And so, accidentally, the modern American health and pension system was born.
The system, in which families received social protections through their employers, worked well for decades. But now it's coming apart at the seams. The proportion of people insured is falling. Rising health care costs burden employers. Workers can't chase opportunities because they can't bring their health insurance packages with them.
As Jason Bordoff points out in the current issue of Democracy, the old employer-based social contract is eroding, and the central domestic policy debate of our time is over how to replace it.
In today's America, only one of every five private workers has a secure pension. Increasingly, businesses have frozen or abandoned "defined benefit" plans that guarantee a certain level of retirement benefits to workers. Employers have moved instead toward plans that set specific and limited levels of contributions by employees and, in some cases, by employers. For workers, these "defined contribution" plans increase risk and diminish retirement security. The average 401(k) savings for workers age 55 to 64 is a mere $60,000, enough for a monthly retirement annuity of just $400. [...]
Meanwhile, as they have slashed workers' pensions, corporate chief executives have been fattening their own.
IBM froze its pension plan for workers in January 2006. But CEO Samuel Palmisano will receive an annual pension of $4 million - $75,000 a week - when he retires at age 65. (Emphasis added by editor of www.ibmemployee.com). Meanwhile, over at AT&T, former CEO David Dorman received a $2.1 million annual pension, or 60 percent of his salary, after only five years with the company. In stark contrast, AT&T accountant Ray Colotti received an annual pension of only $28,000, or 33 percent of his salary, after 33 years on the job.
In the ditch, that’s where. It’s been shoved there by callous and selfish profit-seekers rushing to get cheap labor in China and India, taking America’s middle-class jobs with them. It’s been shoved there, too, by Bush’s anti-government ideologues, who’ve been working feverishly to dismantle the middle-class framework of labor laws, health care, and pension protection. It’s been shoved there, as well, by a weak-kneed Democratic leadership that has lost touch with its populist roots, and by a conglomerate media establishment that has abandoned any connection to – much less concern for – working stiffs.
The economic and political elites crow that the U.S. economy continues to grow phenomenally – though they seem unaware that this growth is based on low incomes and low prospects for the great majority of Americans, while the benefits of growth are being piped to the very wealthiest families. Middle-class incomes continue to fall (even with families working three or four jobs) and poverty continues to rise. Yet the elites stride blithely by, oblivious to the fact that America is breaking apart beneath their well-shod feet.
When told that polls show that Americans are now worried about inflation, a clueless George W said, “They cite inflation?” You see, he’s told that inflation is up only 2.7 percent – but he’s totally ignorant of the fact that milk prices are up 13 percent in the past year, oranges 20 percent, dried beans 11 percent, and both bread and chicken up 10 percent. That’s nothing for the elites, but these are staples for the real America that the elites no longer see or hear.
A middle class exists only if workaday Americans demand it, fight for it, and build it. That’s what we must do between this Labor Day and next year’s – when we’ll be in the thick of a presidential race.
What did surprise many in the tech sector, though, was the serious pushback by lawmakers on H-1B visas. An increase in the specialized-occupation temporary worker visas had been a top priority for the technology sector, which claims there are not enough qualified U.S. workers to fill their advance-degree positions. [...]
"What many of us have come to understand is that these H-1B visas are not being used to supplement the American work force where we have shortages but, rather, H1-B visas are being used to replace American workers with lower-cost foreign workers," Sen. Bernie Sanders (I-Vt.) said in his May 25 floor comments. [...]
"To win favor in China, Microsoft has pledged to spend more than $750 million on cooperative research, technology for schools and other investments," Sanders said. "If Microsoft and other corporations have billions of dollars to invest in technology…these same companies should have enough money to provide scholarships for middle-class kids in the United States of America."
Over all, employment contracted by 4,000 jobs in August, the first monthly decline in four years. The job-creation tallies for June and July were also revised downward, bringing average monthly job growth for the past three months to less than a third of what’s needed simply to absorb new people entering the job market. Suddenly, analysts are talking about a possible recession. And that’s not good news for anybody. [...]
If there is any good news here it is that hardship may be setting the stage — in this pre-election year — for a national discussion about what needs to be done to fix the economy and help the increasingly squeezed middle class.
The Republicans will almost certainly renew their calls for tax cuts on investments and multimillion-dollar estates, arguing that such cuts would pump up the economy. But lower taxes for the rich would not benefit the middle class and would only worsen the budget deficit. Republicans may also continue to champion financial deregulation as a way to juice the economy. But that led to the housing bubble — and the current mortgage mess.
Democrats, or some Republicans with a change of heart, must articulate — and Americans must demand — a program for ensuring that the middle class gets a bigger share of the economy’s spoils than it has received during the Bush era, when gains have largely been funneled to the richest Americans.
To have a fairer and more inclusive economy, workers need true mobility, which requires health care reform. And they need to see a reversal in the country’s ever-deepening inequality, which could come about through more progressive income taxes, better public education and more help for workers whose jobs are displaced by globalization.
Yet there may be early glimmers of change. The oldest baby boomers are entering their 60s, raising the prospect of a vast wave of retirements. The post-World War II baby boom, moreover, was followed by a smaller "baby bust" generation. As a result, some employers are worried that they will lose too many people -- and are pioneering policies to make the workplace more friendly to older employees. [...]
Some have predicted that mass retirements by baby boomers could trigger a disruptive shortage of workers in the coming years, depriving the U.S. economy of millions of needed employees and an immeasurable wealth of skills. But some economists say the concerns are overblown. Employers can move jobs overseas, they point out. Companies can invest in labor-saving technologies. They can restructure jobs. And, economists argue, they can pay more money to attract the workers they require.
Rappresentanza Sindacale Unitaria IBM Vimercate (RSU), has, announced online (naturally) that sometime this month its 9,000 members, employees of IBM, will mount a job action, an information picket designed to inform the public (but especially IBM clients) about the company's employment policies — online.
They won't be refusing to touch their computers. This isn't really a strike. To the contrary, union members will probably be spending more time at their keyboards than ever, when the action starts. What the union is organizing is a picket of IBM's "island" on Second Life, the online alternate world
No matter how many stories crop up in which CIOs confess "outsourcing didn't work for me," the trend toward the commoditizing of IT and development work, not to mention sending IT overseas to save money, shows little sign of letting up. Will their jobs be next? IT workers worry everyday. Technology company CEOs predicted that their use of offshore services would increase over the next several years, according to a 2007 CEO Survey released by Deloitte, a Swiss company, on May 1. [...]
If the dot-com bust was the first nail in the IT work force's coffin and offshore outsourcing the second, the decline in student enrollments in computer science programs and a dearth of qualified candidates may just be the third. Worse yet, many IT professionals admit that they don't feel comfortable ushering their own children down a career path so fraught with land mines.
Recruiters facing difficulties finding the right IT candidate for a job bemoan the fact that after the dot-com boom parents told their kids not to go into technology and haven't changed their message since. Yet the issue runs deeper than parents disregarding that IT may be back and healthier than ever. "The shine is off the apple," one told eWEEK. "Outsourcing… H-1Bs… the commoditization of the IT workforce. Other career paths seem a safer bet."
Indeed, according to the study, compiled jointly by the Institute for Policy Studies and United for a Fair Economy, corporate CEOs "collected as much money from one day on the job as average workers made over the entire year." [...]
The 14th annual survey showed that CEOs at the biggest U.S. companies averaged $10.8 million in pay and associated compensation, including stock options, based on data from 386 of the Fortune 500 companies. That's more than 364 times the pay of the average American worker. Meanwhile, the survey says, the top 20 private equity and hedge fund managers, who work on a fee-based reward system linked to their funds under management, were paid an average of $675.5 million.
That is equivalent to 22,255 times the annual pay of an average American worker--or more in roughly 10 minutes than the average worker makes in a year, the study says. (In this survey, the "average" worker's salary is around $30,000 a year.)
Meanwhile, the new federal minimum wage, $5.85 an hour, is, in real terms, 7% below where the minimum wage stood 10 years ago, the survey says. It also notes that CEO pay and compensation over that same decade has increased by about 45%. [...]
And the discrepancy between the have-lots and the have-nots continued in terms of retirement planning, according to the survey. CEOs at major American corporations saw the value of their potential pensions grow by an average of $1.3 million last year. By contrast, just over half of all American households, where the head of the household is between 45 and 54, had a retirement account in 2004, the last year for which figures were available.
And now, a bit of bad news for those same workers: You're not getting credit for that productivity. Instead, top executives at your companies are reaping the rewards in the form of increasingly fat paydays.
Here's a quick look at four ways in which workers are being shortchanged by their bosses:
Why the gap? Apologists for highly paid CEOs argue they are merely getting the pay they deserve for their talents. Their pay is determined freely by the laws of supply and demand in the marketplace. Right?
There might be more to it than that. For one thing, U.S. execs make three times as much as their European counterparts, even though these European bosses manage companies that are 40% bigger. (The top 20 highest-paid execs at U.S. public companies made $36.4 million on average last year, while the same group in Europe got just $12.5 million on average.)
Ballmer decided he needed a new human resources chief, someone to help improve the mood. Rather than promoting an HR professional or looking outside, he turned to perhaps the most unlikely candidate on his staff, a veteran product manager named Lisa Brummel.
No one was more stunned than Brummel. The 47-year-old executive is about as un-HR as you can imagine. She shuns business books (her taste runs to historical nonfiction); she takes the bus to work (using the 20-minute ride to zone out); and her wardrobe (shorts and sneakers) is in flagrant violation of the HR fashion police. [...]
Over the next two years, Brummel tore up Microsoft's HR playbook. In the process, she has begun to sculpt a new HR that is junking a one-size-fits-all approach for a system tailored to the needs of individual employees. In Brummel's HR, her people are supposed to act less like cops and more like concierges.
With Microsoft's dormant stock, Brummel can do only so much to boost morale. But her approach seems to be resonating. She has made the annual performance review more equitable, introduced new perks, including a service that sends doctors to employees' homes in cases of emergency, and won plaudits for making HR—once widely considered a shadowy politburo—more transparent and consultative. "From the beginning," says Julie Madhusoodanan, a lead software tester in the Windows division, "Lisa was all about 'We're here to serve you.' [...]
They were fed up with the nickel-and- diming on creature comforts. How could a company headquartered near Seattle, home of all things barista, serve industrial-grade sludge in do-it-yourself makers that belonged in a mess hall? "The coffee was just really, really bad," says corporate Vice-President Chris Capossela. (Editor's note: Coffee? Heck, IBM pulled its free water dispensers out of its facilities!) [...]
Nothing got people buzzing more than Brummel's overhaul of the performance review. Employees dreaded Microsoft's ranking system for all the usual reasons: It pitted co-workers against one another at a time when the company needed to be more collaborative; it was unfair; it made frank evaluations less likely.
Here Brummel faced a political third rail. Ballmer was the godfather of the forced curve, believing that differentiation—giving a few people the top grade, most a pass, and laggards failing marks—was the key to Microsoft's we-take-the-hills culture. And when Brummel broached ditching the curve, it was his turn to say "No way." More yelling ensued as they darted in and out of each other's adjacent offices.
Microsoft has always had two rankings: one measuring annual performance and one that captures long-term potential. A forced curve applied to both. To get Ballmer on board, Brummel created a new system that preserved the positive aspects—grades and the chance for stars to win bigger paychecks—while canceling out the negatives. No longer would the first ranking—employee's yearly performance—be subject to the curve. Raises and bonuses would be tied to that grade. Bosses would have freedom to pass out whatever grades they wanted, making less likely the excuse so many of us have heard: "I really wanted to give you a 4. But I had the curve, so I had to give you a 3." [...]
So how's she doing so far? Attrition is down from 10% in 2005 to 8.3%. The new performance rating system has not yet led to grade inflation. And employees, who give Brummel rock-star positive reviews, describe a more buoyant mood. Then again, her InsideMS blog, intended as a marketplace of ideas, quickly turned into a rant-fest. Some employees say Microsoft needs to do a better job of recruiting internally. And, of course, Brummel can't do anything about the stock price.
EMBARQ spokesman Tom Matthews defended the action by saying it would save the company $30 million a year starting in 2008 and would remove $300 million in long-term liability from its balance sheet. He also said that only 19 percent of privately owned companies still provide health insurance to retirees.
Some 8 percent of the Medicare drug beneficiaries, for example, spent at least $300 a month on their medications, compared with only 5 percent for older Americans covered by employer plans or the Department of Veterans Affairs. This is probably because employer plans typically don’t have a gap in coverage comparable to the notorious “doughnut hole” in Medicare coverage, and because veterans’ coverage has low cost-sharing requirements.
The unfortunate consequence for patient health is that Medicare enrollees were much more likely to postpone medications because of the cost. Indeed, fully 20 percent of all enrollees in a Medicare drug plan reported that they had not filled, or had delayed filling, a prescription because of costs. That was a much higher rate than reported by older Americans in employer (8 percent) or veterans’ (12 percent) plans.
The idea is to charge consumers as much as $15,000 a year for better service than they can get through a conventional medical practice. Traditional primary-care physicians tend to serve 2,500 to 3,000 patients, and often the time they can spend with any one is limited by insurance as well as workload. Concierge doctors, in contrast, keep patient loads down to under 600. Most cut their ties to Medicaid and insurance plans. They promise their patients on-time appointments, 24/7 access, and medical tests that the physician, rather than the insurance company, deems necessary. It is medical care when, where, and from whom you want it.
One reason for the trend is that employees are struggling to pay for their share of employer-sponsored health care, says Helen Darling, president of the National Business Group on Health, a nonprofit group that represents large employers.
Heart experts and public-health officials have long been stymied in efforts to get people to pick up the phone instead of their car keys when experiencing symptoms such as chest pain, sweating and shortness of breath. Indeed, many people fail to take any immediate action, not wanting to bother anyone in case it's a false alarm.
Currently, 47 million Americans have no health insurance and the number of under-insured is even higher. Health care costs are soaring. We also pay, by far, the highest prices in the world for prescription drugs. As bad as our general health care system is, the dental care situation may even be worse.
In the United States today we spend over $7,100 per person on health care while other countries, which provide health care to all their people, spend considerably less. And what do we get for this huge expenditure? Well, we rank 42nd in the world in terms of longevity, 41st in the world in terms of infant mortality and near the bottom of the list in terms of disease prevention. According to a number of studies, we also rank low in terms of patient satisfaction. In the midst of all of this, insurance companies and drug companies make out like bandits.
Don't expect IBM to be forthcoming with paying you for vacation earned but not taken when you quit. They might challenge you on it so have your CLAIM and/or TOTALS reports as some proof. Who can trust IBM anymore? They already stole our pension, dumb down our pay, cut our benefits, give our jobs to paid slave labor abroad, and overall treat us like %$#@. Note; If you have taken more than your earned vacation when you quit then IBM will deduct those days taken from your pay. You can bet your last paycheck these skin flinted, greedy, filthy bastards will be sure to not miss this! -Anonymous-
Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC.
I joined IBM as a management graduate, and was quite easily snowed by the IBM recruiting machine which led me to believe that i'd go on to become a top 'management consultant'. Its been a few months here, and all i have seen IBM do is try and sell technology and solutions in the name of management and strategy consulting, or carry out some operational improvement work. We are as far away from management consulting as peace is from Iraq, just that in both the cases, Uncle 'Sam' makes us believe otherwise. The Blue Pig (right christened by the board members) has no regard whatsoever for the career development of its employees, and the concept of "fit" in a project in non-existent. Anyone can be put onto anything, regardless of what the interests of the employee, its background etc. are.
The salary raises are extremely low ( a tad better from USA where employees have cuts, but hey, by 2015, I am sure i'd be ranting in the same way about the Venezuela and Philippines population !), the quality of projects is abysmal. Even if someone conjures up the strength and the motivation to perform in this atmosphere, he is bound to be rewarded with a PBC which most of the population would get, without working their asses off !
In short, joining this company is career suicide, more so if anyone is joining it at the start of their career. There are much better places outside which would value you as an employee, and not treat you as just another resource. So make your choices before its too late !
A word here for Dose, i think your description of the company and its environment is very accurate, and its the same here in India, coz the philosophy of the management is essentially the same...which is to post QoQ profits on the Wall Street. I am under no illusion that IBM's investments in India are bcoz of the cost arbitrage...BUT, the quality of the professionals here isn't as bad as u think ! I agree, our customer focus isn't as good as in the US...but we have some really good people here (although a few are being wasted in IBM), which are learning the tricks of the trade and learning them pretty fast. Outsourcing started just to exploit the cost advantage but ultimately it has had benefits in improving the quality of professional in India; and i am sure the day our capabilities match that of any other resource in the world, will be the day the first wave of job cuts will be announced in India !!
What galls most of the North American IBM'ers (and ex-IBM'ers like me) is the way it was presented to the employees. We were told that IBM was focusing most of it's new hiring on India and China because that was where the business was growing. Any additions in those countries would not impact the employee population in North America as there was more than enough business to keep us employed. The reality was exactly the opposite. My group as were others was consolidated from a regional structure to North American (I am including Canada). Then as people moved, left and the business grew, all the new hires were Indian.
When LEAN came along, it was presented as process to restructure the business to better meet the customer satisfaction requirements. What LEAN turned out to be was a tool to remove the added Indian redundancy by RA'ing North American workers when they felt the Indian workers could marginally backfill the lost experience.
What IBM didn't expect from LEAN was the mass exodus of talented professionals that LEAN generated. When a ship starts sinking, the first to leave are often the best. After three rounds of LEAN, the younger experienced employees without a great investment in IBM started leaving in mass. IBM hasn't had to execute the LEAN August and September cuts to employees because they are now scrambling to backfill the key positions they lost from layoffs and resignations. I've heard they've lost as many by resignation as Resource Action. At my locale, they lost more in June to resignation than resource action.
SP's actions by moving jobs to India, Argentina, Brazil were strictly for cost, not business growth. What I learned 16 years ago when I worked for another computer company that no longer exists. When a computer company stops investing in it's people and business (R&D,etc.) by using cost control as the business model, that company is going down the tubes. We've seen in the US; GE Computers, Sperry, Bourghs, Wang, Honeywell, Digital Equipment, etc. Those business are history. Right now HP and SUN are or have re-invented themselves and are growing. IBM is selling off computer assets as fast as possible.
Good luck on the SS Titanic.
The cost differential is rapidly eroding away, if you don't consider productivity and the overhead of running split operations. It's gone if you add them in.
From the experience with my project, about 10% are almost as good as the best US employees, they just lack experience. Another 50% are productive, but not as good as our US staff. The bottom 40% are barely productive and have to be carried by the others or our US staff. We also had 10% reassigned as it was clear they were useless to us.
None of this is racist, it is all fact from our project. This is not unique to India either - I've seen similar numbers from other low cost countries. Your projects may do better.
The questions we're asking is with the cost differential of US vs. India disappearing, do we move it back to the US, do we move the work to another low cost country to regain the cost advantage or do we push India for improved productivity? The fact that we're asking this question is an indicator that if the trend continues India will price itself out of our business.
Other point - U.S. project managers have been forced to take India resource - whether they needed them or not - AMS has "targets" (Mandatory) for the % of resource that must be from GR (usually India) - Many times the U.S. resource still did ALL the real work - on Overtime - since the India resources were frequently either incompetent or simply pointless to try to have them create work products that needed a in depth knowledge of the clients business processes (which you had to be on-site to appreciate) - the only area I saw GR work well was with straight forwarded coding - and then many times a U.S. person would have to correct - but some GR were good - then they would get pulled from your project or quit
There is zero loyalty left for the IBMer...ZERO They are looking for forced attrition. It seems like they are trying to get as many folks to leave on their own so when the sell off the divisions...the fiscal impact wont be as much. Look back at the recent stock holders voting for the ability to sell of parts or all of IBM...makes you wonder.
I also hear that the turn over rate in India China and the other exploited countries is extremely high as well. Imagine its so bad that you cannot employ folks in these countries.
I don't know if IBM is salvageable at this point. The IBMer spirit has been on the front line attack from management. We really need to research what Randy MacDonald did at his last company to see what he has planned for those IBMers that are left.
Can you believe that the company openly stated that LEAN was an effort to IMPROVE morale ? I chuckle every time I remember that.
Do you remember when customer sat was key ? lmao. Now, if you have a good customer sat... you're way over staffed. All of the accounts are running in an escalation mode..
Workload has increased beyond a reasonable level. Our top notch folks have left...they are now working for the competitor or in a role to make a decision if IBM never gets a sale within their new companies.
It would take a complete house cleaning session in Armonk along with an all hands on conf call where upper management basically admitted the faults and laid out a plan to thin middle management and get our model flattened out. We have toooo many layers of management.
My only concern is the damage done to the street and other companies. We have burned a lot of folks.
The MAIN thing we also need to do is STOP looking for short term gains by RA' folks to get the stock prices up. No one feels safe at IBM anymore. NO one. The churn and burn with getting new eager college grads won't even work anymore..
I wish the VERY best to what remains of my IBMer family out there. Be prepared...get your resume up to date. Start looking so if you are canned, you are already prepared.
I hope there is a special place in hell for the current management team and what they have done to so many members lives. They could have retained a lot more folks and done things better. Cutting the front line members doesn't make sense unless they're deadwood. We passed the deadwood stage back in 2002...it's in the bones and limbs now.
Once upon a time, Indian labor was really cheap, and, silly as it sounds, many corporate customers accepted the poor quality because, even if done over, the job was still cheaper than doing same in the US or Europe. This is no longer true (we can all agree that India is not as inexpensive resource pool as it used to be.) American management responds in one of two ways: either they continually look for locales even cheaper than India (Vietnam, anyone? How about eastern Europe?) or they continue blindly believing that somehow they can get equivalent quality (to developed-country IT) at $24 per hour. Oh, and I forgot: Our brilliant American management also continues to t believer that onshore resources from India and other foreign countries cost less than US FTEs. The moral is that once a story with a kernel of truth takes hold, it has a grip that lasts far longer than its period of validity.
But, what the hell, history moves on, and IBM management trails along at the back of the parade. We are being awfully hard on SP. Really, we are. I never met the man, but I have seen many of his communications over the past few years. He is no dope, and he knows the score. He once really tried to motivate the workforce. He once tried to make IBM into a truly world-class organization with best-of-breed operations all over the globe, but he has failed and I think he knows it. His fallback – and this is sad – is to revert to the “I’m all right, Jack” school of thought. He is in a position to get out of Dodge before the bullets start flying. Four million a year will keep him relatively happy for the rest of his life.
What galls us US employees is the pious intonation of the “IBM Values” -- how are these being practiced by our senior management? The management should be giving us and the other stakeholders an idea of the shape of things to come. Instead we get cost cutting. Some vision. Some imagination. Some leadership.
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