBM's hiring plans and other issues. Full excerpt: I couldn't agree more on both of your points. On my floor at IBM we are down to a few packs of solid blue printer paper. Because there are people in different divisions on the floor who share the printers, there is no one manager who will pay for white paper. When the blue runs out, I don't know what we'll print on (toilet paper from the rest rooms?). Supplies like pens and staples are long gone, we have to purchase our own. And the PR about hiring is exactly that, PR. IBM announced with fanfare last spring that they were investing $25 million in retraining. That is a pittance for a company like IBM. When I asked JR McDonald about it, he replied that the program wasn't set up yet. Has anyone heard anything about it since? Know anyone who is eligible for it? No, I didn't think so. Another point. The "Redeployment Program" for employees who lose their jobs to other countries - you may ask why isn't IBM advertising this program? Huh, why not? Because they don't want to make a big deal out of the fact that they REALLY ARE SENDING JOBS OVERSEAS. Speculation by those in the know about the global resourcing programs are that things are progressing slowly now but the flood gates will open after the November election.

  • From Janet Krueger: I just uploaded a file from South Africa named Adjudication.PDF -- some of the pensioners in South Africa are very gleeful, at least for now! (No doubt IBM will appeal this judgment, but for the time being they have to pay about R2.3M into the pension fund within 6 weeks.) Congrats to our peers on the other side of the world!!!


  • "prtdavis2", an ex-Sprint employee "re-badged" as a new IBMer, comments on a "town hall" meeting conducted by IBM management. Excerpts: Wow - I was starting to get concerned it was just me who wasn't buying the IBM line. I know for a fact the PR - er HR - guy is lying. I spoke face to face with a local IBMer who said: "Well, I work for IBM so I can't say anything bad about them, however, you'll never get training." As well as those people who've emailed me off list on the 'wonderful' experiences they have had with the IBM company.

    Did you miss the bar by which the HR guy said was the balance between home and business life? He was joking (I hope): "IBM understands the need to balance the home and work life. It isn't like we're asking you to work 90 hours a week." Gosh, 90 hours is too much? Is that the bar that less than 90 is acceptable? I also noticed that the lead guy was quick to deal with the overtime issue. I especially liked how he said: "Well, non-exempt employees would get overtime pay, exempt employees are excluded from that and the non-exempt typically work 40 hours a week. (pause) (cough) exempt-work-more-than-that (cough)" The last part was said so quick and away from the mic (I was in the second row) that I think he didn't want people to hear it.

    I like it that we've got 12 days holiday and 15 days vacation (27 days total) from a 2080 work year (260 days), of which we have to have 2000 hours billable (250 days) leaving us with 17 days we have to make up. This doesn't count any IBM time, training (which we won't be getting anyway), sick time, other required time off (deaths, jury, service) and such. While they claim the same pay, what they doesn't include is the increased compensation for the increased time (Sprint requires 1840ish billable hours) nor the increased medical/dental costs. Since I have three kids, mine alone will be 85% more than I am paying now.

    One note of interest, I spoke to Bill Steele who was the guy who asked if anyone at Sprint wanted to pursue opportunities outside of the Sprint account, he said he was flooded with emails. I don't think I'll be taking the IBM opportunity. I'd rather get severance and the $1000 for agreeing not to sue Sprint and be on my way. I've gotten a lot of replies from my resume when I send it to people (and two interviews of the six jobs I've applied for, one job offer from another - part time - and one waiting for me to leave Sprint before they can take further action due to contracts with Sprint).


  • USA Today: Gap between haves, have-nots expands. Excerpts: Over two decades, the income gap has steadily increased between the richest Americans, who own homes and stocks and got big tax breaks, and those at the middle and bottom of the pay scale, whose paychecks buy less. The growing disparity is even more pronounced in this recovering economy. Wages are stagnant and the middle class is shouldering a larger tax burden. Prices for health care, housing, tuition, gas and food have soared.The wealthiest 20% of households in 1973 accounted for 44% of total U.S. income, according to the Census Bureau. Their share jumped to 50% in 2002, while everyone else's fell. For the bottom fifth, the share dropped from 4.2% to 3.5%. ... New government data also shows that President Bush's tax cuts have shifted the overall tax burden to the middle class from the wealthiest Americans. ... More than a million jobs have been added back to the 2.6 million lost since Bush took office, but they pay less and offer fewer benefits, such as health insurance. The new jobs are concentrated in health care, food services, and temporary employment firms, all lower-paying industries. Temp agencies alone account for about a fifth of all new jobs. Three in five pay below the national median hourly wage — $13.53, said Sung Won Sohn, chief economist for Wells Fargo. On a weekly basis, the average wage of $525.84 is at the lowest level since October 2001. The income gap is showing up in booming sales of luxury items. Porsche Cars North America Inc. says sales are up 17% for the year. Strong sales at Neiman Marcus, Nordstrom and Saks Fifth Avenue overshadow lackluster sales at stores such as Wal-Mart, Sears and Payless Shoes.


  • Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC.
    • IBM Career and Job Profile, submitted by a financial analyst in Raleigh, NC. Excerpt: I was offered $62K plus bonus and 2 weeks vacation. When I was hired the bonus was supposed to be 10%. They've now lowered that number to 6%. They say you will get the 6% if you are a level 2 performer and the company is 100% of target. The number is supposed to be larger if you are a 1 performer and IBM is over target. Newsflash: IBM hasn't been above target since I've been here, and less than 10% of employees receive 1 ratings. But wait, you say, IBM is the darling of the tech industry! Remember what I said about the ridiculous internal targets? Last year, by the time you factored in our internal performance metrics and my personal rating, that 6% bonus was less than 3%. What about raises you ask? A little better than bonuses. Ask where you are in the pay band. If you are near the top of the band, you can forget a raise for a while. I had a friend who came in higher than me (around $80K) 4 years ago, and he is still waiting for his first raise. Every year he hears "well we paid you so much when you started, and there are so many people on the team that make less than you..."


    • (Travel expense policy) "Determined by project + firm" by "feldspar." Excerpt: Your meal per diem, etc. is determined on a per-project basis and within the firmwide expense policies and cost ceilings. For example, your project expense policy may dictate that your lodging expenses not exceed $90/day, and your meals be expensed at their actual cost. Meanwhile, the firm policy requires you to select a hotel from its preferred vendor list (ex, Hilton, Holiday Inn, Howard Johnson, Sheraton, Westin, Ramada) and the maximum meal allowance for your work city may be $30/day. So, your expenses for one day might be the Hilton at $75/night + tax, and $22 for breakfast & dinner that day. There are additional rules for airfare, train, taxi/rental car, parking/tolls, etc. so you'll need to adhere to the guidelines set by both the firm as well as your project management, as IBM's accounting/expense police are known for strictly upholding these rules and withholding employee reimbursements when an infraction occurs. It may sound like a hassle, but there are tools for travel booking and expense reporting to make things easier for you .Actually, the mandatory Online Travel Tool is terribly restrictive and a pain to use, but the Expense Reporting application is quite handy...

      I'm unsure how this compares with the rest of the Big Four, but keep in mind that IBM enforces extremely rigid sales & revenue targets even in BCS. This often trickles down at consultant level in the form of aggressive project budgets (and compressed deadlines) just for the sales win, and , it appears unlikely that the expense policies will turn in our favor anytime soon. A partnership such as Deloitte, for instance, does not have to answer to shareholders so I imagine it offers a bit of leeway with budgets & expenses. Former partners at Accenture & BearingPoint have probably been spending the last few years trying to discipline themselves to meet their quarterly sales targets. The same may or may not apply to CG, as I believe their leadership is in Europe. Nonetheless, the expense policies for my last few projects are listed below. They're all mediocre at best:
      • Midwest (don't want to give this one away): $24/day for meals; stayed at corporate apartments - no lodging per diem; actuals for rental car/taxi
      • New York metro area: $30/day per diem for meals; $99/night for hotel; book airfare four weeks in advance nonrefundable; actuals for train/taxi
      • Dallas area: $25/day per diem for meals; $55/night for hotel (everyone was required to stay at the same hotel because of ridesharing); book refundable air travel (due to frequent last minute weekend stayovers); share rental car.

    • "NYC limits" by "feldspar". Full excerpt: You are correct. The NYC limits for the project were quite a bit below policy - I believe the firm limit is somewhere around $36-$42/day for Manhattan. I know the amount has been updated recently but am unsure if it was raised or lowered. But to answer your question, yes, the meal policy was levied by project management. But then again, it was probably not their fault for selling a tightly budgeted fixed-bid engagement in the first place. Thankfully, the client was sympathetic to our cause and would sometimes foot the bill for pizza dinners, take-out, etc. while we were in the office working late nights.


    • "Will not be a profit center" by "Dose of reality". Full excerpt: For most BCS client-reimbursed projects, the travel allowances are set at the project level. There are general corporate guidelines, but still a great deal of discretion, depending on the negotiations of the selling partner. Fixed per diem reimbursements, where you can take a draw regardless of actual spend are unusual, but not forbidden. I have sold two such projects, since it is a drawing card for resources, and generates some rare goodwill. These work out particularly well where long-term apartment type lodging is in the mix. Again, these are the exception, since most partners use expense policy as a bargaining chip, to the detriment of team morale. As another poster said, the emphasis on closing revenue gaps is so high, and the need to keep billing rates up so intense, that when push comes to shove between lowering hours/fees or lowering expenses to close a deal, expenses lose virtually every time. Remember, fees generate profits, and expenses are pass through. Of course, if you can’t get anyone to work on your project, fees are zero, but most of my colleagues don’t think about this when they are in the sales cycle, think they can use coercion or charm to mitigate it, or are so hamstrung by unachievable targets that they surrender on expense policy.

      As far as the general travel/lodging policies, they are decidedly uncompetitive vis a vis the industry. The standardization of processes across all of IBM is never a question of whether to do it or not, it is a question of where to set the standards. The answer is always to set them at the lowest common denominator. Travel is no exception. The problem with this approach is that the economics of client reimbursed expenses are entirely different than the economics of expenses that are incurred internally, but the policies, rules, vendors, and limitations are virtually the same. For a permanent traveler (e.g. BCS), for whom expenses are reimbursed, it makes no sense to institute Draconian expense policies. The incremental cost to the client of allowing consultants to have convenient flights, decent food, and quality accommodations nearby the site are less than 5% of the total cost of an average consultant (fees + expenses). The increase in productivity, and lowered turnover would more than compensate for any revenue lost due to being uncompetitive as a result of this difference. The industry travel standard for consultants is above average to excellent, so in terms of competitive pricing strategy we are subsidizing higher fees by having a relatively lower T&L cost vis a vis the competition. In addition, consultants are usually traveling 70 – 80% or more.

      Contrast this with the occasional traveler who incurs expenses that are subsidized directly by IBM. The “discomfort factor” is much lower with less frequent travel, and the cost savings to IBM is 100%, yet the policies are the same. We are so legalistic in our HR policies, and so focused on revenue generation that the idea of differentiating these policies based on different business models, employee needs, and cost drivers would never even be considered. We have a short list of airlines and preferred hotel vendors which you would not choose if you had the choice due to convenience and quality considerations, and IBM gets rebates back from these vendors which it doesn’t pass back to the client. You are treated the same as the internal staff accountant that has to travel one week a year to another facility to help with a physical inventory. Also, the expense report Nazis are designed to wear you down so you just give up on the small stuff. It is not uncommon for expenses to be collected and not reimbursed – a tidy little profit center for the business. Bottom line, with rare exception, our travel policy is another reason not to work here.


    • "Part 1 This question has been answered many times" by "Dose of reality". Excerpt: There was a rather lively thread back in June, "Best way to get laid off" - currently #85 in the queue, where I answered this question repeatedly to a rather querulous and dense apologist. I finally had to post a "Dr Seuss" version of the rationale. That post is currently available to non-subscribers, while the other more thorough and compelling posts have over-60 day subscriber only status. Some of my foil's posts were deleted due to profanity, so the flow is a bit awkward. The basic argument is as follows: The key stakeholders of the company are the employees, the customers, and the stockholders. Upon looking at the organizational dynamics and performance over the past few years, any first year Harvard business school student would correctly discern that the leadership level of the employee class is the weak link in this group. The litany of their mistakes includes:
      1. Reactionary compensation squeezes to close profit gaps, with no regard to the long term effects on resources.
      2. A budgeting process comprised of plug and play, bean counter-driven assumptions that have no grounding in economic reality, and multiple layers of sandbagging and cushions which lead to unachievable targets on the front lines.
      3. These lead to the setting of unsustainable utilization targets that leave no room for sales/proposal work or training, and kill the growth engine of the company.
      4. Pie in the sky long term projections on outsourcing which fail to consider the contracting value proposition to the market and inevitable decline in our competitive position.
      5. Failure to institute real profit sharing structures across service lines to take advantage of the natural synergies. You can't have a loss leader strategy without this, and we have a mature portfolio of "products", which can't generate above market returns in silos.
      6. Accounting gimmicks and pension plan grabs which are at best questionable as to legality. Similar less spectacular resource grabs with travel policy.
      7. Blatant disregard for employee morale and customer service.
      I could go on, but this short list leaves no doubt that there are structural problems with our long-term viability and clearly demonstrates an absence of management competence. Behind it all is a hyper political culture of a few "haves" who manage to usurp more than they create in value and a vast underclass of "have-nots" who give more than they get.


    • "Echo" by "ThinkKim". Full excerpt: I'll pipe in here in hopes that someone at IBM might be listening: If you bothered with real exit interviews, you would find that consultants who have worked elsewhere mark the travel policy as yet another reason to leave. Crappy treatment of the consultants in the form of 3-4 to a rental car, a $55/night hotel, etc are just ways that the sales staff can sell a deal. They don't care about the client, so why would they care about the consultants? Ask around at IBM - I bet that without exception the projects with the best travel policies are legacy PwCC projects.


    • "Well said....but" by "ancientblueconsultant". Full excerpt: You forgot that the expenses are not entirely pass-through. There's a 2% uplift for "administrative costs" added to the customer bill. If there was no need for "expense control Nazis" because good expense management was "mass customized" to individual client situations then customers would begin to question why pay an extra 2% for our "world class" billing system? The other VERY dirty little secret you alluded to is the kickbacks from hotel and airline "partners" would also probably put at risk a decades old huge inflow of "clean" revenue into the blue pig. The new trend of TCS (Total Cost of Service) measurement to compare consulting and services offerings is beginning to bite us and it will be a major issue shortly. This isn't TCV, my friend, but the T the client pays.

  • American Medical Association (AMA) News: Extreme payoff: What CEOs get when they leave is a real eye-opener. Regulators and physicians are paying more attention to managed care executives who receive "golden parachutes" after mergers. Excerpts: Golden parachutes can be over the top. When his firm was bought out by Aetna in 1996, U.S. HealthCare Chair Leonard Abramson, according to Securities and Exchange Commission filings, stayed on as business and public relations adviser for $2 million a year plus benefits, so long as he could work "during normal business hours." Aetna supplemented that with an immediate $10 million merger bonus, an extra $1 million a year to sign a noncompete agreement, and an IOU for another $10 million when he left the company completely. In addition, he got a gift of a $25 million airplane and was paid up to $2 million a year to operate it. ... To some, the numbers were startling. According to data released by the California Dept. of Managed Healthcare on the consumer group's request, Anthem planned to pay 293 WellPoint executives between $147 million and $356 million in severance and retention bonuses, or between $502,000 and $1.2 million per executive, on average. The $600 million figure quoted by Garamendi includes other stock options and bonuses.


  • Physicians for a National Health Program (PNHP): Health Care Cost Containment or Consumer Rip-Off? Excerpts: Do PBMs Profit at Expense of Their Clients and Consumers? Recent state investigations and several lawsuits have begun to raise the question of who benefits the most from PBMs. Do PBMs keep the savings they negotiate for their own profits rather than passing them on to consumers? Do they pad their profits by steering consumers to more costly drugs instead of the highest quality drugs at the lowest cost? Although 60 PBMs administer drug plans nationwide, three companies (Caremark, Express Scripts, and Medco) control close to half of the business. According to financial data submitted by these three companies, they enjoyed billion dollar earnings in 2003. Caremark had revenues of $9.1 billion managing more than 114 million prescriptions. ... A pilot study conducted for the Journal of the American Pharmacists Association found wide gaps between what a PBM pays a pharmacy for a drug and what it bills the end user. While the study concluded that PBMs average a $5 to $10 markup on generic and brand name drug transactions, it also found some much larger gaps, including one case in which a PBM billed an employer $215 for a generic stomach medicine, Ranitidine, but only paid the pharmacy $15 for the drug. In addition, PBMs may be using financial incentives to choose which drugs they offer. One study found that drug companies pay rebates to PBMs for placing their products on special usage lists called formularies. PBMs typically retain up to 30% of the manufacturers’ rebates, so they have an incentive to swap for drugs that pay higher rebates even if the drug costs the end user more.


  • Newsday: Drug savings in NY just a click away. Excerpts: A new state Web site will help consumers faced with high prescription costs to compare prices and save up to $100 on a drug purchase while driving down the market price. State Attorney General Eliot Spitzer launched the site yesterday. The Web site allows consumers to shop online for a prescription, giving comparisons by store, address and price throughout the state. A telephone help line is also provided. ... Although not comprehensive, Spitzer said, the information covers 170 pharmacies including major chains in 25 counties, including all but Suffolk County in the New York area. It will be updated at least monthly.


  • New York Times: Rising Cost of Health Benefits Cited as Factor in Slump of Jobs. Excerpts: A relentless rise in the cost of employee health insurance has become a significant factor in the employment slump, as the labor market adds only a trickle of new jobs each month despite nearly three years of uninterrupted economic growth. Government data, industry surveys and interviews with employers big and small indicate that many businesses remain reluctant to hire full-time employees because health insurance, which now costs the nation's employers an average of about $3,000 a year for each worker, has become one of the fastest-growing costs for companies. Health premiums are sapping corporate balance sheets even more than the rising cost of energy. ... Other businesses are resorting to tactics of dubious legality to avoid the health care burden. Phyllis Burlage, an accountant in Millersville, Md., whose clients include several small businesses, said rising health insurance costs were driving some employers to skirt age-discrimination law by hiring only younger workers as a way to reduce premiums. "It's the deep dark secret of small businesses," Ms. Burlage said. ... The Big Three automakers spent $8.5 billion last year on health care. General Motors estimates that providing health coverage for its workers and retirees adds about $1,400 to the price of each of its vehicles built in the United States.


  • BusinessWeek: A Wal-Mart with a Union Label? Employees in a Canadian store have won the right to organize. It's one more headache for the giant retailer. Excerpt: Labor unions scored a significant but largely symbolic victory Aug. 3, when a Wal-Mart (WMT ) store in Canada became the first in North America to win the right to unionize. Company founder Sam Walton likely wouldn't have been pleased. Then again, he may not have known that his original discount store in Rogers, Ark., would grow into a 4,800-store global behemoth that sets an entire industry's standards for wages and worker treatment. What happened in Canada "shows that when workers' rights are protected, Wal-Mart workers will exercise those rights for a voice at work," says Joseph Hansen, president of United Food & Commercial Workers International (UFCW), which secured the right to represent Wal-Mart workers at the store.


  • Bloomberg News, courtesy of The Arizona Republic: CEOs strongly support Bush in survey on issues. Excerpts: U.S. chief executive officers support President Bush over Democratic rival John Kerry on issues including the economy, taxes and job creation, according to a survey by Chief Executive magazine. When asked which candidate most effectively would handle nine different issues, the 358 CEOs surveyed favored Bush over Kerry in every area. Of the executives surveyed, 83 percent supported Bush on terrorism and homeland security; 81 percent gave Bush the edge on "tort reform"; 75 percent favored Bush on the economy; and 70 percent were more confident Bush would create jobs. CEOs also gave Bush higher ratings on trade, taxation, global labor sourcing, energy and health care. Still, the executives are more concerned about the outlook for the economy and business conditions than they were a month ago, said William J. Holstein, editor in chief of the magazine.


  • Washington Post: Rules for Overtime Pay to Take Effect. Employers, Workers Confused by Regulations on Eligibility, Classification. Excerpts: Other than the higher threshold for automatic eligibility, every change in the new regulations means less overtime protection for workers, said a report released last month by John Fraser, Monica Gallagher and Gail Coleman -- three of the highest-ranking Labor officials under Presidents Ronald Reagan, George H.W. Bush and Bill Clinton. "More classes of workers, and a greater proportion of the workforce overall, will be exempt than we believe the Congress could have originally intended," they wrote. But the Department of Labor argues otherwise. "Millions of workers in America will benefit from the Department of Labor's new, stronger overtime protections," Steven J. Law, deputy secretary, said in a conference call Wednesday. The rules have been the source of political contention for months. The Senate voted to block the rules in May, in an effort pushed by Sen. Tom Harkin (D-Iowa). Sen. John F. Kerry (Mass.), the Democratic presidential nominee, has said he will repeal them if elected. ... Business groups have been proponents of the new regulations. "These reforms provide clearer guidance to both employers and workers on their rights and responsibilities under wage and labor laws," Randel K. Johnson, U.S. Chamber of Commerce vice president for labor, immigration and employee benefits, said in a statement when the final rules were announced. "They also address many of the fundamental problems in the previous, outdated regulations that led to numerous compliance questions and needless lawsuits." "We figure if they can find a way to take our overtime away from us, they will," said John Garrity, a naval electronics technician. Garrity, who earns about $5,000 in overtime a year that he uses to help support his wife and three children, believes the new rules would allow his employer to count him as a professional.


  • San Jose Mercury News: Shifting obligations of pensions an outrage, by Dan Gillmor. Excerpts: In the 1980s, some sharp but ethically challenged financial types realized they could enrich themselves in the savings-and-loan industry. Under the cover of inadequate laws and almost non-existent regulation, they made risky loans and collected big fees. And when their institutions went broke, the federal government's deposit insurance fund was left holding the bag. They did it pretty much in plain sight, and a few watchdogs did bark. But by the time most regulators, politicians and the public caught on, federal taxpayers found themselves on the hook for hundreds of billions of dollars. History doesn't repeat itself precisely. But whenever people spot a way to stick taxpayers with their own obligations, they will try -- and they're succeeding again. Corporations are trying to shift pension and health obligations to the people to whom they've made extravagant promises, or if that won't work, onto governments. Home-mortgage lenders are making incredibly risky loans and selling the paper to giant financial institutions that may need mega-bailouts of their own one of these days. ... Meanwhile, consider last year's Medicare drug legislation, which was mostly a giveaway to big drug companies under the guise of helping seniors with escalating drug costs. The law provides a subsidy that supposedly encourages companies to maintain drug benefits for retired employees, but the government recently estimated that at least a third of major corporations will drop coverage and let the taxpayers take care of it. Shifting health care and other burdens to taxpayers is a time-honored tactic, especially by businesses that rely on low-cost labor. One notorious example is Wal-Mart Stores, the mega-retailer. A recent study by the Labor Center at the University of California-Berkeley, which Wal-Mart naturally disputed, showed that California taxpayers subsidized the company on health care and other public programs to the tune of some $86 million in 2001.


  • USA Today: Companies fail workers. Excerpt: United's actions follow an irresponsible routine that has become all too common in the corporate world. Companies contribute too little to their pension plans in good times and then run to the Pension Benefit Guaranty Corporation (PBGC) and bankruptcy court in bad times to wiggle out of their obligations. The losers are the employees, who normally get only a fraction of what they were promised in the event of a takeover by the PBGC. It collects premiums from companies to pay benefits when plans collapse. Also on the hook are U.S. taxpayers. They could be called on to bail out an overwhelmed PBGC, much as they wound up paying $200 billion in cleanup costs when federal deposit insurance proved inadequate to cover the collapse of the savings and loan industry in the 1980s. The risk of another taxpayer bailout stems from loopholes in federal bankruptcy and pension laws that provide companies too many outs for not doing right by employees.

Coverage on H1-B and L1 Visa and Off-Shoring Issues
  • New York Times: Financial Firms Hasten Their Move to Outsourcing. Excerpts: From 2003 to 2004, Deloitte Research found in a survey of 43 financial institutions in 7 countries, including 13 of the top 25 by market capitalization, financial institutions in North America and Europe increased jobs offshore to an average of 1,500 each from an average of 300. The Deloitte study said that about 80 percent of this went to India. Deloitte said the unexpectedly rapid growth rate for offshore outsourcing showed no signs of abating, despite negative publicity about job losses. Although information technology remains the dominant service, financial firms are expanding into other areas like insurance claims processing, mortgage applications, equity research and accounting. ... In a recent report "Offshoring, A Detour Along the Automation Highway," Mr. Haney estimated that potentially 2.3 million American jobs in the banking and securities industries could be lost to outsourcing abroad. ... Deloitte forecasts that by the year 2010, the 100 largest global financial institutions will move $400 billion of their work offshore for $150 billion in annual savings. Its survey forecasts that more than 20 percent of the financial industry's global cost base will have gone offshore in that period. With competence levels rising, Indian companies are tackling more complex tasks. DSL Software, a joint venture of Deutsche Bank and HCL Technologies, a software company, is handling intricate jobs for the securities processing industry. "Indian firms are taking offshoring to the next level; in the banking industry for instance, they are getting into wholesale banking, trade finance and larger loan processing type tasks," said Mr. Haney, the analyst from Celent.

Now 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

  • San Francisco Chronicle: Unions protest new overtime regulations at Labor Department. Excerpt: Several hundred union members marched outside the Labor Department to protest new overtime pay regulations taking effect Monday, with two senators pledging to try to roll them back when Congress returns from recess. Protesters, many wearing union T-shirts, carried signs such as "President Bush: Hands off my overtime pay," and chanted, "Come on all you billionaires, give us wages that are fair." "The fight is not over yet," said Republican Sen. Arlen Specter of Pennsylvania, an opponent of the changes who is facing a tough re-election bid in November.


  • Detroit Free Press commentary by Ross Eisenbrey: Law steals overtime pay from Americans. Excerpts: On Monday, the Bush administration will take away the right to receive overtime pay from millions of employees in a broad range of occupations, from office workers in financial services to embalmers, nursery school teachers and restaurant chefs and assistant managers. Despite four disapproving votes in Congress, the Bush administration is using its power and authority to accomplish the biggest rollback in employee rights in more than half a century. The administration denies it is weakening overtime rights and claims to be taking overtime pay from workers earning $100,000 a year or more. But the new regulations have their biggest impact on employees earning far less. Salaried employees earning as little as $24,000 a year are subject to the new rules, which make it far easier for employers to deny overtime pay. It might shock people to think the government would lie to them, but there is no nice way to describe the administration's campaign of disinformation around the new overtime regulations. ... This is a corruption of the Fair Labor Standards Act and its exemptions, by which Congress intended to ensure that all but a narrow class of well-paid top officials and professional employees would get time-and-a-half pay when they work long hours. The Bush administration has sided with employer groups, who oppose regulation and resent having to pay extra for overtime work. They want the flexibility to work employees 50 or 60 hours a week without paying any more than they would for 40. One restaurant chain worked low-paid assistant managers 85 or 90 hours a week without any additional pay. The new rules will make that kind of abuse legal. As we approach Labor Day, founded as part of the original campaign for an 8-hour workday and a 40-hour work week, it is critical to speak out against these new regulations. Unless Congress can block these regulations this fall, millions will lose overtime pay and find themselves working longer hours. It took 100 years of struggle to pass the Fair Labor Standards Act and create a 40-hour work week. It has taken the Bush administration less than four years to turn back the clock.
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