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Highlights—November 20 , 2004
- IBM: Cooper v. IBM Subclass 3 Settlement. Excerpt: This site contains information regarding the
settlement of the partial termination claim for eligible plaintiffs (Subclass 3) in the lawsuit Cooper
vs. IBM Corporation and IBM Personal Pension Plan. This site provides the following information:
- Important Dates;
- The Settlement Notice approved by the court and sent to eligible class members
of subclass 3 describing the settlement;
- A list of Frequently Asked Questions regarding the
case and the settlement;
- Other Important Contact Information
An excerpt from the FAQ: Question: How do I know if I am part of subclass 3? Answer:
Generally, subclass 3 is defined as all IBM employees who were participants in the Plan as of July 1,
1999, and who subsequently left IBM’s employment before meeting the Plan’s vesting requirement
-- five years of service with IBM. The settlement does not apply to: (a) persons who have become vested
in their accrued benefit under the Plan on or before the date of Final Approval of this Agreement,
or (b) persons whose beneficiaries received or are entitled to receive a vested benefit under the Plan
on account of the individual’s death on or before the date of Final Approval of this Agreement,
(c) persons who became employees of Hitachi Global Storage Technologies, Inc. pursuant to the Framework
Agreement between IBM and Hitachi, Ltd. dated June 3, 2002, or (d) persons who had earned no benefits
as of July 1, 1999.
- Janet Krueger answers a
question concerning the settlement for subclass 3 class members. Excerpt: Q: Defendants
have agreed to pay each class member a lump sum payment equal to 23.1% of the present value
as of July 1, 1999 of such Class member's June 30, 1999 accrued benefit, with present value determined
utilizing an interest rate of 6% and the Plan's mortality table. "The "Notice of Proposed
Class Action Settlement" does indeed state what you said, including the 23.1% for all subclass
3 members. I don't understand the statement. Maybe Dave can explain it. The first question would
seem to be, what is the definition of "present value as of July 1, 1999?"
A: On July 1, 1999, each of the members of subclass 3 was
an employee at IBM, with an accrued but unvested
pension. If they had run ESTIMATR on that day (had IBM
not taken it off-line), their earned amount would have
been expressed in terms of an age 65 annuity. That age
65 annuity had a present value, obtainable from
running a standard annuity calculator using a 6%
interest rate, for how much it would have taken to
purchase that annuity on July 1, 1999. You can call
this amount X.
You can find a close approximation of what that amount
is if you find the brochure IBM sent out with the
opening balance for the CB program on July 1, 1999.
There were two alternate formulas used to determine
the opening balance -- one was the present value of
the age 65 annuity from the prior plan, and the other
was something vaguely called the "always cash balance" formula. The first number (or
something close to it, if 6% wasn't the interest rate used) is X. Once you have X, multiply it
by 23.1% and that is the
proposed settlement amount.
Many people have been asking "Why 23.1%?" The legal
team decided the fairest way to divide what IBM
offered as a settlement would be to apportion it based
on what each of the people in the class had accrued
the day the prior plan was 'terminated'. That is the
amount each of those people would have been given if
IBM had actually terminated the plan on July 1, 1999,
and then started over with a defined contribution
plan. The settlement amount is 23.1% of the total of
all those balances for all of the members of subclass
3. Note that if Judge Murphy decides the share given to
the plaintiffs' legal team doesn't need to be 29% of
the settlement, the multiplication factor will go up.
It is worth noting that there is NO legal
precedent for the partial termination claim. Such a
charge has never been won before, so it is a little
surprising IBM was willing to settle it. Apparently,
IBM wanted to get it out of the way so they could
focus on the bigger issues during the appeal.
- Janet Krueger answers more
questions concerning the settlement for subclass 3 class members. Full excerpt:
Q: If I understand correctly, the class 3 members are being offered 23.1% of the value of
their unvested pensions on July 1, 1999. This appears to be a small fraction of the amount it would
take to make the "subclass 3" members whole.
A: You understand correctly. Settlements very rarely make class members whole --
they attempt to make class members better off than
they would have been without the settlement and to
achieve a modicum of justice. The goal is to find a
balance between the interests of the defendant and
the plaintiffs by trading off the possibility of
winning and making the class 'whole' against the
possibility of losing, going through many more
years of protracted litigation, and perhaps getting
It is not uncommon to see settlements in the single
digit range -- that is part of why it is often said
that the only winners in long, complex legal actions
are the lawyers. And in law school I'm learning that
often even the lawyers end up feeling frustrated after
years of litigation. Because prolonged litigation is extremely frustrating
to all the parties involved, the court system rules
are being modified to encourage the parties to reach
out of court settlements -- in most states, less than
5% of the cases ever make it into a courtroom!
Q: I am starting to understand Cutoff_90's frustrations. It appears that IBM is screwing Cutoff_90
A: Yes, we all can easily empathize with Cutoff_90 and
the other class members -- 23.1% of their 1999 balance
is not very much for most of them! But for most of
them it is almost $1,000 more than the nothing they
received without the lawsuit!
Q: Most bank robbers would be happy if they could get off just giving back 23.1% of what they stole.
A: Most bank robbers, IBM included, would prefer not to
be caught at all. There was some small amount of
justice here; I'm certainly not ready to concede that
we should not have attempted to hold IBM accountable
- iSeries Network: IBM Reaches Partial
Pension Settlement, but Suit Far from Over. Excerpts: A partial
settlement reached last week affects only those employees who'd been with IBM for less than five
years when the changes to the pension plan were made and thus weren't fully vested in the plan. "It's
only a very small part of the overall settlement," says Ralph Montefusco, organizer for the IBM
employees union Alliance@IBM and a former IBMer in the Microelectronics Division. "The majority
of the settlement, which is the actual pension conversion and the age discrimination that was involved
in that, still has to be ruled on. We won the lawsuit, but the judge still has to announce what the
penalty will be, in other words, what IBM will have to pay."
Alliance@IBM is expecting that ruling at any time now. "As I understand it," Montefusco says, "IBM
has asked the judge to hold off on that ruling because they are making an attempt to settle. ... I
honestly don't know if giving away a partial settlement piece and then saying you're trying to reach
a settlement — I
don't know if that is nothing more than an attempt to delay the judge's ruling, or if it's actually
a sincere attempt to settle things. You can't help but be suspicious — not just of IBM, but of
the process itself." IBM says it's in negotiations to settle some of the additional claims in the
suit, but it's appealing a judge's ruling saying that its switch to a cash-balance pension plan is
a form of age discrimination that must be rectified.
The changes to the pension plan came during the reign of previous CEO Lou Gerstner, whose hard-boiled
devotion to the bottom dollar made him the darling of Wall Street — but also led to numerous layoffs
and benefits cuts for employees. Have things improved much under the kinder, gentler leadership of
new CEO Sam Palmisano? "Sam Palmisano has been more cordial at stockholder meetings and probably
pays a little more attention to the PR part of the job." Montefusco says. "But when you look
at the actual policies, benefits are being cut, hours are being added to without additional pay, people
are under a lot of stress, offshoring is happening left and right, short-term financial decisions are
what drive the entire corporation. I honestly don't see any change under Sam."
- AARP: Black Eye for Big Blue.
Settlement in a groundbreaking case against IBM affects workers facing pension changes. Excerpts:
Kathi Cooper, a 54-year-old finance worker at IBM, says her basement is crammed with thousands of
letters, e-mails and phone messages from middle-aged employees around the country—"people
inside IBM, people outside IBM"—cheering the recent settlement in her lawsuit against the
company and its switch to a cash-balance pension plan. The big-money case isn't over, and neither
is the controversy, but experts say the lawsuit has already strengthened the hand of other workers
facing changes in their pension plans. In a case watched by businesses and employees across America,
Cooper and her co-workers sued IBM in 1999, arguing that its switch to a cash-balance plan from a
traditional defined benefits plan discriminates against older workers and decimates their promised
benefits. IBM contends the new plan is lawful, fair and fiscally sensible. ...
The suit against IBM has slowed the rush of companies converting to
cash-balance pensions, and recent conversions have been done "in a way that has been slightly more protective
of employees," says Karen Friedman, policy director for the Pension Rights Center in Washington. "Lots
of companies have changed their practices … recognizing that this is a controversial and—in
our opinion—illegal practice."
- Alliance@IBM: IBM Pension Lawsuit FAQ
- BenefitsRestoration.org: We are an organization
of retirees, retirees' spouses and working employees growing in size daily. We are united by
our belief that over the years companies like IBM have committed lifetime medical benefits to
employees who stayed with them until retirement. We are united by our resistance to recent actions
that have greatly reduced many corporations' percent of contribution to the cost of retiree medical
benefits. We are united in our demand that corporations like IBM honor their contract with their
retirees and restore the medical coverage that was promised. We are united by our belief that many
corporations in the past, particularly IBM, recruited employees with the promise of providing a "total compensation
package" (salary and benefits) from
cradle to grave and agree that many corporations have since broken their promise.
the November, 2004 BenefitsRestoration newsletter. Excerpt: By now you have had an opportunity
to analyze the 2005 "think health choose well" plan recently sent by IBM. Please note the
lack of capitals in their title; seemed appropriate to me. I have talked to a number of people who
think that we all have had great success in causing IBM to hold the line on retiree benefits costs.
I have a goodly amount of email expressing outrage at the continued increase in costs and insisting
that we "take action". My own feeling is that both of these groups are correct. In large
part, due to the activities of members of Benefits Restoration and other organizations such as
NRLN, the change in benefits costs this year was held to some extent. I don't have data from
all states but I have confirmed that HMO's were dropped in the more expensive states and replaced
with a slightly lower cost plan, the IBM EPO. I'd like to hear your views-- all of you. Send
me a note at firstname.lastname@example.org and tell me how you
made out in the new plan. Personally, I think you should all feel pretty good at what has been
accomplished so far and then realize that we still have much to do. Without continued pressure,
as one member put it, "look out for next year". I think IBM would like us to declare
victory and go away. I say we should do the first and not the second.
- "madinpok" details IBM's long-term promises to its employees. It's
lengthy, but excellent! Full excerpt: I've been with IBM through those same years, and I recall quite
a different story. Through the 70's and 80's, IBM had a pretty
consistent track record of improving benefits. During the 80's,
when IBM started the IRA and 401(k) programs, these were presented
as additions to our other benefits, not something that would replace
a pension plan that would be gutted in the future. We were
encouraged to save via the 401(k), but I never saw a message that
said your better do this, or you're going to be sorry someday.
I'm the type of person who saves anyway, so I'm lucky that I took
advantage of it. Yes, there were some who could afford to save in
the 401(k) and chose not to, because they had other spend-now
priorities. But I know many who couldn't because of tight
In the mid to late 80's, when IBM started offering buyouts, I
heard the promises that were made to those who were
interested in the buyout. People were told that they should
calculate whether they could afford to retire by assuming that
they wouldn't have to worry about the cost of medical insurance -
IBM would provide that for life. I don't know how anyone can
equate that message as meaning anything other than medical insurance
will be free for life. Regular employees were not yet required
to contribute to their medical insurance costs, and there was
little indication that anyone would ever have to.
Although COLAs were not guaranteed, a history of IBM's COLAs was
shown. I'm not sure why you weren't shown any of this. I recall
for some of the buyouts, going to these meetings was optional and
only those who were interested (or eligible) went. Perhaps it's
just differences in the way local management handled things.
During the 90's IBM made a big deal about planning for your
future and retirement security, and how you had to do this
over a long term period of 20 years or more. Yet, IBM saw
nothing wrong changing the rules every 4 years or so and
grandfathering only those within 5 years of retirement.
Along the way, the pension plan went from one that provided
64.5% of final average salary (1.5% times 43 years for a full
career employee) to one that provides at most around 40%
under the PCF plan (for a 30 year employee, the change was
45% of FAS to 30% under PCF). That's quite a hit to long term
If you are fortunate enough to earn $100k or more a year, and
lucky enough to have made wise investment choices with your
401(k) and other savings, then perhaps your financial plans
can absorb a loss of 1/3 or more of your pension income,
not to mention the additional burden of retirement medical costs
that current employees will have to pay. But I think it's safe to
say that a lot of IBMers are not in that income class.
What is really abhorrent is how IBM went out of it's way to hide
what was really happening from the employees through all these
changes. ESTIMATR gave a deliberately deceiving picture of how
your retirement income was being reduced. In fact, it often
made it look like your income would increase under each new
plan change. Only if you were smart enough to have saved some old
ESTIMATR runs would you discover what was really happening.
Or, if you were smart enough to work through all the math
yourself. (Editor's note: ESTIMATR was the mainframe-based application IBM provided its employees to estimate
their pension benefits.)
When IBM capped their contributions to retiree medical insurance,
they made it seem like it was no big deal and didn't encourage
anyone to try and estimate what it might cost them out of their
own pockets in the future.
In my opinion, IBM did a great disservice to the employees by
trying to make them think that everything was fine, they still
had great benefits and there was nothing to worry about.
Unfortunately, many people took them at their word and didn't
understand what was really happening.
- Wall Street Journal: Suit
Claims Pricewaterhouse Used 401(k) to Enrich Partners, by Ellen Schultz. Excerpts: A former
employee of PricewaterhouseCoopers LLP is suing the professional-services firm, saying it used
its pension and 401(k) plans to enrich its partners at the expense of regular employees. Among
other things, the complaint says Pricewaterhouse provided partners with a 200% matching contribution
in their 401(k)s, compared with 25% matches to other employees, and provided partners with outsize
contributions to their so-called cash-balance pension accounts. Such disparate treatment, the
suit alleges, runs afoul of federal pension guidelines. ... According to Mr. Laurent's complaint,
Price Waterhouse LLP, a predecessor of Pricewaterhouse, in July 1994 froze its traditional pension
plan and set up a cash-balance plan. Four years later, when Price Waterhouse and Coopers & Lybrand merged to create the current firm, Coopers & Lybrand's
traditional pension plan was converted into a cash-balance plan, and the two firms' plans merged
in July 1999. ... The suit also alleges that Pricewaterhouse took steps to provide the top-paid employees
with an unfair share from the retirement savings plans. While most employees receive annual "credits" to
their cash-balance accounts ranging from 5% to 8% of their annual pay, partners can receive an
amount necessary to generate a benefit equal at retirement to $140,000 to $165,000 a year for life,
depending on the returns in the investment options the partners select, people familiar with the
matter said. If link is broken, view
Adobe Acrobat version [PDF--29 KB].
- Wall Street Journal courtesy of the San Francisco Chronicle: Health
insurers reject 'near elderly'.
Excerpts: Though health insurance is an issue that affects young and old alike, it is a particularly
tough problem for people aged 50 to 64 who are too young for Medicare, the government's health program
that covers those aged 65 and over. As a group, they are often vulnerable to layoffs or pushed into
early retirement at a point in their careers when it is difficult to get another job with benefits.
Those who retire early thinking they are covered may see their benefits scaled back, as employers
have tried to cut these costs in recent years. Still others lose coverage when an older spouse switches
to Medicare from a plan that had formerly covered both members of the couple. Whatever the reason,
many in this pre-Medicare age group find themselves in the individual insurance market at the very
time they are developing health problems that scare insurers. (Editor's note: As a 'near elderly'
person myself, I had mistakenly believed IBM's promise of lifetime retiree medical would have
- San Francisco Chronicle: Catering
to the 'young invincibles' New Blue Cross health plan is marketed to 19- to 29-year-olds. Excerpt: Health insurance? Cool? Blue
Cross of California thinks so. The insurer Wednesday introduced Tonik, a new individual health plan
intended primarily for young adults ages 19 to 29. It's being promoted with a hip Internet campaign
and marketing tactics directed at a generation more familiar with snowboards than shuffleboards.
The product is designed for people who can afford health insurance but think they can get away without
it -- the so-called young invincibles. Blue Cross also says the plan will appeal to mature mavericks,
those who may not be so young but carry on as if they were.
- New York Times commentary by Dalton Conley: Turning
the Tax Tables to Help the Poor. Excerpts:
The other option would be to hijack the Republicans' fervor for tax cuts, the military and
the ownership of private property. Let's start with tax cuts. From an accounting standpoint,
there is no difference between a direct transfer to the poor and a refundable tax credit. In
political terms, one is called welfare (a sure loser) and the other tax relief (an almost certain
winner). ... The same goes with the payroll tax. Why not cut the payroll tax? The Social Security
payroll tax is the biggest tax burden faced by poor Americans; cutting it would put more money
in their pockets. Such a move would also stimulate hiring, since employers shoulder half the
burden of the tax. This plan could be kept revenue-neutral by merely raising the amount of wages
subject to the tax - now capped at $87,900. The worship of all things military can also be co-opted
for progressive ends. The military is now the de facto welfare state. The armed forces and the
Department of Veterans Affairs are the two largest health care providers in the United States.
The military is also a major bankroller of higher education through the G.I. Bill. And because
of America's all-volunteer force, it is the nation's poor that disproportionately serve. By proposing
major increases in benefits for the families of active personnel, reservists and veterans, Democrats
can use that holiest of holy grails on the right - "our troops" -
to help increase opportunities in American society.
- New York Times: The
Dollar Is Down, but Should Anyone Care? Excerpt: The United States is spending nearly $600 billion
more a year than it produces, almost 6 percent of its annual gross domestic product. Much of that spending
has been financed by Asian governments, which bought more than $1 trillion in Treasury securities and
other dollar assets in the last two years to help keep the dollar strong against Asian currencies.
... A steep drop in the dollar could lead to higher interest rates for the federal government and American
private borrowers, as foreign investors demanded higher returns to compensate for higher risk. And
it could expose hidden weaknesses among financial institutions and hedge funds caught unprepared. "There
is a school of thought that the U.S. can keep borrowing forever," said Kenneth S.
Rogoff, professor of economics at Harvard University and a former chief economist at the I.M.F. "But
if you add up all the excess saving being thrown out by the surplus countries, from China to Germany,
the United States is soaking up three-quarters of it right now." For Mr. Rogoff and several other
economists, the question is not whether the dollar declines - but how fast and how far the fall turns
out to be. The United States current account deficit, which encompasses annual trade as well as the
balance of financial flows, has gone from zero in 1990 to nearly $600 billion this year. The United
States' accumulated debt to foreign investors is $2.6 trillion, or 23 percent of the annual output
of the economy.
- Vault's IBM Business
Consulting Services message board is a popular hangout for IBM BCS employees, including many
employees acquired from PwC.
- BusinessWeek: What's
Ahead for Social Security? Excerpt: President George W. Bush has interpreted
his reelection as a mandate to restructure the troubled Social Security system. While Bush has
not yet said how he'd do it, he has called for sweeping changes that would divert part of workers'
payroll taxes into individual investment accounts. His goals: heading off a fiscal collapse of
Social Security and promoting an "ownership society" that would give working Americans
a chance to build their own retirement stake of stocks and bonds. Here's how today's system works
and how Bush may change it...
- "What's an Actuary?" Blog: Social
Security. Excerpts: In no meaningful or honest sense is any aspect of SS funded. Every dime
paid to beneficiaries will come from future taxes. SS owns no stocks; it owns no commercial bonds;
it owns no income producing properties. The only real question remaining is who is going to pay
those future taxes; will they be payroll or general taxes? Some of you may be thinking but, but
... SS owns a bunch Treasury script which is just like a Treasury bond, and those can be sold
to raise cash. True enough. But where do you think those future coupons and maturity payments
are going to come from? That's right, future general taxes! It's all going to come from taxes;
either payroll or general. That's unavoidable. Come to grips with it.
Let's be honest about this
program. We should just toss into the crock box enough Treasury tax futures to allow an actuary
to call SS fully funded, kill the payroll tax for both employees and employers, set up the entire
liability on the federal government's books, and require SS to maintain this state of being fully
funded. This is no less a scam than the current system, so why not do it now and be done with it?
In fact, this is no different than the way the current system functions. This move has several
benefits: it's an honest accounting of the federal government's debt; any expansion of the program
will trigger an immediate and full hit to the budget; and it's consistent with the Roosevelt administration's
contention that SS payroll taxes are general, and not dedicated, taxes. Let the federal government
fund the entire program from general taxes, not regressive payroll taxes.
- The Century Foundation: Scare
Tactics—Why Social Security Is Not in Crisis [PDF]. Excerpts:
Opponents of Social Security have been striving to convince American workers,
especially young adults, that Social Security will no longer exist by the time
they retire. Phrases such as “imminent crisis” and “unmanageable costs” lace
this rhetoric. To a large extent, this alarmism is voiced by those who are hostile to
government and therefore favor replacing all or part of one of this nation’s most
successful and essential programs with private investment accounts. ... Social Security is
not in crisis. Even pessimists predict that the program will be able
to meet every promise until most of today’s forty-year olds are deceased. And even
mildly optimistic assumptions generate forecasts of no crisis at all in Social
Security, ever. There is no reason to rush to dismantle this basic part of our social
safety net, a system that is vital to a large majority of our elderly population. We
must continue to keep a close eye on Social Security, but the system is not broke.
- Forbes: Bush
Raised Your Taxes. Excerpt: "Christmas is going to be free this year. Just charge
even MasterCard would dare such a pitch. Credit is a convenience, not a way to reduce costs.
Your costs include both cash outlays and any tab you run up. Isn't this the essence of accrual
accounting? Haven't we known this since maybe the time of the Sumerians? What brings accruals
to mind is the $413 billion federal deficit and the threat that it will bring on some kind
of tax increase. As Janet Novack explains on page 50, certain increases are already programmed
into the code, and more loom in the guise of "reform" and "loophole
- Washington Post: Easy
Fixes For Social Security. Excerpt: The president's determination to
partially privatize Social Security stems from ideological reasons. But in fact the projected
Social Security deficit is small enough -- 1.89 percent of payroll, under the Social Security
trustees' intermediate assumptions (neither optimistic nor pessimistic) -- that a major revision
to the system is not necessary. The deficit can be remedied with a few discrete changes in
the program, all of which are surprisingly easy to understand and accept. The first is to
raise the earned income on which the Social Security payroll tax is assessed and benefits are
paid. At present the maximum is $87,900 a year, subject to annual indexing to wage growth. But
it could be raised gradually over several years to 90 percent of covered earnings of individuals,
from its current level of about 85 percent, and indexed thereafter. If that were done, the additional
payroll tax paid by the 6 percent of earners who earn more than $87,900 would reduce the
long-range deficit by 0.61 percent of payroll.
- Jim Hightower: The Ideology Behind
Our Flu-Shot Crisis. Excerpt: This crisis is the result of rank incompetence and ideological
stupidity by our political leaders. Of course, these so-called leaders are now trying to dodge
their responsibility, claiming they couldn't have known about the contamination at the plant.
Hogwash. The problems there were widely publicized months ago. Also, this is the second year
in a row that our vaccine supply was botched. It's been a crisis waiting to happen...and now
it has. But the real cause of the failure to protect our public health is Washington's insanely
irrational pursuit of privatization and laissez-faire theory. Washington ideologues tied our
nation's health to the profit whims of only two of the corporations that make flu-shots, neither
of which are even in the U.S. Other nations are not facing a flu-shot crisis, because they
wisely get their medicines from many sources. Well, sniff the politicos, U.S. drug makers don't
find flu-shots a profitable enough business, so what could we do? Hello, gooberheads––it's
time to admit that the profit motive does not always serve the public interest, especially
on health care issues. When corporations fail to meet the need, government must.
- Computerworld: Best
Buy hit with lawsuit over layoffs of IT workers. The retailer denies claims of age discrimination
by 44 ex-employees. Excerpt: Richard Walstrom said this week that he sensed something was wrong
during a job fair in May, when he saw some of his IT co-workers, who had also been told by Best
Buy Co. that they were losing their jobs. "There were a high percentage of people with
gray hair," said Walstrom, who's 57. "It was a lot of us. I didn't really realize
what had happened until you look around and say, 'What's wrong with this picture?' " Walstrom
is one of 44 former Best Buy IT workers who filed a class-action lawsuit on Wednesday claiming
that the Richfield, Minn.-based electronics retailer engaged in a pattern of age discrimination
in terminating their jobs. The plaintiffs range from 40 to 71 years old, and their average age
is 51, according to the lawsuit filed in U.S. District Court in Minnesota. The charges relate
to layoffs that were announced in April, when Best Buy said it planned to outsource its IT operations
to Accenture Ltd., as well as to a smaller round of cuts that took place in October 2003.
of "Junk Lawsuits" Hype:
Citizens' right to hold corporations accountable is the real target. Excerpts: “We think
lawsuit abuse is a serious problem in this country," proclaimed Dick Cheney while debating
John Edwards in early October. The "runaway lawsuits" theme is repeated at almost every
Bush/Cheney campaign stop. Knowing the record of his own company, I can't help wondering
whether Cheney is like an alcoholic seeking help, for during his five-year reign as CEO,
Halliburton and its subsidiaries filed more than 150 separate court actions (documented by
Halliburton Watch). Those lawsuits pursued injunctions, evictions, and attempted to collect alleged
debts from other corporations and individuals, sometimes for as little as $1,500. But Halliburton
is just part of a larger pattern. A recent study by Public Citizen indicates that the 7 million
U.S. corporations file four times as many lawsuits as the 281 million individual Americans, so
corporations are 160 times as likely to sue as an average person.
When asked during the debate if he thought Senator Edwards, a former trial lawyer, was part
of the lawsuit problem, Cheney responded, "I'm not familiar with his cases." (As if Bush
campaign staffers didn't scrutinize every lawsuit the man ever filed). But as The Washington
Post noted, Edwards' previous political opponents seeking dirt "came away frustrated because
Edwards' clients were almost universally sympathetic figures." Like most trial lawyers, he
helped genuine victims get justified compensation and deter wrongdoers from harming others.
The attack on trial lawyers is really an attack on citizens' ability to sue corporations, and
it goes far beyond this election cycle; it's part of a long-term assault on the rights of citizens
and small business owners to hold corporations accountable via the courts. Having successfully
undermined or dismantled regulations on big business in many realms, the next corporate agenda item
is to regulate us -- to strip citizens of our right to punish corporate crime and criminals. We
can and should find ways to curb groundless lawsuits, including disbarring lawyers deemed by judges
and peers to have repeatedly filed unjustified lawsuits (and nobody despises unscrupulous attorneys
more than honest ones). Genuine improvements, however, must work narrowly to discourage the
small fraction of suits that truly are frivolous, not shield giant corporations from one of our
few functioning tools to hold them accountable.
|Coverage on H1-B and L1 Visa and Off-Shoring
- CRM Buyer: IBM
Executive Sees Upside to Offshoring for US Workers. IBM has kept a low profile regarding
its offshore presence and plans. Citing the volatility of the issue, the company would not
allow a reporter to visit its Bangalore facilities. But while IBM is being quiet about its
global expansion plans, it's not scaling them back. Excerpts: The debate surrounding offshoring
should focus on retraining American workers rather than stemming the flow of jobs to overseas
markets, a senior IBM official says. Big Blue plans to continue to grow its presence overseas,
but officials aren't oblivious to the effect their actions have on U.S. workers, Bruce Harreld,
IBM's vice president for strategy, said in an interview earlier this month.
- Jim Hightower: The Return of the
H-1B Monster. Excerpt: H -1B is an immigration classification
that has allowed high-tech corporations to import hundreds-of-thousands of low-paid computer
engineers, programmers, and other skilled professionals from abroad, rather than paying the
middle-class salaries earned by high-tech workers in America. These visas have been a primary
tool used by CEOs to bust the salary levels of high-tech jobs–the very jobs that, we were
told, were to be the source of upward mobility and middle-class opportunity for our citizens.
... At the height of the high-tech boom, greedheaded corporate executives wailed that they
simply could not find enough Americans with the computer skills they needed, so it was imperative,
they said, that they be allowed to bring in tech workers from India, Russia, and elsewhere
to fill the gap. This was pure horsehockey. Far from a shortage of qualified U.S. workers,
people with top-notch skills were practically begging for jobs...and being rejected. The industry
executives were creating a false crisis for one reason: They wanted to displace well-paid Americans
with foreign workers who would take a third or less in pay. But, horsehockey prevailed. With
their campaign contributions and lobbying clout, they got congress to triple the number of
H -1B visas issued each year––and many Americans soon found
themselves training their foreign replacements. ... But now that the tech economy is picking
up again, instead of hiring Americans, the CEOs are wailing the same old tune about "shortages," demanding
that congress give them more H -1B visas to import cheap workers to fill the new jobs.
- PBS Frontline: They're rolling back prices, rolling back competition, and rolling jobs overseas...Is
Wal-Mart Good for America? Editor's note: The full program is available on-line. Topics covered
include "The Secret of Wal-Mart's Success", "Transforming America", "The
and "Interviews". "The
China Connection" is a real eye opener as it exposes how
tightly integrated are the U.S. and Chinese economies.
- BusinessWeek: India:
Let The Deals Begin. Excerpts: It felt like the lights went on again in Bangalore. Almost
as soon as U.S. President George W. Bush was reelected and the specter of a Democratic
Administration that might pull the plug on outsourcing receded, the deals began to flow.
On Nov. 8, Infosys Technologies Ltd., India's top software services company, announced
a $1 billion secondary offering of its shares. That same day, General Electric Co. sold
a stake in its New Delhi-based outsourcing subsidiary to U.S. investors for $500 million.
... There's likely to be a scramble to gain local knowledge, too. The outsourcing industry
was pioneered by the Indians, so the most successful shops have been homegrown. Except
for GE and Citibank, foreign operators came late to the game and have been playing catch-up.
In April, IBM Global Services paid $150 million for New Delhi's Daksh, a call-center operator
with 6,000 workers and customers around the world. That purchase catapulted IBM into the
top ranks of Indian outsourcing players. Insiders say other U.S. services firms may seek
similar deals. "Like IBM, Accenture and EDS will look to buy scale here," predicts
K.P. Balaraj, managing director of VC firm WestBridge Capital. Accenture declined to comment.
EDS says it is more likely to pursue organic growth. ... There's no shortage of ambition
in Bangalore. Although worries in the U.S. about jobs flowing overseas could still slow the
sector's M&A activity, the possibility of a serious backlash against outsourcing seems to
have faded with Bush's reelection. So bring on the dealmakers.
- Computerworld: Offshoring
Revives Man-Month Myth. Excerpts: as IT shops apply "brute-force programming techniques" with
low-cost coders from India and elsewhere. That's the observation of Tom Bigelow, CEO of Performance
Software Corp., a Phoenix-based developer of custom software for the aerospace industry.
Bigelow says companies that hire offshore developers in bulk eventually hit a wall. That's
because, as Frederick P. Brooks Jr. revealed in The Mythical Man-Month, his classic book
on software engineering published nearly 30 years ago, you can't compress the time it takes
to complete software simply by throwing more bodies at it -- not even in the Internet age.
Most IT managers have been "mandated to cut x percent from their budget," Bigelow
contends. So, many have grasped at the straw of offshore development with the hope of saving
money and still getting big development jobs done. The frequent results, he says, are late
projects, bad projects and dead projects. While upper management is busy updating its spreadsheets
with lower-cost programmers from abroad, many midlevel IT managers are foundering as they
try to control workgroups overseas, Bigelow says.
- Working Families e-Activist Network: Take
Action! Protect America's Jobs. Excerpt: Please send the letter below to urge your members
of Congress to oppose any legislative effort to increase the number of H-1b visas. The
proposal would be included in the Omnibus Spending bill for FY05 in HR 4818. Congress is
giving last-minute consideration to legislation that would increase the number of high-tech
and professional foreign guest workers who can work in the United States even though U.S.
workers in the occupations most affected already suffer high unemployment rates. The legislation
is part of an agenda by the Bush administration and congressional allies to enable businesses
to hire foreign workers they can pay less than U.S. workers under the H-1b visa program.
This would allow foreign graduates with advanced degrees from American colleges or universities
access to professional and technical jobs here. While giving companies a supply of lower
wage workers, the measure also would worsen today’s job crisis for professional and technical
workers whose unemployment rates are already at record levels. Please act now...
- Wall Street Journal: Drug
Companies Look to China
For Cheap R&D, by Laura Santini. Excerpt: Long known as a place to produce clothes and toys
cheaply, China now is providing the West with another opportunity: developing drugs at lower
cost. Opening a new frontier in outsourcing, pharmaceutical companies overwhelmed by the
rising cost of creating drugs are turning to China to conduct research and development. They are
finding highly educated scientists who work for a fraction of what their Western counterparts
are paid, as well as vibrant and growing biotechnology businesses. And they are beginning to sink
significant amounts of money into deals that will further boost China's capabilities.
- Computerworld: Workers
of The IT World, Unite! Excerpts: A new report from the University of Illinois at Chicago
reveals that 403,300 jobs were lost in the IT sector from March 2001 to April 2004 (download
the report at QuickLink a5130). And the majority of the positions were lost after the IT
recession came to an official end in November 2001. The combination of outsourcing and
uncertainty over the future of business growth probably means there won't be a rush to
hire lots of IT staffers, even if the U.S. economy starts humming again. Microsoft this
week will break ground for a new facility in -- you guessed it -- Hyderabad, India. There's
nothing intrinsically wrong with that; labor and capital flow where they can be efficiently
employed. But it seems odd that U.S. IT workers are only now waking up to the threat of
offshore labor and tightfisted corporate budgets. ... To a great extent, the individual,
professional and skilled nature of many IT jobs provides an intellectual security blanket
that has helped programmers, system technicians and other IT managers remain blissfully
ignorant of the slow leak of jobs to their comparably skilled but lower-paid colleagues
overseas. But the voice of the individual is currently outweighed by the vast cost savings
that outsourcing represents to some companies. And the calls by unions to debate and explore
remedies to sustain our domestic IT industry can't carry the day unless they are backed by
the IT workers whose fortunes and futures are at stake. Without union representation, IT workers
will have to take what is given them, and that might not be such a good deal.