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6, 2000 April, 2000

Highlights—May 10, 2008

  • Wall Street Journal: IBM Shifts Several Top Jobs. Moffat to Succeed Zeitler as Head Of Hardware Group. By William M. Bulkeley. Excerpts: International Business Machines Corp. named Robert W. Moffat Jr., who has overseen billions of dollars in cost cuts through outsourcing operations and offshoring jobs, to replace the retiring head of its computer hardware and semiconductor operations. Mr. Moffat, 51 years old, who has been senior vice president for IBM's supply chain, will succeed William Zeitler, senior vice president of its systems and technology group. Mr. Moffat will retain responsibility for the supply chain that he has held since 2003. Mr. Zeitler will retire Aug. 1, after he passes his 61st birthday.

    The changes come along with a package of other high-level personnel moves, including the retirement of Nicholas M. Donofrio, executive vice president, innovation and technology, who is 62, and will retire Oct. 1 after 44 years at the company. Mr. Donofrio won't be replaced.

    The changes come along with a package of other high-level personnel moves, including the retirement of Nicholas M. Donofrio, executive vice president, innovation and technology, who is 62, and will retire Oct. 1 after 44 years at the company. Mr. Donofrio won't be replaced. ...

    The moves include significant new responsibility for Mr. Moffat, who is known as a hard-driving protégé of Mr. Palmisano. He previously ran IBM's personal-computer business and outsourced most PC manufacturing in 2002, before the business was finally sold. He is also credited with helping to shift much of IBM's manufacturing to offshore suppliers and moving lots of IBM jobs out of the U.S. and Western Europe to India and China. The moves have helped IBM boost profit margins, but they have often been criticized by the employees, legislators and others.

  • Boston Common Asset Management: IBM Shareholders Show Significant Support for "Say on Pay" led by Boston Common. Excerpts: The Say on Pay resolution led by Boston Common Asset Management received support from 43.3% of IBM shareholders at today's annual meeting in Charlotte, North Carolina. The proposal, commonly referred to as Say on Pay and filed by 11 additional investor proponents, asks management to allow shareowners to cast non-binding 'yes' or 'no' votes on the company's executive compensation report.

    "Over 40 percent of IBM shareholders made a strong statement today by openly opposing the Board's assertion that an advisory vote on management's compensation is unwarranted," said Dawn Wolfe, social research and advocacy analyst at Boston Common. "While the company is a leader on many corporate governance issues, Mr. Palmisano's high level of compensation is of concern. Giving shareholders a Say on Pay in the form of an advisory vote would encourage the Board to explain why that level of compensation should be supported."

  • CNN/Money: IBM Senior Vice President Rometty exercises options. Excerpt: A senior vice president of IBM Corp. exercised options for 29,400 shares of common stock, according to a Securities and Exchange Commission filing Friday. In a Form 4 filed with the SEC, Virginia M. Rometty reported she exercised options for the shares on Thursday for $88.96 apiece and then sold them all the same day for $122.50 apiece.

    Editor's note: Ms. Rometty's earnings from the exercise of this set of options was $986,076. Meanwhile, due to a spending freeze in place for well over a year, GBS employees must continue to fund their own purchases of office supplies, Internet access, business telephone lines, and business software.

  • Poughkeepsie Journal: IBM to increase pension payments for some retirees. By Craig Wolf. Full excerpt: Yes, it’s true IBM Corp. plans to raise certain retiree pension payments. But not all the details are worked out yet, because the raise is “a work in progress,” said Doug Shelton, a spokesman in Armonk for IBM.

    The increase will affect about 42,000 retirees who retired before 1997. About half of those who retired before 1997 will be eligible. The goal is to raise payments to those who were not able to participate in the 401(k) plan.

    The details have not been finalized, including how it will be calculated and who will receive it, he said. Authorization for the increase was granted at an IBM Corp. board of directors meeting April 29. The raises will take effect beginning Sept. 1.

    IBMers who retired before 1997 will receive a letter in the next week or so about the pension adjustment, Shelton said. Questions can be directed to the Employee Service Center at 1-800-796-9876.

  • Poughkeepsie Journal: Some IBM pensions will go up. By Craig Wolf. Full excerpt: Thousands of IBM Corp. pensioners will get extra money in their checks soon.The company's board of directors Tuesday approved a boost in the payout for some pensioners, a spokesman confirmed Wednesday. The company will supplement incomes for about 42,000 retirees and their spouses who retired prior to 1997, said Doug Shelton, a spokesman at IBM's headquarters in Armonk.

    Employee and retiree advocates have called for years for increases. This is the second once since 2000 and the third since 1990, Shelton said. "We tried to aid the retirees who were retired the longest," Shelton said. These are people who did not have the opportunity to earn retirement benefits through both the traditional pension plan and the newer 401(k) plan, he said.

    Those who qualify will see an increase of as much as 21 percent, which could come to $180 per month beginning Sept. 1. "Our ability to do this is based on IBM's strong financial position," Shelton said. The pension fund ended 2007 with a $10.9 billion surplus in its $57.2 billion in assets. There are about 123,000 U.S. retirees.

  • Yahoo! IBM Retiree message board: "pension uncrease" by "thomas365us". Full excerpt: As a point of reference we will get $180 at most. There is a guy at our morning coffee table who is retired from the assembly line at Ford. They (Ford) barely made a profit and he is getting $680 a month increase from the United Auto Workers. He did not get a raise last year , but got $1000 one time payment at Christmas. Did we work at the wrong place?
  • Poughkeepsie Journal: Agency reports IBM has canceled contracts; tell us if you've been affected. Excerpt: East Fishkill. Some temporary employees at IBM Corp.'s campus here were laid off but the number was not released monday. Manpower, a global staffing company headquartered in Milwaukee, said temporary production associates working at IBM's chip-making plant are out of a job and Manpower is looking to find other positions for them. IBM didn't announce the moves, but the Poughkeepsie Journal received calls about it. IBM spokesman Jeff Couture, based at the Burlington, Vt., IBM site, confirmed there were some employment contracts canceled.
  • Times Herald-Record (Hudson Valley, NY): Temp agency says IBM laid off employees at East Fishkill facility. By George Spohr. Excerpts: An unspecified number of workers at IBM East Fishkill have been laid off, a national spokesman for a temporary-staffing agency says. A workforce reduction recently took place at the facility, which manufactures components and chips, Manpower Inc. spokesman Paul Holley said. "We're not in a position to discuss" additional details, Holley said. "We don't discuss our relationship with our clients." IBM spokesman Jeff Couture was also tight-lipped. ...

    In 2001, temporary IBM employees were forced to sign up with Manpower — often for less pay and less benefits than when they were directly employed by IBM, according to Alliance@IBM, Big Blue's union. Temporary jobs in IBM always were one-year positions, the union said. Workers who take these jobs hope that they'll become regular IBM employees after the year, with IBM's benefits.

  • Reuters: IBM begins talks to cut staff in Finland-union. Excerpts: International Business Machines Corp has begun talks with workers on plans to cut 55 jobs from the total 1,400 it employs in Finland, an employee union said on Tuesday. ERTO, the Federation of Special Service and Clerical Employees, said on its Internet site the talks to determine which 55 jobs would be cut out of a possible pool of 250 were set to finish by the end of June.
  • LawyersandSettlements.com: California Computer Professionals Take On IBM - Again. By Julia Browne. Excerpts: A second class action suit has been filed against information technology giant IBM for refusing to compensate California computer professionals for overtime. The suit is headed by Loren Teegs* (not his real name), a Systems Operations IT Specialist who claims that his employer reclassified certain categories of support workers across the country, coding them as exempt, which has resulted in thousands being denied their due overtime.

    Teegs launched the suit on April 17 for violation of the Fair Labor Standards Act, the Employee Retirement Income Security Act (ERISA) and California state labor law. The action applies to IBM employees in California, and nationwide, who were employed in job band positions six, seven and eight (from new college hires at 6 to PhD at 8) and classified as exempt anytime between July 12, 2007 and February 16, 2008, then subsequently reclassified as nonexempt.

    California legislation regulating exemption in the IT field specifies that a computer professional has to spend more than 50 percent of his time performing designated 'exempt' activities, such as coding, as opposed to managerial tasks. He must also be proficient in theoretical and practical applications of systems analysis, software engineering and programming. Teegs' primary responsibilities are to install, maintain, and/or support computer hardware and software.

    According the lawsuit filed, IBM failed to keep records of hours worked, which could result in inaccurate accounting for which Pension and Savings Plan benefits may be due. Also under California law, Teegs claims that the company did not honor legal meal time allowances nor provide regular wage statements.

    This lawsuit comes as the most recent episode in the overtime battle between IBM and its employees. In late 2006 IBM agreed to pay $65m to settle a class action suit brought on by 32,000 IT specialists and tech employees claiming overtime rights. The company struck back in January 2008, with a 15 percent cut to the base pay of 7,600 of these employees to compensate for their reclassification as exempt. The cut to the first 40 hours, IBM said, will allow the company to break even on any overtime accrued.

    Reaction was outraged, as expected. One commenter to the Wall Street Journal blog, said, "I work for IBM and will be part of the 15 percent pay cut...However I am not part of the class action suit for Overtime. IBM preaches Work-Life Balance, but how can you be so if you now have to work 50 hours to make up for the pay cut." He went on to say the company would prevent employees from putting in extra hours unless the customer took on the overtime cost.

  • IDG News Service: Danish union wants IBM's Palmisano to testify in court case. Danish IT workers union PROSA wants to call IBM Chairman and CEO Sam Palmisano as a witness in a Danish court case concerning the company's use of contracts that prevent customers and partners from recruiting IBM employees. Excerpts: PROSA wants Palmisano to testify about a secret nonsolicitation agreement between IBM and Danish container shipping company A.P. Moller-Maersk. The court has yet to rule whether Palmisano must testify. If it allows PROSA to call him as witness, he must travel to Denmark or be video-interviewed before 2009, when the result of the trial is expected. ...

    Palmisano would be an unusual sight in a Danish courtroom: Top executives "seldom" have to testify in Danish employment disputes, said Ole Hasselbalch, a professor and expert in employment law at Aarhus School of Business. Hasselbalch wouldn't comment on the reasons for PROSA's action, but said that IBM can object to the request if it thinks PROSA's arguments are invalid. PROSA said it wants Palmisano to testify because he was in Denmark when the agreement with A.P. Moller-Maersk was negotiated, and that such a large deal must have been cleared with the CEO. On top of that, PROSA believes that IBM officials in the U.S. ordered that Juul be fired after he tried to enter an IBM shareholders' meeting to question Palmisano about the nonsolicitation agreement. Whether Palmisano will have to testify will become clearer in the next few days. PROSA expects that the case will be decided before the end of the year.

  • Dissent Magazine: Jeff Madrick on ‘High Wire,’ Peter Gosselin’s Look at the Economic Meltdown. Excerpts: It would be a pity if Peter Gosselin’s new book, “High Wire: The Precarious Financial Lives of American Families,” gets lost in the current turmoil over subprime mortgages and deepening recession. He has done the most convincing job I’ve seen in capturing the failures of America to deal with a changing, complex and far less generous economy than it has known in the past. That economy, despite cyclically painful periods, was so generous compared to the rest of the world over its 200-year history in terms of the rate at which it expanded the typical American’s standard of living that the country’s national character was formed by it. The resulting tendency in America, though thankfully violated from time to time, is decidedly toward a laissez faire philosophy of government. ...

    Peter Gosselin’s admirable objective is to show how many people of all income levels are now insecure and afraid in an economy that Americans are constantly told, by Republicans and Democrats alike, has long been back on track. At least, that was the conventional wisdom until a year or so ago, when the current hydra-headed crisis emerged. But, in truth, the American economy has not been on track for a generation now. Even the Clinton interlude was, as we now know, prompted by intense and unsustainable financial and housing speculation.

    The main theme of Gosselin, a veteran reporter for the Los Angeles Times, is the rise of deep-seated financial, health and material risk. He gathers the many pieces of the new economic America together quite beautifully, even elegantly, and brings them alive with interesting and not the usually predictable individual examples. I learned many things in this book, and I’ve been covering this territory for a long time.

    Take pension and health-care coverage. Most of us who read about these matters know about, and too many of us have already lived through, the growing failure of America’s pension and health-care system. Americans depend on having a good job for having a good pension. Now pensions are being frozen by major companies like IBM, many industries from autos to airlines are on a downward slide and their pension funds won’t pay off, and the Enrons of the world caused many to lose hundreds of thousands of dollars of retirement savings through fraud. ...

    But what makes Gosselin so interesting is that he digs further for the pertinent government failures. For example, the Employee Retirement Security Act (ERISA), passed in 1974 originally to protect workers, now, as he writes, protects big companies. The reason is that ERISA prevents companies from being sued by employees. In the current age, “[ERISA] has become a crucial vehicle for shifting economic dangers that our employers once helped us manage onto our backs.” ...

    A former insurance consultant told me recently that some employees are paid at insurance companies according to how many claims they can deny. I was shocked. Naive me, and after all these years. Of course, that is how the companies operate. Create incentives to maximize profits. ...

    To be precise, the 30-something median male—in the middle of the distribution—makes less after inflation today than did the 30-something male in the 1970s. As some perceptive commentators put it, the typical male today makes less than his father did 30 years ago. ...

    In other words, typical men have made no progress compared with typical men a generation ago. This experience violates the true American dream, not the one about how we can all get rich, but the one about how, if we work hard, most of us will do better over time than the previous generation. We can’t all rise higher on the pyramid, but the whole pyramid can rise. In fact, that is what happened in the U.S. since the beginning. That is what made the nation special and its people optimistic. But now it no longer does. ...

    Now the experience of the 2000s has brought the message home. Wages haven’t gone up at all in the 2000s, despite record profits and decent productivity growth. Family incomes are down. These are unprecedented in the modern economy.

  • New York Times: Who Will Tell the People? By Thomas L. Friedman. Excerpts: Traveling the country these past five months while writing a book, I’ve had my own opportunity to take the pulse, far from the campaign crowds. My own totally unscientific polling has left me feeling that if there is one overwhelming hunger in our country today it’s this: People want to do nation-building. They really do. But they want to do nation-building in America.

    They are not only tired of nation-building in Iraq and in Afghanistan, with so little to show for it. They sense something deeper — that we’re just not that strong anymore. We’re borrowing money to shore up our banks from city-states called Dubai and Singapore. Our generals regularly tell us that Iran is subverting our efforts in Iraq, but they do nothing about it because we have no leverage — as long as our forces are pinned down in Baghdad and our economy is pinned to Middle East oil. ...

    We are not as powerful as we used to be because over the past three decades, the Asian values of our parents’ generation — work hard, study, save, invest, live within your means — have given way to subprime values: “You can have the American dream — a house — with no money down and no payments for two years.” ...

    A few weeks ago, my wife and I flew from New York’s Kennedy Airport to Singapore. In J.F.K.’s waiting lounge we could barely find a place to sit. Eighteen hours later, we landed at Singapore’s ultramodern airport, with free Internet portals and children’s play zones throughout. We felt, as we have before, like we had just flown from the Flintstones to the Jetsons. If all Americans could compare Berlin’s luxurious central train station today with the grimy, decrepit Penn Station in New York City, they would swear we were the ones who lost World War II.

    How could this be? We are a great power. How could we be borrowing money from Singapore? Maybe it’s because Singapore is investing billions of dollars, from its own savings, into infrastructure and scientific research to attract the world’s best talent — including Americans.

    And us? Harvard’s president, Drew Faust, just told a Senate hearing that cutbacks in government research funds were resulting in “downsized labs, layoffs of post docs, slipping morale and more conservative science that shies away from the big research questions.” Today, she added, “China, India, Singapore ... have adopted biomedical research and the building of biotechnology clusters as national goals. Suddenly, those who train in America have significant options elsewhere.”

    It is especially not trivial now, because millions of Americans are dying to be enlisted — enlisted to fix education, enlisted to research renewable energy, enlisted to repair our infrastructure, enlisted to help others. Look at the kids lining up to join Teach for America. They want our country to matter again. They want it to be about building wealth and dignity — big profits and big purposes. When we just do one, we are less than the sum of our parts. When we do both, said Shriver, “no one can touch us.”

  • Workforce Management: Wal-Mart Suit Hits 401(k) Fees. By Mark Bruno. Excerpts: While more than a dozen large companies have been hit with suits from 401(k) plan participants alleging they were charged excessive fees in their company retirement plans, none of these corporations has been bigger than the latest target: Wal-Mart, the country’s largest private employer with nearly 1.4 million people in its U.S. workforce.

    Like many of the other suits that have been filed since 2006 against such big employers as Boeing, Deere & Co. and General Dynamics, the suit against Wal-Mart, which was filed last month, claims the company breached its duties as a fiduciary by allowing its 401(k) plan participants to be charged "unreasonably expensive" fees. The plaintiffs are seeking class-action status.

    The suit alleges the fees were too high because Wal-Mart’s $9.5 billion 401(k) plan offered participants retail mutual funds, as opposed to less expensive institutional funds, "despite the ready availability of reasonably priced options," the claim stated, "particularly for a massive Plan like Wal-Mart’s with tremendous potential to leverage economies of scale."

  • New York Times book review: Empty Nest Egg. By Jeff Madrick. Excerpts: The future of Americans’ pensions has not become a serious campaign issue so far this election season. It’s hard to get retirement issues to the front of the line when the nation faces soaring health care costs, global warming, $100-a-barrel oil, a likely recession and collapsing housing prices. There is also the little matter of the worst credit crisis since the 1930s.

    That is too bad, because, as Roger Lowenstein nicely illustrates in “While America Aged,” the country “is sitting on a retirement time bomb.” He is not talking about Social Security, which, he writes, is among the more manageable of future concerns. He is addressing the large-scale failure of America’s once-enviable private pension system. ...

    From all this, however, Lowenstein draws a conclusion he does not prove. “The story of pensions is, in fact, largely the story of the slow accretion of power by the labor unions,” he concludes. But is it? The unions bear plenty of responsibility in the three stories he tells. But so does management. In each case, management deliberately underfunded its obligations. ...

    These three cases also fail to cover all the key bases. For example, while unions pushed their advantage in some quarters, large corporations explicitly underfunded pension obligations in the good times, not because of onerous union demands but because of greed. They wanted to make their earnings grow as rapidly and consistently as possible to boost stock prices.

    Most important, the greatest cause of uncertainty about retirement has been the large-scale shift by business from traditional defined-benefit pensions to defined-contribution plans — the typical 401(k).Today, three out of five workers are covered by such plans. Why? Some businesses were surely overburdened by pension obligations and union demands. But most others, again, just wanted to make more money, and 401(k)’s cost business a lot less. Workers themselves must contribute to the plans, manage the money themselves and hope there is not a market crash just at the moment they retire. “Whatever relief this brings to corporate shareholders,” Lowenstein writes, “from the employees’ point of view the demise of pensions is a calamity in the making.”

  • InformationWeek: IBM Launches Program To Attract More Hispanics Into Technology Jobs. IBM hosted a summit this week to harness and share best practices for recruiting the growing Hispanic population into scientific, technology, engineering, and math careers. By Marianne Kolbasuk McGee. Excerpt: This week, IBM hosted a summit in New York with leaders from several other large companies, including Lockheed Martin, Univision, and ExxonMobile, to discuss how to draw more Hispanics into STEM careers. Among the conclusions from the discussions are that the barriers for Hispanics to enter STEM professions start early and can be helped with collaborative effort, said Sánchez. "Schools, corporations, nonprofits, government play a role" in helping to prepare more Hispanics for careers in STEM fields, said Sánchez.
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Plan Sponsor: Studies Suggest $45B Taxpayer Cost from Dropoff of Employer Health Coverage. Excerpts: Two new studies presented by the Commonwealth Fund suggest that falling rates of employer-sponsored coverage are placing an increasing burden on taxpayers, public health insurance programs, and workers themselves - particularly low-wage earners.

    The report "Who Pays for Health Care When Workers are Uninsured" states that ultimately, the lack of employer-based coverage generates public costs in the form of taxpayer bills to fund public insurance programs or uncompensated care. According to the report, the share of costs paid by public sources has remained roughly constant, but the total cost to taxpayers has increased substantially since 1999 to a total of $45 billion for publicly paid care. ...

    In the second report, “The Widening Health Care Gap Between High- and Low-Wage Workers,” the authors say increasingly fewer low-wage workers are eligible for public insurance programs or can afford to purchase private insurance. The report also says low-wage workers are less likely than high-wage workers to work for companies offering health coverage.

  • Taking Note, A Century Foundation Group Blog: Debating the Road to Universal Coverage. By Maggie Mahar. Excerpt: This week, I have been mulling over The American Prospect’s May 2008 Special Report: The Path to Universal Health Care At first glance, it might seem that the eight articles in the report take eight different roads to reform. But I’m glad to see agreement on many pivotal points.
  • New York Times Magazine: Entitled to What? By Roger Lowenstein. Excerpt: Not surprisingly, John McCain’s platform is well to the right of the Democrats’. He favors bringing entitlement spending down rather than bringing revenues up. And he has made it clear that he is open to cutting Social Security benefits. His boldest stroke is on health care, where he would offer a universal tax credit but in return make employer plans taxable to the recipient. In other words, if your company has a health plan, you would have to pay taxes on the value it provides. This would pierce the illusion that health care is “free” and, it is said, discourage spending. This is Adam Smith 101: if health-care recipients pay more of the cost, they will order fewer M.R.I.’s and replace fewer knees.
  • Detroit Free News: The candidates' health care proposals.
  • Kaiser Daily Health Policy Report: U.S. Manufacturers Spend Twice as Much as Foreign Competitors on Health Care, Report Finds. Excerpt: U.S. manufacturers that offer health insurance to employees spend an average of $2.38 per worker per hour on health care, substantially more than the amount spent by foreign competitors, according to a report released on Tuesday by the New America Foundation, the Los Angeles Times reports. According to the Times, the report "provides support for the now-familiar lament of employers -- that rising health care costs are eating into the corporate bottom line."

    Len Nichols, policy director for the foundation and author of the report, said that foreign manufacturers have lower health care costs because they operate in nations with more efficient health care systems that are financed by the government.

  • Plan Sponsor: Lack of Health Care Weighs Heavily on Decision to Retire. By Rebecca Moore. Excerpt: According to a press release on the analysis conclusions, employees who rely on their employers for health care coverage and do not expect to receive employer-provided health benefits in retirement are 16.5 percentage points less likely to retire in any given year than workers with access to health care coverage through another source. Other health insurance sources that allow an employee to decide to retire, according to the data, include a spouse's health insurance plan, public health insurance, COBRA coverage, or employer-sponsored retiree health insurance.
  • CCH Internet Research Network: Employee Contributions For Health Care Are Nearly One-Month’s Salary. Excerpt: Employees’ median annual contribution for family health care coverage is now $3,120, a 15% increase from 2007 and a 22% increase from 2006, according to Aon Consulting’s 2008 Benefits and Talent Survey. This annual contribution represents nearly one-month’s salary, based on the median household annual income of approximately $48,000, Aon noted. In comparison, the 1,100 U.S.-based organizations responding to the survey experienced approximately 10% annual health care cost increases since 2006.

    Aon found that employees’ median monthly contributions in 2008 averaged $66 for employee-only coverage, $160 for employee-plus-one or employee-and-child coverage, $186 for employee-plus-children coverage, $189 for employee-plus-spouse coverage, and $260 for family coverage. Employer contributions averaged $326 for individual coverage, $574 for employee-plus-child coverage, $628 for employee-plus-one coverage, $633 for employee-plus-spouse coverage, $641 for employee-plus-children coverage, and $863 for family coverage.

  • BusinessWeek: Is Your Kid Covered? Insurers make big profits from college students, but some families are left with huge bills. By Ben Elgin and Jessica Silver-Greenberg. Excerpts: In fall 2006, Ralph Giunta Sr. decided to buy his son Ralph Jr. a practical birthday gift: health insurance. The father, who owns a small financial-services company that lacks an insurance plan, phoned Palm Beach Community College, where his son was on the dean's list. The Lake Worth (Fla.) school recommended a policy provided by MEGA Life and Health Insurance, whose student business was acquired in late 2006 by giant UnitedHealthcare. Giunta wrote a check for $1,044 for one year. "They assured me he was well covered," he says. ...

    Ralph Giunta Jr. knew something was wrong in March, 2007, when the photography major and avid skateboarder felt pain in his legs and feet. Then 19, he lost all feeling in his lower extremities and was rushed to the hospital. The diagnosis: Guillain-Barré's syndrome, a rare disease of the nervous system that typically causes temporary paralysis. His father's anxiety was compounded upon learning more about the insurance he had purchased. Even with "major medical" coverage, the plan reimbursed only $22,800 of the $206,325 bill for 19 days of intensive care.

    In the end, Ralph Jr. recovered, but the Giuntas owed $265,000 in hospital and doctor bills. As he juggles maxed-out credit cards and loans from friends to make minimum payments on medical debts, Ralph Sr. admits he didn't read the UnitedHealthcare plan closely. "I thought, well, the college is offering it," he says. "Why would it be a bad plan?"

    More than half of the insurance plans recommended by colleges offer benefits of $30,000 or less, according to a survey published in March by the General Accounting Office, an arm of Congress. Many plans have further limits that prevent payout of even modest maximums. While two-thirds of the country's more than 17 million college students have coverage from a parent's employer or their own job, many of the rest may be vulnerable if they suffer a serious illness or accident. With premiums and restrictions increasing under employer-provided plans, a growing number of parents are shifting children to college-sponsored coverage. But "when a student gets gravely sick, $30,000 in benefits is unrealistically low," says Alan Sager, a professor at Boston University's School of Public Health. ...

    In some cases, universities have comfortable relationships with carriers that reimburse the schools a small percentage of student premiums to cover administrative expenses. This raises questions about whether schools ought to serve as what amounts to a broker. The University of Alaska system receives 5% of premiums collected through its plan. With $2.3 million in premiums expected this academic year, the payment would come to about $115,000, according to a copy of the contract provided by the system. The Kansas Board of Regents receives 1.5% of its students' premiums to cover costs of administering the plan "or other uses as determined by the Board," according to its contract. That could mean a reimbursement of about $100,000 for 2007-08. ...

    The vigorous health of most college students helps make insuring them a lucrative niche, according to industry consultants. Most insurance companies, even if publicly traded, don't break out separate financial results for their student-oriented policies. But some schools disclose an indication of the profitability of policies sold to their students: the so-called benefits ratio. This shows the percentage of premiums returned to customers in the form of benefit payouts. Large health insurers typically have overall ratios of about 80%, meaning 20% of premiums goes to profits and administrative costs.

    In several cases where BusinessWeek (MHP) was able to obtain benefits ratios from colleges or universities, the percentage was well below 70%. Anything below 75% ought to be grounds to negotiate a better deal, according to Eric Engstrom, president of Keeling & Associates, a consulting firm in New York. At Palm Beach Community College, the benefits ratio for the spring semester of 2008 was 42.6%, according to reports provided to the school by UnitedHealthcare.

New on the Alliance@IBM Site:
  • Spotlight: As the Alliance@IBM CWA Local 1701 begins its Spring membership drive you need to know some hard facts.

    The Alliance has been losing members due to retirement, job loss and employee financial difficulties. This web site receives an average of 40,000 visitors a month.

    Tough economic times are obvious; however, we simply can not go on or take employee advocacy to higher levels if we don't build our dues paying membership. It is not just this web site: It is an office and an organization that is at stake. Our staff of 1 full time, 1 part time and volunteers/members are dedicated to building this organization; but it is up to YOU to see that we are able to keep the office open and the organization financially viable. We need to become financially independent--We can not continue to rely on being financed by non-IBM CWA members. IBM employees need to support their own organization!

    Frankly if IBM employees do not see the value of this employee organization then the future of our work is in jeopardy.

    Please consider joining the Alliance@IBM as a member for only $10 a month--the cost of a few Starbuck's coffees. Your dues and involvement help the Alliance with the following:

    • Organizing employees and challenging IBM on policies and practices detrimental to employees and retirees.
    • Exposing job cuts.
    • Helping employees to deal with redeployment and replacement training.
    • World wide media source for IBM employee issues.
    • Legal references and current labor law information.
    • Political action on employee issues.
    • Stockholder proposals and actions.
    • Working with International IBM employee Unions to develop worldwide responses to IBM employee issues.
    • Working with Federal, State, and Local officials to make sure IBM employees, IBM retirees and communities find information and remedies for toxic exposures from IBM sites.
    • Union privileges and benefits through Alliance@IBM's membership that are offered through the Union Plus /Privilege program.

    We also have the expense of keeping an office up and running: Rent, Office supplies, fax, phones internet access and mailings of organizing materials; such as newsletters, flyers and brochures.

    We believe Alliance@IBM has, by its very existence; given IBM Corporate Mgmt pause, during their anti-employee actions.

    The bottom line is that if we are NOT here, then IBM Corporate Management has the field. There will be some who say that employees do not want representation through an employee organization or a union. Now is the time: Prove them wrong or prove them right.

  • From the Job Cuts Status & Comments page
    • Comment 5/06/08: Hi, I guess I am one of the freeloaders. I watch the website because it gives me valuable information on what IBM is doing which helps me plan my career options. I don't join the union because I am an Australian, not an American. Having the website open means that you can gather intelligence on IBM activities from people who may be unable to post in the new world. It also is a vehicle to hold what IBM does up to public scrutiny, which in turn, may have *some* moderating effects on what IBM does. Big companies like IBM are now bigger than small governments. The union movement could be a balancing force, but only if it operates internationally. To my knowledge, there is no viable union presence in the Australian operation. We are in the same position as Americans, with IBM jobs being moved from here to lower cost centres. Until there are effective unions in the BRIC countries, we are all going to struggle. I know my perspective doesn't pay your bills, but hopefully it gives you another point of view on the best use of your website. -Fingerbun-

      Alliance reply: We very much appreciate your point of view and your obvious support of our effort. Thank you for watching us from across the ocean. We have known for some time that we have friends and supporters in other countries. We are connected to the IBM Workers international Solidarity and have been, for some time. We are now carrying their web pages on our web site: http://www.allianceibm.org/iwisindex.htm also this page: http://www.allianceibm.org/unions.htm We will be contacting you and will try to provide specific information to you that we hope will be of some help in your workplace. Thanks again for your comments. We appreciate them.

  • General Visitor's Comment page:
    • Comment 5/03/08: I was on assignment to IBM Germany in the early 80's and was , therefore, covered by the union that was in place then. I think it worked well. Overtime was always approved by the union (Betriebsrat) but it seemed that the union was always concerned about work-Life balance. Our (big) project went live - on schedule I guess. I was not in the union discussions but it seemed to be a good partnership between Company and Union. -Neal Watkins-
    • Comment 5/04/08: -ibm30plus- Most IBMers still are loyal to IBM, and would like to see a long term benefit to themselves and the company. I can't speak for most IBMers, but I\'d guess our site has fewer than 10% who feel that way. Everyone I talk to has a reason for still being at IBM, but they profess to despise the company and will leave as soon as they find something better. Management seems okay with that, so long as people don\'t leave faster than our products can be offshored. -irRational-
    • Comment 5/04/08: Quote: "I work for GBS Application Services (Division 6C). Our work week is 48.5 hours due to the large bench they have been carrying in 2007 and all of this year (2008). I only work 40 hours but charge 48.5." You better not be billing any government contracts this way. If you are, IBM will be severely fined and those employees responsible will be immediately terminated. I hope the government is being diligent and frequently auditing IBM's billing practices on government contracts. -No_way_jose-
    • Comment 5/05/08: H-1B's, offshoring, pay cuts and the like will not disappear until as long as it represents money in the pockets of our management. Do the math. If a firm has 25,000 employees on H-1Bs or can otherwise "save" $10,000 on each, that equals $250,000,000 that management can use to increase their pay and not impact the bottom line. Businesses have become a mechanism to transfer wealth, rather than system of value add. -Calc-
    • Comment 5/07/08: It would be GREAT to work with people who didn't spend 75 percent of their time worrying about losing their jobs. Back in the 70"s and 80"s we worked together and helped each other and the general success of the team was paramount . It was a great work environment and we all looked forward to coming to work.

      The only way we will ever get that great work environment back is to unionize. Then WE have a contract that frees us from wasted time worrying about job loss. Management can stop wasting time scheming how to screw us out of money and benefits to make themselves look good and concentrate on focusing the team against the competition to make profits and stocks soar. As everything, salary and benefits wise, will be negotiated by trained professionals on both sides. The results should be fair and equitable to IBM and its employees and be fairly administered so even more savings; as we wont need outsourced administrators trying to explain the convoluted benefits package no one really understands.

      I do not know if modern IBMers could work in that environment though. Earning respect from the quality of your work instead of the sharpness of your backstabbing knife. Being able to trust your peers to protect you and themselves without a second thought because anything else is detrimental to the work environment. Respect for each other is what made things work so well back then. IBM called it respect for the individual. It did not flow from IBM. It was the employees respecting each other and if IBM wanted respect they had to give it also.

      That respect can live again in a union. The biggest difference between a union negotiator and a CEO is a union negotiator will make concessions and accept a pay cut if times are really bad . A CEO won't. And in fact, will manipulate numbers to maximize his/her own bonus and raises. Which is worse for a business? The Greedy CEO who wants to take take take without really performing, of course! -Exodus 2007-

    • Comment 5/07/08: US Project Managers beware as it coming this way! Ron Atkins, VP of ITD Transition/Transformation, is moving forward with the Global Resourcing program they have been planning behind closed doors. They are not hiring more US full time or sub-contractor employees, but instead want to start using offshore PM's based in other (cheaper labor) countries to work on US projects. It's just to help out with workload since we are so busy ;-) TIME TO CONSIDER JOINING THE ALLIANCE! -Just another IBM serial #-
    • Comment 5/07/08: I would hate to see the message board closed to non-members. I still think it's a good vehicle for getting more people to join. The Alliance could, however, limit comments to union members only. -Exodus2006-

      Alliance reply: The message board and the comments are the same thing. If we closed the message board to non-members, then the comments would be limited to union members, only. Our existing members have been concerned about our 'giving away the store' for some time. Especially when they see the membership decline because of layoffs.

      You are right about the web site being a good vehicle to getting more employees to join. The point is, we need funding to continue that effort. Our dues paying members are the union. When new members join and pay $10 per month, they are helping to continue our effort and their own. There is a huge responsibility to be shouldered; if we all carry some of the weight, we can move forward quicker, toward a number of sign-ups that can make a huge difference when the time comes to vote.

      Organizing is a very difficult. Especially when the economy is plummeting and the working people become egregiously affected. The days of IBMers being 'safe' from the economic woes of layoffs and downsizing have been over since 1990. The new IBM has opened the door of opportunity to its employees to form a union and bring some protection and sanity to this whole process. The most necessary ingredient is the non-management employees; standing up for each other and weathering the ups and downs of 'Globalism'.

    • Comment 5/08/08: If you are one of the few remaining employed by IBM in the US, it's time to join Alliance now and make a difference. Word on the street is more cuts by end of 08 to complete their master plan. Make a difference and join up now! -Anonymous-
    • Comment 05/08/08: -Anonymous-: You are so right !! If you're in ITS/SSO, prepare for 80 - 85% of the work to be off-shored by the end of the year. This is their master plan, and there is no stopping it. -miss understanding-
    • Comment 05/09/08: I sat on the fence for 2 years waiting for things to get better at IBM and/or for Alliance membership to start showing significant gains. Well, things continue to get worse at IBM (hard to believe things could get worse but they do) and Alliance membership will never grow unless people decide to start taking action rather than sitting on their hands and letting IBM continue to slap them around. I’m proud to say I took the plunge and became a member this week. Ever since I signed up, I’m sleeping better at night, knowing that I’ve at least done something to stand up for myself and to try and put a stop to this insanity. Take my advice, sign up and you’ll sleep better at night as well. -IBM Slave-
    • Comment 05/10/08: So over 7,000 employees had their salary cut by 15 percent, yet I don't think Alliance membership has increased by that amount. What's wrong with you people that haven't signed up yet? Are you just going to continue to take it? Are you just going to grumble about it but do nothing? Make a stand!! It's better to light a candle than curse the darkness. I've lit my candle, how about you? -Wondering Aloud-
  • Pension Comments page
    • Comment 5/10/08: I was one of the 7600 reclassified as non-exempt. I am still in the same job position now that I was in when the pension was not frozen which was before this year. Shouldn't my OT worked from last year and before be accrued to my pension since I was incorrectly classified as exempt since IBM reclassified me as non-exempt? OT is pensionable earnings correct? BTW, I was told by my management to only code 40 hours on my labor claim despite the OT I worked last year and before. So IBM probably wanted this to make their profts and also screw me out of OT pensionable benefits. BTW, I joined the Alliance. I'm tired of how I am treated by IBM. -Anonymous-
  • Raise and Salary Comments
    • Comment 05/04/08: In the last 2 weeks, we have had our OT limited to 6 hours per week. Previously (before the salary cut), I worked 55 hour weeks. I am now working the 46 hour week and just not getting all of my work done. Has anyone else had this happen? Wondering if it is just my org or IBM across the board. -JustMe-
    • Comment 05/07/08: Salary = 62K before 53K after; Band Level = 6; Job Title = IT Specialist; Years Service = 5; Hours/Week = 50; Div Name = 29; Location = MN; Message = I heard that of the 48 people that appealed their remix in my 2nd line org, only two were approved. I know several of the people affected (truthfully) presented their case based on answers that would lead to an exempt answer using the FLSA Computer-related occupation questionnaire. -Anon-
    • Comment 05/07/08: Salary = 58500; Band Level = 6; Job Title = IT Architect; Years Service = 3; Hours/Week = 40; Div Name = ITS; Location = Midwest; Message = Stupid Non-Exempt Thing -JonAnon-
  • PBC Comments
    • Comment 5/09/08: Prior Yr PBC = 2; This Yr PBC = 3; This Yr Bonus = 0; Prior Yr Bonus = 2500; Message = I appealed and lost. Provided written documentation on my deliverables. They said I was convinced I delivered, but didn't like how I delivered. HR says I am encouraged to leave if I get one more. I said this is a rat-race and I won't run, HR's response, walk the line or this is not the place for you. Stop. Think. I think I am an individual with reasonable intelligence, but it's not what works here (or seems to). I still don't get the how part, but does it matter ? One thing to keep in mind. this is not a products company anymore, but a services company. Just another CapGemini or EY. They are not in the league of PwC, Goldman Sachs etc. Words come time mind, but let's be professional. Joined the Alliance. -RS
  • International Comments
Vault Message Board Posts:

Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. Some sample posts follow:

  • "Cheapskates" by "phooey69". Full excerpt: According to the Merriam-Webster dictionary, the word "cheapskate" is defined as: "A miserly or stingy person, especially one who tries to avoid paying a fair share of costs or expenses."

    It's probably not a surprise to anyone on this forum that SO has run into problems. The "raison d'etre" in SO has always been COST CUTTING. Charge exorbitantly high fees to the clients, yet run the business as cheaply as possible. The cost-cutting mentality has infected the entire business. Every day, I deal with managers whose major (probably only) concern is that they don't get stuck with the bill. I'll bet everyone on this forum who works (or has worked) for IBM has dealt with them.

    This mentality has certainly affected customer relations. Employees working for customers don't want to work for IBM, because they know what's coming. The customers also know what's coming, because they bring in lots of lawyers, outsourcing consultants, etc. before signing any deal. The chickens are coming home to roost, indeed.

  • "A familiar pattern" by "civilliberty". Full excerpt: I remember working on a client's account. Everything was pegged back to the cost of managing the account, down to the last cent. Though, as an IT professional, I wanted to give the customer the best possible advice and add value in my role this was time and again forbidden me because of cost (and we are really talking pennies here, maybe only $200-$300) - forget about the client relationship and good will and being professional. Managers don't reward professionalism , only those that stick relentlessly to budget regardless of the customer experience. It's good to see clients wising up to IBM's exorbitant cost regime and abysmal quality. It's only a matter of time before everyone will be smelling roast pork.
If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

This site is designed to allow IBM Employees to communicate and share methods of protecting their rights through the establishment of an IBM Employees Labor Union. Section 8(a)(1) of the National Labor Relations Act states it is a violation for Employers to spy on union gatherings, or pretend to spy. For the purpose of the National Labor Relations Act, notice is given that this site and all of its content, messages, communications, or other content is considered to be a union gathering.