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Highlights—December 16, 2006
- Yahoo! message board post by Janet Krueger:
Cash Balance plan declared illegally age discriminatory".
Full excerpt: I just uploaded today's decision from the US District Court in the Southern District of New York
in favor of Citigroup employees declaring their cash balance plan illegal.
Another repudiation of Judge Easterbrook's opinion, as well as confirmation of Judge Murphy's;
a good indication we'll win the Cooper appeal *IF* the Supreme Court agrees to hear the case. Interesting reading!
- Business Insurance: Judge
says cash balance plans discriminate. By Jerry Geisel. Excerpts: Rejecting the reasoning of a federal appeals
court, a federal district court judge says cash balance pension plans discriminate against older employees. The plans
are age discriminatory because when an account balance is converted to a retirement annuity, "cash balance plans
are not age-neutral," wrote Judge Shira A. Scheindlin of the U.S. District Court for the Southern District of
New York. [...]
Judge Scheindlin’s decision comes about four months after the 7th U.S. Circuit Court
of Appeals in Chicago ruled in a widely publicized decision involving IBM Corp. that the plans do not violate age
Since the appeals court ruling, two district court judges in other cash balance plan suits
have rejected age discrimination charges, while two judges, including Judge Scheindlin, have found the plans to be
age discriminatory in their design. The split in the courts shows that it will be some time before the age discrimination
issue will be resolved, said Nancy Ross, a partner with McDermott, Will & Emery L.L.P. in Chicago.
- WISH-TV (Indiana): Public Hearing Held
on Privatization of State Agencies. By Mike Corbin. Excerpts: The big issue
at a packed public hearing Friday morning was the question of whether or not some state agencies should go private,
more specifically, about IBM's proposed $1.1 billion takeover of the Indiana Family and Social Services Administration. "We
think we negotiated a very good contract," Governor Mitch Daniels said. It is a tentative 10 year, $1.1 billion
deal with IBM and partners. They would administer state programs for the needy, including Medicaid and food stamps.
"The problem with IBM is they have no history and experience at all in social services," said
David Warrick, AFSCME Executive Director. Some 200 people with additional ideas packed the public hearing. "When
employees are not involved as equal partners in any massive reorganization, that reorganization will fail," said
Nancy Guyott, Indiana AFL-CIO. [...]
Some 2,200 state workers are affected by the IBM deal. Officials say they are guaranteed two
years of employment at current or higher pay. Union officials say the deal would create more lower paying jobs and
the pension plan would not be as good. The federal government must still approve the deal.
- Associated Press, courtesy of Yahoo! News:
Held on $1B Welfare Contract. By Ken Kusmer.
Excerpts: A parade of state case workers, their union leaders, social advocates and others accused Gov. Mitch Daniels'
administration of lying, fudging statistics and endangering needy and vulnerable Hoosiers to make its case for
outsourcing the application process for food stamps and other public benefits.
Friday's lone public hearing on a contract to pay an IBM Corp.-led coalition of vendors $1.16
billion over 10 years attracted a standing-room only crowd of about 200 people to an Ivy Tech Community College
auditorium. It stretched on for hours to accommodate the dozens of opponents who signed up to speak out against
the plan. [...]
"This meeting, if it does nothing else, tells Governor Daniels that Hoosiers do not want
this change," said Robert Butts, a Division of Family Resources case worker in St. Joseph County. He also questioned
the proposed contract's plan to move some state workers to the vendors at no less than equal pay and benefits. "Don't
tell me about employee protection. I don't believe," Butts said.
- Yahoo! IBM Pension message board post "
someone explain this to me?" by Kathi Cooper. Excerpts: Form 8-K for INTERNATIONAL BUSINESS MACHINES CORP,
Item 8.01. Other Events. The Company will be asking IBM stockholders to approve amendments
to our Certificate of Incorporation at our 2007 Annual Meeting that will lower all statutory supermajority voting
thresholds now applicable to the Company under the New York Business Corporation Law.
Under existing statutory voting provisions now applicable to the Company, the approval of
two-thirds of all outstanding shares entitled to vote are presently required to effect each of the following extraordinary
- a plan to merge IBM into another company or to consolidate our Company with another company;
dispose of all or substantially all of our assets outside the ordinary course of business;
- to effect
a share exchange under which IBM would become a subsidiary of another company and its stock exchanged for the
stock of that other company (IBM's new parent); or
- to dissolve.
IBM has never sought to undertake any of these extraordinary actions, and does not anticipate
However, as a result of the vote at the Company's 2006 annual meeting on a stockholder proposal
that asked IBM to lower all supermajority voting provisions and other considerations, the Board will recommend to
IBM stockholders in the Company's 2007 proxy statement that stockholders vote to approve four (4) separate management
Approval of these proposals will implement the stockholder proposal in a manner consistent
with New York State law.
The four proposals, if approved, would add new provisions to the Company's Certificate of
Incorporation, lowering the existing statutory supermajority voting provisions on the four matters listed above to
the lowest possible voting threshold; that is, a majority of all outstanding shares entitled to vote on each matter.
There are no other statutory supermajority voting provisions now applicable to the Company
that can be lowered.
Full details relating to the amendments the Company will be recommending to stockholders will
be set forth in the Company's 2007 Definitive Proxy Statement, which is presently scheduled to be filed with the U.S.
Securities and Exchange Commission in early March 2007.
- "ibmaccountant" comments
on IBM's Form 8-K filing. Full excerpt: It'll make it easier make big decisions, like selling the company or
any of its major operating units to the private pirates like Lou's boys at Carlyle. The best way to hide any "issues" is
to sell and go private.
The fix is in. The senior management will make millions and be free of the liability hanging
over their heads.
The big item to sell next is IGS.
- Yahoo! message board post by "sby_willie":
Spirit event". Full excerpt: Found out the IBM Poughkeepsie Spirit "Holiday Season" event was
cancelled. For other IBMers: was your event cancelled or even planned to be held?
The reason given for Poughkeepsie was due to low enrollment. Gee, is this REALLY the truth?
And do you wonder why!?
IBMers in Poughkeepsie and all of IBM are increasingly pressed to make their CLAIM customer "billable
hours" targets for the year since it is the 4QTR. Since this event is not customer billable, then how can IBM
think that anyone can afford to give up an hour or two to attend this event?
Maybe it is a case of IBM Poughkeepsie not having enough "IBM spirit". Wrong. IBM
Poughkeepsie shows tons of spirit by working hard helping IBM make their profits. It's just that IBM Poughkeepsie
and much of the "Global IBM" has the sentiment that they don't have any spare time when at work these days
to give to attending an event like this.
I bet some employees in Poughkeepsie feel that if they planned to attend and their management
found out then they would be scrutinized as having "too much time on their hands" or something of the like
It also could be the case that our present "pale blue IBM" is so Ebeneezer cheap
they didn't want to afford any 4QTR money to fund this event anyhow so the reason given was "cancelled due to
poor enrollment". (I hope this is not indicative of how the 4QTR results are going to turn out)
The comment in the note "We apologize, but due to low enrollment this event has been
cancelled. No actions are necessary on your part."
Apologize? For what?
No actions are necessary on your part? Put a little guilt trip on us for not enrolling? Ok,
really, no IBM action plan here? Maybe the action plan should be to "try to show more spirit" for the next
Maybe IBMers are really understanding this IBM Spirit program is just a load of internal propaganda
to try to boost the sad and plummeting morale in IBM. If morale was so good why do you need to try to reinforce or
even build "spirit"?
If this action taken by IBM to cancel this event is not indicative in general of the low IBM
employee morale then what is? One has to wonder what IBM's intentions are of sponsoring this Spirit program really
- Yahoo! message
board post by "sby_willie". Full excerpt: Wow. Curbing the Thanks awards... They
can't afford to allow Thanks awards now in 4th QTR here. How cheap can this company get?
Supposedly these Thanks awards are "valued" at $25 although most of the awards IMHO
are much less in value than that amount. I guess it might cost more for processing, shipping, and handling than the
actual items themselves..typical IBM since Gerstner.
IBM meet Ebeneezer Scrooge. The way things are going I would prefer to work for Ebeneezer
for the New Year.
- Vault message board post "Holiday
Social cancelled!" by "IGS_Consultant". Excerpts: It's always interesting to see how the glowing
press coverage of IBM is so out of sync with the reality inside. As has been discussed elsewhere in these forums,
IBM will no longer reimburse mobile employees (i.e. employees who do not have IBM offices, and therefore have *no*
office expenses within IBM) for broadband access, wireless data card access or a separate wired voice line for
More lately, IBM has cancelled all travel unless a client is paying for travel.
And, now, IBM has even cancelled Christmas (or your other favorite year-end holiday celebration)
according to the following notice:
"As we work to close a strong fourth quarter,
we need to focus on meeting our business objectives, including cost management. To this end, we have decided to postpone
our Holiday Social originally scheduled for xxxx, Dec. xx. We will reschedule this event early next year as a kickoff
for 2007. This action is in line with Corporate direction."
"I'm sorry to postpone the Social at this
late date. I appreciate your understanding."
- Fort Worth Star-Telegram: American plans
to bolster pension plans. By Trebor Banstetter. Excerpts:
American Airlines will pump an additional $100 million into its employee pension plans, a move that will help strengthen
the airline’s retirement plans. American, based in Fort Worth, had already contributed $223 million this
year, which was the minimum amount required to satisfy its funding obligations. The additional contribution is “a
strong example of our commitment as a company to invest in the future of our employees,” Gerard Arpey, the
airline’s chairman and chief executive, said in a prepared statement.
He called it “a prudent use of our cash resources.” At the end of the third quarter,
American had about $5 billion in unrestricted cash on hand.
American is the only major airline that still has traditional pension plans for most of its
employees. Others, including United Airlines and Delta Air Lines, have terminated pensions in bankruptcy court, significantly
reducing retirement income for many employees.
- The Oregonian: Intel
cuts employee education benefits. The company will reimburse only those who attend
schools with approved accreditation. By Brent Hunsberger. Excerpts: In an apparent rebuke of for-profit colleges,
Oregon's largest private employer says it will stop reimbursing employees for tuition at some schools and will
set annual caps on executive MBA programs. Intel confirmed Tuesday that it has decided to reimburse tuition only
for students attending universities with professional accreditation accepted by the company. [...]
Oregon's major public universities and largest private schools won't be affected by the move.
But several for-profit colleges no longer qualify for tuition reimbursement, company officials said. Among those
on the outs with Intel is the nation's largest for-profit education provider, the Apollo Group Inc., which owns the
University of Phoenix. The school operates four campuses in the Portland area -- including one near Intel's facilities
in Hillsboro -- and one in Salem.
- Wall Street Journal: How
Backdating Helped Executives Cut Their Taxes. Evidence Suggests Recipients Of Some Stock-Option Grants Manipulated
Exercise Dates. By Mark Maremont and Charles Forelle. Excerpts: In a paper
that began circulating in recent days, a Securities and Exchange Commission economist concludes there is strong
statistical evidence that executives manipulated the exercise dates of their options as part of a tax dodge. And
a review of corporate filings turns up some companies with startling options-exercise patterns.
The new information could open another front in the options-backdating scandal. Backdating
already has sparked the broadest corporate-fraud probe in decades, with more than 130 companies under investigation
by federal authorities. So far, attention has focused on the practice of retroactively selecting favorable dates
to grant options. The new wrinkle involves rigging the dates on which options are exercised, sometimes years
after they're granted. [...]
About three-quarters of the time, executives immediately sell the shares they buy when they
exercise options. Under IRS rules that typically apply, those executives must pay ordinary income tax, as well as
payroll taxes, on the difference between the stock's value on the date the option was exercised and the option's strike
price. The highest federal marginal income tax rate is 35%.
But for a variety of reasons, including corporate rules that require top managers to own a
certain amount of stock, some executives don't sell immediately. Those who hold the shares for at least a year pay
a much lower capital-gains tax -- currently 15% -- on any profit between the time they exercise and when they eventually
dispose of the shares. That lower rate gives the executive an incentive to exercise the options at a relative low
point for the stock: The move reduces the amount of money that would be owed at the ordinary income tax rate, and
shifts the difference so it is potentially taxed at the much-lower capital gains rate.
- Reuters, courtesy of Yahoo! Finance: Guerrilla's
Siris sees end of American era. Excerpts: High
levels of debt, the war in Iraq and shifting demographics will bring about "the end of the American era," a
hedge fund manager said on Tuesday. Peter Siris, who runs U.S. hedge fund Guerrilla Capital Management and Hua-Mei
21st Century, a fund specialising in emerging Chinese companies, said young Americans should study Chinese because
fading U.S. influence in the world will require them to invest more money in foreign firms, especially in the Far
He said the U.S. housing market slowdown is not yet finished and will likely deteriorate further
as baby-boomers look to down-size. "I'm not very bullish about who is going to buy all those houses in East Hampton,
all those extra ski houses in Vail. The housing industry will get hit, and a lot of the baby boomers' net worth is
in housing," Siris said. "Consumers will feel poor."
Siris said the war in Iraq will likely impact the United States detrimentally for the next
Along with fading geopolitical influence, he said the U.S. economy will be challenged by a
continuing trend of outsourcing as information-based services are even easier to export across borders than manufactured
- BusinessWeek: Virtually
Addicted. A lawsuit against IBM is reviving debate over whether Web overuse
may be classified as an addiction. The answer will have big implications for business. By Catherine Holahan. Excerpts:
By his own admission, James Pacenza was spending too much time in Internet chat rooms, in some of them discussing
sex. He goes so far as to call his interest in inappropriate Web sites a form of addiction that stems from the
posttraumatic stress disorder he's suffered since returning from Vietnam. Whatever it's called, Pacenza's chat-room
habit cost him his job.
After 19 years at IBM's East Fishkill plant, Pacenza was fired in May, 2003, after a fellow
employee noticed discussion of a sex act on a chat room open on Pacenza's computer. IBM maintains that logging
onto the Web site was a violation of its business conduct guidelines and a misuse of company property—and that
it was well within its rights to terminate Pacenza's employment.
- Forbes, courtesy of MJM Financial: Retirement
Rip-Off [PDF]. By Neil Weinberg. Excerpts: True or
false: Your 401(k) plan is costing you more than answer that question you're like a lot of Americans.
Caterpillar had a nifty idea for managing its employees' 401(k) assets. Instead of bringing
in an outside investment firm, the bulldozer behemoth set up its own, the Preferred Group of Mutual Funds. Caterpillar
then funneled $1.3 billion into it, charging workers fees that were quite ample, if not out of line with averages
in the mutual fund industry: 1.12% annually for a value fund, 1.54% for an international growth fund and so on.
After a decade and a half of this arrangement Caterpillar this year decided to dismantle the
in-house shop; the assets will presumably wind up with a mainstream fund vendor. In September lawyers filed a
class action against Caterpillar, charging that the company had used Preferred to profit illegally from its employees'
retirement accounts, in violation of federal law requiring that 401(k) plans must solely benefit workers, not
their companies. A Caterpillar spokesman denies wrongdoing and declines further comment.
The Caterpillar suit is one of several filed recently accusing big corporations, including
Boeing, Kraft and International Paper, of failing to offer employees a fair shake in their 401(k) plans.
- Financial Times: EU
to link labour standards to trade deals. By Andrew Bounds in Brussels. Excerpts: Europe will try to improve working
conditions in the developing world by demanding that trade partners meet minimum labour standards in new bilateral
trade deals it is planning. Citing agreements with India, South Korea and east Asian states for which he will on
Wednesday seek negotiating authority, Peter Mandelson, trade commissioner, said: “I would like to see us make
a step-change in how we integrate decent work and the broader agenda of sustainable development into these bilateral
His move will be popular in France and southern European states most nervous of losing jobs
to low-wage economies. “The choice is not between fortress Europe and a race to the bottom,” he said at
a conference in Brussels, seeking to assuage their fear of globalisation. Such suggestions have already received a
cool response from India.
- Harvard Business Review: The
High Cost of Low Wages. By Wayne F. Cascio. Full excerpt: Wal-Mart’s
legendary obsession with cost containment shows up in countless ways, including aggressive control of employee
benefits and wages. Managing labor costs isn’t a crazy idea, of course. But stingy pay and benefits don’t
necessarily translate into lower costs in the long run.
Consider Costco and Wal-Mart’s Sam’s Club, which compete fiercely on low-price
merchandise. Among warehouse retailers, Costco—with 338 stores and 67,600 full-time employees in the United States—is
number one, accounting for about 50% of the market. Sam’s Club—with 551 stores and 110,200 employees in
the United States—is number two, with about 40% of the market.
Though the businesses are direct competitors and quite similar overall, a remarkable disparity
shows up in their wage and benefits structures. The average wage at Costco is $17 an hour. Wal-Mart does not break
out the pay of its Sam’s Club workers, but a full-time worker at Wal-Mart makes $10.11 an hour on average, and
a variety of sources suggest that Sam’s Club’s pay scale is similar to Wal-Mart’s. A 2005 New York
Times article by Steven Greenhouse reported that at $17 an hour, Costco’s average pay is 42% higher than Sam’s
Club’s ($9.86 an hour). Interviews that a colleague and I conducted with a dozen Sam’s Club employees
in San Francisco and Denver put the average hourly wage at about $10. And a 2004 BusinessWeek article by Stanley Holmes
and Wendy Zellner estimated Sam’s Club’s average hourly wage at $11.52.
On the benefits side, 82% of Costco employees have health-insurance coverage, compared with
less than half at Wal-Mart. And Costco workers pay just 8% of their health premiums, whereas Wal-Mart workers pay
33% of theirs. Ninety-one percent of Costco’s employees are covered by retirement plans, with the company contributing
an annual average of $1,330 per employee, while 64 percent of employees at Sam’s Club are covered, with the
company contributing an annual average of $747 per employee.
Costco’s practices are clearly more expensive, but they have an offsetting cost-containment
effect: Turnover is unusually low, at 17% overall and just 6% after one year’s employment. In contrast, turnover
at Wal-Mart is 44% a year—close to the industry average. In skilled and semi-skilled jobs, the fully loaded
cost of replacing a worker who leaves (excluding lost productivity) is typically 1.5 to 2.5 times the worker’s
annual salary. To be conservative, let’s assume that the total cost of replacing an hourly employee at Costco
or Sam’s Club is only 60% of his or her annual salary. If a Costco employee quits, the cost of replacing him
or her is therefore $21,216. If a Sam’s Club employee leaves, the cost is $12,617. At first glance, it may seem
that the low-wage approach at Sam’s Club would result in lower turnover costs. But if its turnover rate is the
same as Wal-Mart’s, Sam’s Club loses more than twice as many people as Costco does: 44% versus 17%. By
this calculation, the total annual cost to Costco of employee churn is $244 million, whereas the total annual cost
to Sam’s Club is $612 million. That’s $5,274 per Sam’s Club employee, versus $3,628 per Costco employee.
In return for its generous wages and benefits, Costco gets one of the most loyal and productive
workforces in all of retailing—and, probably not coincidentally, the lowest shrinkage (employee theft) figures
in the industry. While Sam’s Club and Costco generated $37 billion and $43 billion, respectively, in U.S. sales
last year, Costco did it with 38% fewer employees—admittedly, in part by selling to higher-income shoppers and
offering more high-end goods. As a result, Costco generated $21,805 in U.S. operating profit per hourly employee,
compared with $11,615 at Sam’s Club. Costco’s stable, productive workforce more than offsets its higher
These figures challenge the common assumption that labor rates equal labor costs. Costco’s
approach shows that when it comes to wages and benefits, a cost-leadership strategy need not be a race to the bottom.
- The CPA Journal: Social
Security Reform. Let’s Not Forget About the Middle Class. By Eric
Rothenburg. Excerpts: The May 2006 CPA Journal’s theme of Social Security reform was timely and relevant. It
addressed the Social Security insolvency problem, noted the issue of the fund’s being insolvent earlier than
most government economists had forecast, and discussed possible solutions. However, the articles were somewhat unbalanced.
They were skewed toward high-net-worth individuals and ignored the lower and middle classes.
First, one must understand why Social Security was created. As a direct result of the stock
market crash of 1929 and the subsequent collapse of the U.S. banking system, many people were left with nothing.
Their stock market investments, as well as any depository accounts they might have had, evaporated. The government
realized that many retired people were left penniless. Social Security was formed primarily for the people who
had not saved enough for retirement or who had seen their retirement “wealth” evaporate. Social Security
was not formed for the top 20% of people in the United States who earned income and held wealth. It was for the
other 80%. [...]
The Rise of ‘You’re on Your Own’ Government. Unfortunately,
many of our government officials today believe in the classical school of economics. If we look at the recent federal
tax cuts, we see capital gains and dividend reductions that basically cater to the upper class. We do not see an interest-income
deduction that would help middle- and lower-income Americans. In addition, more and more post-Keynesians, including
renowned economist Jared Bernstein, have suggested that government tax policy and Social Security policy essentially
say “you’re on your own” to the middle class. Remember, in the 1950s through the 1970s, it was the
middle class that made the United States an economic world power via productivity gains, consumption patterns, and
The supply-side theory that many government officials now follow will only cause larger income
gaps between upper- and lower-income groups. The middle class is quickly evaporating in the United States. (By middle
class, I refer to people in urban areas of the United States whose adjusted gross income is between $40,000 and $150,000.)
- India eNews: Indians may get social
security money on return from US. Excerpt: The US is considering
a pact with India to refund social security contributions by Indians on their return even if they had not worked
for a requisite number of years, a top official said Tuesday.
'We have this time very seriously discussed the implications of the totalisation agreement
with the Indian government,' said US Under-Secretary of Commerce for International Trade Franklin L. Lavin, who is
heading the largest-ever American business delegation to India.
- India eNews: Over 43,000 Indians got
H-1B visa in US fiscal 2006. Excerpt: A total of 43,167 H1-B visas were issued to Indians in the US fiscal year
2006 which ended on September 30. Stating this at a press conference here Friday, US consul general Peter Kaestner
said that this was part of the 127,000 temporary work visas that were granted during the same period. [...]
Overall, a total of 358,734 temporary visas were issued to Indians in US fiscal 2006, a 14
percent increase from the previous year, Kaestner said, adding that during the same period over 30,000 immigrant
visas were also granted to Indians. [...]
Kaestner said that demand for H-1B visas is expected to increase in the years to come. IBM
alone, he said, is planning to hire 50,000 IT professionals in the next two years. 'And we expect one-third of these
to come from India,' he said.
Asked whether there was any plan to increase the H-1B visa ceiling from the current figure
of 65,000 per year, he said, 'The US administration wants the H-1B visa ceiling to be increased. We hope that the
next Congress will do it.'
- CNET News: 100 years of
Grace Hopper. By Colin Barker. Excerpts: For most people who work in IT,
the programming language COBOL is as dead as the dodo. Yet Grace Hopper, the woman credited with establishing COBOL
(Common Business-Oriented Language) as the language of business, would be pleased to know that 100 years after
her birth, the language still underpins many applications that keep modern businesses going.
This Saturday is the centennial of Grace Hopper, who was born on December 9, 1906. Often referred
to as "the mother of COBOL," her contribution to the theory and practice of programming is commonly appreciated
as enormous. She is credited, among other achievements, with being the first person to develop a compiled program
in an age when computers worked by running programs that were interpreted one line at a time.
- Associated Press, courtesy of Forbes: Disk
Drive Pioneer Al Shugart Dies. By May Wong. Excerpts:
Alan Shugart, the co-founder of hard drive maker Seagate Technology LLC, has died, the company said Wednesday.
He was 76. Shugart helped pioneer the multibillion dollar hard drive industry, in which Seagate now holds the leading
market position. He helped start the company in 1979 and served as its chief executive officer until 1998.
Born in Los Angeles, Shugart attended the University of Redlands where he earned a degree
in engineering physics. He joined IBM Corp. in 1951 and was among the original team of
developers there who built the first computer disk drive 50 years ago.
|News and Opinion Concerning Health Savings Accounts, Medical Costs and
Health Care Reform
- Families USA: How HSAs
Can Drain Your Wallet and Harm Your Health [PDF]. Excerpts: HSAs and high-deductible
health plans represent a tremendous gamble for health care consumers: While such plans may benefit people
who remain healthy, people who become ill often have a hard time paying for their care. People may forgo
care due to cost, only to find that they have a serious condition that would have improved with earlier
treatment. Even if people save a significant amount of money in their HSAs, they may not have sufficient
funds to pay for care when illness strikes. And lower-paid workers have less ability to save money in HSAs
than higher-paid workers.
Although HSAs and high-deductible plans are often marketed as ways to give consumers “control” over
their health care budgets, people who are sick actually have little control over their health care costs. What’s
more, after they meet their plans’ deductibles, they often face high out-of-pocket expenses for services
that are not covered by their plans and for out-of-network care that, especially in an emergency, may be unavoidable.
- Washington Post editorial:
and Health Care. Two fixes for middle-class insecurity.
Excerpts: The rise of inequality over the past generation calls for a rethinking of tax and education policies,
as earlier editorials in this series have said. But it also calls for reform of the health system. Because
of a historical accident -- wage controls during World War II drove employers to compensate workers with
perks such as medical insurance -- the health system is tied to corporations. This exacerbates inequality.
In most countries, rising medical costs are shouldered by taxpayers. Because tax systems
are progressive, this means that the extra cost is borne by those who can afford it. But in the United States,
where health spending per person has doubled since 1975 (after adjusting for inflation), the non-poor and non-elderly
are expected to pay their own way. This is most clearly the case for Americans who lack a company health plan
and must pay directly out of pocket. It's increasingly the case for Americans who have corporate coverage that
comes with high deductibles and co-payments. But even workers who have generous, all-you-can-eat health plans
end up paying indirectly, since their wages are held down to offset the cost of the plans.
This individualistic system goes a long way toward explaining the "middle-class
squeeze" so frequently invoked on the campaign trail. Workers' total compensation may be rising, but health
benefits gobble up an increasing share of that, so wages lag. Equally, out-of-pocket medical expenses
are believed to cause at least 425,000 bankruptcies annually, and one in six working-age adults carries
medical debt. [...]
The health system is a huge problem in its own right, irrespective of inequality. The
United States spends almost twice as large a share of its economy on health care as do other rich countries,
yet it still has lower life expectancy; it still has 47 million uninsured; and future health costs threaten crippling
budget deficits. But the rise of inequality provides an extra reason to tackle the health challenge. Struggles
with medical bills and fears of losing coverage are at the root of middle-class anxiety, and that anxiety creates
pressure for misguided populist policies that would spread the dysfunction of the health system to the broader
economy. So long as a third of the workforce lives in fear of losing access to doctors, nobody should expect
the nation to believe that a rising tide is lifting all boats.
- Washington Post: Senator
Wants Universal Health Care Plan. By Matthew Daly. Excerpts:
Several business and labor leaders on Wednesday hailed a proposal to provide health care coverage to all
Americans through a pool of private insurance plans. A dozen years after Congress rejected a Clinton administration
plan for universal health care, Oregon Sen. Ron Wyden offered a plan he said would provide affordable,
private health care coverage for all Americans, except those covered through Medicare or the military.
"Employer-based coverage is melting away like a Popsicle on the sidewalk in August," Wyden
said. Wyden, a Democrat and a member of the Senate Finance health care subcommittee, said his plan would "guarantee
health coverage for every American that is at least as good as members of Congress receive and can never be taken
- New York Times: Last-Minute
Inserts Offer Benefits in Medicare Bill. By Robert Pear. Excerpts: By slipping four sentences into a
big bill passed last week, Speaker J. Dennis Hastert secured a major change in Medicare policy avidly sought
by a few health insurers, in particular a multinational company with headquarters in his home state, Illinois.
In the final hours of the 109th Congress, the Senate Democratic leader, Harry Reid of Nevada,
also got special treatment for a hospice in his state. The bill did not name the hospice, but specified the Medicare
provider number for the intended beneficiary, the Nathan Adelson Hospice in rural Pahrump, Nev.
Representative Bill Thomas, Republican of California, inserted a provision earmarking $40
million for a valley fever vaccine sought by his constituents, while the Senate Republican leader, Bill Frist of
Tennessee, obtained tens of millions of dollars for hospitals in his state.
These examples illustrate how power is exercised in the final, chaotic hours before Congress
adjourns. Obscure provisions of interest to just a few lawmakers were quietly stuffed into a grab bag of legislation,
with no indication of their parentage or purpose.
| New on the Alliance@IBM
- Scrooge is alive and well at IBM. Full excerpt: IBM employees are
telling the Alliance that Holiday parties and Spirit events are being cancelled at the last minute at many
IBM locations, except corporate headquarters.
According to employees, Fishkill site management bought 7000 lunches and ended up having
the vendor donate the food to local charities.
Events have also been cancelled in Poughkeepsie Charlotte and Boulder. Burlington decided
to reschedule the holiday party but now employees have to pay for it.
In IGS other last minute cost cutting is taking place in Education and Thanks awards.
A note from an IBMer puts it this way, “If the times are tough I don’t think
anyone would have a problem with cutting these expenses if it helps save jobs. But what takes this beyond belief
is that Corporate HR made the decision to keep holiday parties at 3 headquarters buildings in Armonk and Somers
at an expense of over $100k. Does this mean that the largely executive population deserves this little perk but
the peons at other sites do not?"
- From the Job Cuts Status & Comments
- Comments 12/11/06: I am a recent statistic of an IBM resource action in STG, Hopewell Jct. I used
to laugh at the whole Alliance thing, but now am thinking of joining. The nonsense at IBM must stop,
with resource actions, outsourcing, etc, we must do something. It might start with going to local county
executives, John Hall, Elliot Spitzer, Clinton to name a few. I have already started writing to them,
but maybe we need more forceful actions...a rally, a town meeting, whatever. What really pisses me
off about the whole thing is that I was only given 30 days notice. Then to be told by IBM managers
for jobs I applied for, that"We cannot hire anyone". Bulls***!!!
And the icing on the cake...you
ready for this? I was 30 days shy of being able to bridge to retirement...30 days!!! IBM new this,
and planned this so I would have to wait 4 years for my pension, if there is anything left. That's
my story. I have been reading all the notes here, and I knew I was not alone. Oh, another fallacy of
IBM is that cutting people makes them more productive. No it doesn't! Where do they come off with this
kind of thinking? More later..... -Jeff-
- Comments 12/14/06: Around the SDC We(r)st, all I hear is how next year's IGA budgets are
ridiculous and more "challenges" keep coming. This can only mean one thing for next year. Yep,
they are oiling up the turnstiles! Sammy needs a new home in the Hamptons it seems. BTW, the GR DBA
we got is a complete failure. Doesn't know DBA or English. You call that a strategy? -Anonymous-
- Comments 12/14/06: what i heard about the ricoh transition was that it was scheduled
for 12/15/06, but had been pushed back for some reason (unknown). i'm sure that the good folks in management
would like to see this done before the holidays, since peoples spirits are high, and there's less chance
for an "incident." sort of like the movie "office space." -gadfly-
- From the General Visitor's Comment
- Comment 12/11/06: For anyone part of the overtime lawsuit that was recently won. I called the lawyers
involved last week to make sure I was on the list and she verified that I was. She also indicated in
February or March I would be receiving a form in the mail to fill out concerning the case. Then the
payout for lost overtime would be calculated and distributed this summer sometime. If you are wondering
if your part of the case you can call 415-956-1000 x3393. Good luck to all involved. -Anonymous-
- Comment 12/14/06: I worked for IBM Endicott a few years back, and IBM sold us off, near the
holidays to EIT. EIT is a sinking ship and I left that for a very small company. I started with this little
company in November.
The week before Christmas i received my weekly check in the mail. I open it and found
2 regular pay checks! Being from IBM, I assumed the home office made a mistake and contacted them
about accidentally get two weeks pay... I was told, "That's not a mistake...that's your Christmas bonus
check! Were glad to have you with us."
Needless to say I was happy to see the spirit of Christmas still did exist! I'm glad
to be done with big, cheap IBM. There is many smaller companies out there that still treat their employees like
humans, not just cogs in a machine...
IBM and it's greedy execs need to change their ways, their deeds on earth could catch
up with them! There was a time at IBM that the spirit of Christmas was alive and those were wonderful
times, with happy employees and managers...Cheer was all around. Profits were high and loyal employees
eager to start a new year at IBM. Today I'm sure this is not the case at IBM. -IBMChristmasGhost-
- Comment 12/15/06: Spare no holiday party expense for Armonk and Somers, eh? That these
sites are treated special and got a holiday party when other sites had theirs cancelled is truly despicable.
Getting coal in their stocking would be too good for the IBM executives that are at these sites! They
all deserve to be left out in the cold for the New Year with actions like this. -Santa_is_watching-
- Comment 12/15/06: Here in Ireland people are afraid to join a union.They see more
and more multiflex being brought in and less full time staff. You see IBM are doing this because that
way they have control without the worry of IBMers joining unions; and they can get rid of staff knowing
they are still covered by sub contracted staff. They win we lose. -Anonymous-
- From the Pension
- Comment 12/11/06: I heard that when Russian law enforcement raided IBM offices over pension theft,
that the raid was broadcast live on TV... IBM had better watch out, cheating workers outside the
USA may not be given a blind eye, like here in the USA. Humm, I wonder what workers in China, South
America, or India will do, when IBM cheats them in some way??? I think that,IBM execs there better
have a good escape plan and security best be high at shareholder meetings. IBM cheating the workers
around the world, may not be a smart thing to to do. -Anonymous-
- IBM employees on employee
- Comment 12/14/06: Salary = 93000; Band Level = 7; Job Title = Sr IT specialist; Years Service = 8;
Hours/Week = 50 to 55; Your Gender = Male; Div Name = SO; Location = USA; Message = What a waste of
8 years in IBM. Goldman
Sachs is handing out big, fat holiday gifts to its employees this year, with an average 25 percent
hike in pay per employee, resulting in a record-high compensation package. Goldman's $16.4 billion
total compensation package was mentioned as part of this week's fourth-quarter report, in which the
firm disclosed a surge in quarterly profit. The package will be divvied among 26,467 employees, resulting
in an average annual compensation, with pay and benefits, of $621,906 per worker. -JealousFreak-
- Comment 12/14/06: Salary = 50k; Band Level = contractor; Job Title = Software Engineer;
Years Service = 2; Hours/Week = 40; Your Gender = Male; Location = RTP; Message = 10 yrs experience
before joining -Anonymous-
- Comment 12/14/06: To the person talking about Goldman Sachs, this is from the Daily
News --"The merry moneymakers at Goldman Sachs will end the year with $9.5 billion in profits,
and they'll divide $16 billion in bonuses - about $622,000 for each employee. We do not begrudge these
conquerors of capitalism, but we note two points.
First: Gov. Pataki and Mayor Bloomberg lavished Goldman
with subsidies so it would build a headquarters near Ground Zero. The giveaway grows more obscene as
Goldman rakes in ever more money.
Second: Goldman's numbers offer a vivid example of the growing gap
between the rich and everyone else in America. In the city, 1.5 million people live below the poverty
line of $16,000 a year for a single parent with two kids. Goldman's bonus pool could raise each of
their incomes by more than $10,000. Something is wrong when one firm's bonus pool is big enough to
end poverty in America's largest city." -Anonymous-
|Vault Message Board Posts
- "Relativity" by "yeahsure". Full excerpt: I see a LOT of lack of perspective here. Everyone is complaining
against a magical place that USED to exist. It sounds like all the whiners at ACN after we went public. Get over
it, that place doesn't exist.
Compare it with TODAY. These "perks" (not the right word) are better than anywhere
I have been. Matching, insurance, discounts 70% are better than the other consultancies I have been with.
The 30% that are worse? Per diems, raises (although I am taking your word for it, as I
haven't been here long enough) and vacation. It was a cool benefit to roll over vacation, and when you quit, you
got a decent bonus, that sucks here...
So what's the bottom line? I think I came out ahead, but just barely, but it's no where
near as bad as everyone is portraying.
Full excerpt: Maybe you need to broaden yours. The point of many in this board is that why settle for IBM
when you can get a lot more elsewhere (consulting or otherwise). We're not comparing the current IBM to
a magical place that used to exist. We're comparing the current IBM to a very REAL place that exists ELSEWHERE.
For example, I left IBM (and consulting) this year but I'm doing exactly the same PM job
I had with IBM. I make more money, just got a raise, and I'm entitled to a real bonus. I get 22 vacations days
(aside from 7 additional days off since we don't work during the holidays). On average, I work 45 hours a week.
I get 100% tuition reimbursement, Retirement matching 2 for 1 ... and so on and so forth. Now those are real perks.
And I'm sure there are many other companies out there aside from mine that offer the same.
case you missed it before" by "Wok N Off". Full excerpt: Here is why I stay (at IBM):
- 10. Grabbing my ankles, bending over, and yelling, "Thank you sir, may I have another" is
my favorite activity.
- #9. Fulfilling career development opportunities to manage offshore resources in my native
language 'round the clock abound.
- #8. My people manager cares about me as a human being...really.
I love the travel policy, which is flexible and affords me the most luxurious travel accommodations,
be it hotel, auto, and daily living allowances. I appreciate being able to stay at five star hotels,
renting a lincoln, eating surf-n-turf at every meal.
- #6. I am often reminded by caring executives that I should
be grateful to have a job here at the greatest technology company that ever existed.
- #5. I enjoy the
freedom and opportunity to innovate, share my creativity, and have my ideas pilfered by any of several
- #4. Culture, culture, culture!!! My masochistic tendencies are a perfect fit for my sadomasochistic
colleagues, who are diverse, tolerant, and welcoming, thus assuring an appropriate fit for all, whatever
your preference (i.e., sado, maso, or anywhere in between...or at the extremes come to think of it).
We even reimburse for the leather accessories!!!
- #3. I am assured of work/life balance cause that's what the
- #2. I really enjoy the overhead of IDPs, PBCs, PAs, PDFAs, PDs, PCBs, LSDs, GEDs - did
I miss any?
- and the number one reason I spent more than a few weeks at IBM... the money, the fame, and
**Disclaimer** - Any statements made herein and believed are not the responsibility of
the author, but rather the idiot that took such author seriously. Author understands that there are many who need
this disclaimer and will be patient with such folks, as he will be with the first smart-a** reply recognizing
that there are 3 components in #1, but are ultimately all part of the same package.
final words before my exit from IBM"
by "ubisububi". Full excerpt: Dose, past, present
and future IBM'ers:
I wish you much success and upward mobility, most likely with another company. I recommend
heeding the advice on this message board. I was skeptical of the veracity of the postings and had to see for myself.
Let's just say that I learned the truth the hard way. I'll miss the IDP's, PBC's, PA's, PDFA's, FSA's, MTF's,
and ABC's of IBM.
Dose, thank you again for your insight. I'm heading over to BAH as a Level III. They matched
my salary here, but to me that's the least of it. I'm looking forward to joining a true management consulting
we making life miserable for you?" by "civilliberty". Excerpt: I've worked for about
20 years. I have never worked at a worse company than IBM. They have deliberately deceptive remuneration
policies - they basically breach the trust of their employees ALL the time. That's why so many people are
pissed off. And their appraisal system is out of this world for manipulating outcomes.
the numbers guy" by "Dose of reality".
Full excerpt: Wonder - I agree. The tit for tat
on this is a bit tedious. The key point is the general theme that things have been taken away with no consideration
for the economics, or impact on staff.
More importantly, having the cell phone reimbursement of $600 is the equivalent of a $900
reduction in salary due to the tax effect. This is why this type of change is so stupid. It only costs
IBM a theoretical 65 cents on the dollar to get you the equivalent in net compensation. Of course, the IBM effective
tax rate is a lot lower than the nominal corporate rate, but let's not bring up that rather unpleasant "tax
planning/tax minimization" topic. Executives can actually go to jail for some of that. Then again.....might
not be such a bad idea!
- Last week's highlights included a three-part post by a recent new hire titled ""A
year in the life of a new hire" by "band6er". This post by "pwned", titled "talk
to people who are jumping ship", comments on "band6er's" messages. Full excerpt: Hi band6er,
thank you so much for articulating a year in the life of an undergrad at Big Blue. I'm in the same boat as you;
came in as an enthusiastic and fresh graduate, now looking for a way out. I'm only 23 years old but feel so jaded
and used up. I've talked to friends who work at other companies and none of them have been treated the way I
have, so it's not just a case of me being a whiny young kid. This company really does treat its people like crap.
My advice to you is to attend all the farewell parties that you can. You mentioned the
5 types of team leader that you may be assigned - this type is the one that could actually be very helpful to you:
"4. Someone who is currently interviewing for other jobs or leaving any day now
and doesn't give a crap about the project or you."
The people who are leaving are often people who have been genuinely screwed over by this
company. At their farewell drinks, they're often very happy and generous. They'll even get into long, serious
discussions with lowly grads such as myself and provide great career advice :) They give out useful info such
as dishing out dirt on which of the PMs/team leads are extra-incompetent both technically and socially(seriously,
the lack of people skills of many managers in this company is at an insane level).
I've even gotten a couple of job offers at their new companies at people's farewell drinks.
And they're serious job offers, not "I was so drunk that I was offering everybody the world at my farewell
drinks" kind of offers. They've rung me up a few weeks at work after they left and asked me to forward them
my CV. The jobs pay a lot more than my pitiful Big Blue salary and for one of the jobs, the work hours are 40
to 45 hours per week with no weekends(I've lost count of the unpaid weekends I've given to Big Blue). I'm currently
in the process of checking out how the roles compare to what's out there in the job market.
And although you say that you're not a good liar, there's really no other choice than
to learn how to become a good liar to make the most out of your experience. Writing up BS isn't something that
comes naturally to me, so I've asked for tips from co-workers who have the amazing ability to pad out their PDFs/PAs/PBCs/CVs
with so much hot air.
Again, these co-workers who are generous enough to share their time and information are
usually the jaded cynics who are about to move on. I've found that the people who resign or leave are
treated like lepers by their managers and colleagues who still want to cling to the company like it's the only
place that will employ them. Of the RMs, PMs and team leads that I've had that fit this "I'm staying here
to climb the Blue ladder" mindset, all have given me very useless advice and support. Honestly, sometimes
I feel like they're just reading off one of the executives' "we did well but didn't meet our targets" emails
that we get spammed with. They never reveal anything of their own way on how they succeeded because they're so
afraid you'll steal their roles out from under them. I've seen fellow grads being denied a rating of 1 because
of jealous managers and team leaders, i.e. the people who have spent the better part of a decade just to get to
a band 8 and aren't too happy to see people getting promoted faster than they did when they first came in.
- "also..." by "pwned".
Full excerpt: The most important thing to do is to take some time to really
figure out what you want from life. I thought it was a really tedious motivational speaker cliche, but
didn't realize how miserable I was because I was just drifting around, letting whoever was my current team lead
or PM dictate almost every single hour of my week(i.e. doing unpaid overtime for b!+chwork). I had no long-term
plan, all I had was "this sucks, I don't want to do this" instead of having a clear view of what kind
of role I wanted to do.
So make whatever work that's being assigned to you a distant second priority to navel-gazing
and figuring out what you want. 18 months ago, when I was assigned to my first project, I was overenthusiastic
and did the work given to me to the best of my ability and even volunteered for more work. I even tried to network
and schmooze and do extra-curricular activities like helping to organize work drinks/team breakfasts and talking
up how wonderful this place is to the newer recruits at the grad network functions. And like you said, it didn't
matter because I was given a rating of 2 anyway!
Now I just do the bare minimum, and spend the rest of my time pretending to be super-busy
when I'm navel-gazing/reading news sites/sitting at the office kitchen flicking through job ads in the paper,
and guess what? I still got a rating of 2!
Also a big thank you to Dose of reality for helping me and so many others with our wake-up
calls! He's right - this place really does give you bad habits and mess with your outlook on life. Good luck with
your exit plan, band6er!
- "Congratulations!" by "Dose
of reality". Full excerpt: Thanks for posting, and for the excellent tips and advice regarding job search.
I am sure that many will find them very useful.
Sounds like you have turned the corner, and soon the page, on your career. The fact
that you can still articulate your IBM experience the way you have tells me that you haven't become jaded
at all, but instead have learned an important lesson about career and company choices. Better now than in
I don't think the idiots running this place will ever come to understand the implications
of their grading/curving/compensation policies. You have acted quite rationally. The only suggestion that
I would make for the next recruit coming in is that they realize what it is they won't get for their efforts,
and just get ahead of the curve. Do the bare minimum from day one, and spend all your time developing skills
on IBM's dime - not for us or our clients, but for yourself.
Or better yet - don't come here at all! Best of luck to you!