The other encouragement is the stroke of generosity by which a Virginia businessman is spending more than $1 million to rent prime hotel rooms and promising that assorted down-and-out citizens — from the poor to the terminally ill to wounded soldiers — will have a perch of privilege on Pennsylvania Avenue for the parade. The Capraesque gesture — dubbed “The People’s Inauguration” replete with two gala balls — is the gift of Earl Stafford, a 60-year-old Air Force retiree who made a fortune founding a military technology company.
Mr. Stafford is picking up the tab for three nights with meals at the hotel for scores of the normally uninvited and overlooked. He’s even promising gown, tuxedo and hair-dresser costs for those most in need. “We just need to get back to caring about one another,” Mr. Stafford told The Washington Post, paraphrasing the Bible: “To whom much is given, much is required.”
Managers initially encouraged employees to retire, but when that failed they began threatening same-day firings or cutting bonuses, said Nomoto, a manager who has worked for IBM for 37 years. Mid-ranked managers "told workers they would be fired in less than 48 hours, or would place very high goals and then tell them they didn't make the grade," he said. According to news reports, a supervisor even called one employee's wife and told her to push her husband to quit.
"Many employees are upset at the cowardly way the company has conducted itself and how unimaginably awful it is despite what it advertises about its work environment," said Nomoto.
"IBM Global Business Services is taking what have long been disparate parts of the human capital lifecycle, and we are pulling the pieces together to give our clients an end-to-end capability to access key employee data and manage workforces as a globally integrated talent pool," said Tim Ringo, vice president and global leader, Human Capital Management, IBM. "We add to this solution IBM's award-winning collaboration and social networking software to create the next generation of workforce and talent management, which is truly unique in the marketplace." ...
IBM Workforce and Talent Solutions offering takes a strategic view of an enterprises' human capital technology and processes. Through our Human Capital Healthcheck tool, IBM human capital experts assess where an organization is on its journey to globally integrated workforce and talent management and defines a strategy, technology and process roadmap for the future. The solution builds on what is already in place in the enterprise and implements the integrated solutions required to create an end-to-end capability to access key employee data and manage workforces as a globally integrated talent pool.
p.s. the cost of a college degree in Egypt is $22 per year. No student loans to repay so they can work cheap. And their families back home can live WELL on $20,000 per year.
In many cases, they even go so far as to specifically compare that figure as wages to other companies. For example, this quote, from a conservative talking head:
"When you're paying $73.73 an hour to those people with salary and benefits and your competition is paying $48 to its workers, you're going to get your butt kicked in the marketplace unfortunately."
Here's the problem with that. The roughly $70/hour figure is a statement of labor costs, not wages. What's the difference?
Let me pull an example from my own experience. The numbers are fudged somewhat - both because I have no interest in telling you what my salary at IBM was; and because I'm afraid IBM would still come after me if I gave up real information about how they charge for employees. The very rough proportions are based on my (imperfect) memory of the real breakdown, but I'm really making this up based on the rough structure of how the figure was computed.
IBM had an internal figure that it used as my labor cost. For simplicity, let's say that that figure was $100,000. That cost was broken down as:
A full third of my "labor cost" had absolutely nothing to do with actually paying me. And that's typical: when you want to make something look expensive, you can find all sorts of ways of transferring costs to it. Never trust the figure that a company cites for what it's workers cost unless you get to see the real, entire balance sheet, and see what costs they're including, and what income they're excluding.
Let's get back to the auto-workers. How do they get that labor cost figure? The company takes every expense that they can plausible associate with past or present workers: salaries, benefits, insurance, pensions, etc. Then it divides that by the number of hours worked by current active employees. The result is the "per hour labor cost". This is a very artificial number. It's specifically set up to include pension payments to retired workers, while excluding the money that they paid into pension funds. So the entire expense of pensions and benefits for retired workers is added to the "labor cost" of current workers.
For two years, Mark McDonald kept a tomato crate under his desk, mindful that he might need to pack up on short notice. He knew that a job with CTG Inc., which supplies contract workers for IBM, came with uncertainty, given the big computer company's reputation for sudden, drastic cuts. But when two managers in the Research Triangle Park, N.C., office stopped by McDonald's work station on the morning of Oct. 17, he was still caught off guard.
McDonald was checking e-mail and sipping hazelnut coffee. It was four days short of his 40th birthday. The managers had come to tell him that today would be his last day at work. McDonald's first thought was that he had done something wrong. The managers, rather than give reasons in front of the office staff, asked him to join them in the conference room after he had packed.
As McDonald worked in a fog, an account representative nearby began crying softly. Russ Hemenway, a team leader in the service test group for IBM, came over and put a reassuring hand on his shoulder. "Mark," he said, "if you need help finding another job, use me as a reference right away."
When he arrived at the brightly lit meeting room with his crate, McDonald was given a couple of forms to sign. One was to cancel his contract; the other informed him he could be rehired if things turn around. In the seven weeks since then, McDonald has had a half-dozen job interviews. He is confident he will find something soon. But he is also sure things will never feel the same. "I worked with a very special, unique group of people, and it just all of a sudden abruptly ended," he said. "I think on my next job, I'm going to be holding my breath."
So, he thought, “Where can I get people who can write the word for less?” In a move that sounded so preposterous it became a Stephen Colbert skit, he put an ad on Craigslist for Indian reporters and got a flood of responses. He fired his seven Pasadena staffers — including five reporters — who were making $600 to $800 a week, and now he and his wife direct six employees all over India on how to write news and features, using telephones, e-mail, press releases, Web harvesting and live video streaming from a cellphone at City Hall. “I pay per piece, just the way it was in the garment business,” he says. “A thousand words pays $7.50.”
I checked in with one of his workers in Mysore City in southern India, 40-year-old G. Sreejayanthi, who puts together Pasadena events listings. She said she had a full-time job in India and didn’t think of herself as a journalist. “I try to do my best, which need not necessarily be correct always,” she wrote back. “Regarding Rose Bowl, my first thought was it was related to some food event but then found that is related to Sports field.” ...
At first the reaction to covering Pasadena from 8,000 miles away and 13.5 hours ahead was “absolutely brutal,” Macpherson recalled. Journalism professors keened and Larry Wilson, the public editor at The Pasadena Star-News, called it “nutty.” But then in October, Dean Singleton, The Associated Press’s chairman and the head of the MediaNews Group — which counts The Pasadena Star-News, The Denver Post and The Detroit News in its stable of 54 daily newspapers — told the Southern Newspaper Publishers Association that his company was looking into outsourcing almost every aspect of publishing, including possibly having one news desk for all of his papers, “maybe even offshore.”
These aren't just the spendthrifts or sloppy planners you would expect to run into trouble in retirement. Interviews with 35 of The Unretired show that many are people who did everything they were supposed to do—working for decades and regularly socking money away. Floyd McCoy, 67, retired three years ago after working for IBM for 22 years and running his own consulting firm. But his $400,000 in savings has dropped 40% this year, and the value of his Weston (Conn.) house is down by a third. McCoy says he can't afford to keep the house he and his wife built 25 years ago for retirement. "I never knew life could be as challenging as this," he says. ...
Retirees have been squeezed during past economic downturns, of course. Their stocks tend to get hit, and returns on fixed-income holdings slide as interest rates are cut to stimulate the economy. But there hasn't been this kind of sharp decline in stocks and home prices at the same time since the Great Depression. In addition, more retirees have exposure to the stock market than in the past because companies have moved from traditional pension funds to employee-managed retirement accounts, such as 401(k)s, which tend to include stocks. A Vanguard survey of clients aged 55 to 64 at the end of 2007 found that two-thirds of their retirement funds were in stocks. "A lot of people invest by themselves, and they aren't aware of all the risks," says Benjamin H. Harris, senior research associate at the Brookings Institution.
Thirty years ago, a typical consumer had a fixed-rate mortgage, a life-insurance policy, a bank account and an employer-paid pension plan. Nowadays, that same consumer may have a payment option adjustable-rate mortgage, a 401(k) retirement-savings plan, a home-equity line of credit and perhaps even a health-savings account instead of traditional employer-sponsored health insurance.
In the process, risks previously borne by big banks and employers have been placed squarely on the shoulders of consumers. Individuals increasingly bear the risk of interest-rate fluctuations, rising health-care costs, stock-market gyrations and outliving their retirement savings.
"If I'm going to buy a BMW for anybody, it should be me," says Mr. Gamradt, an information-technology worker. "I wouldn't exactly say the financial-services industry is at war with your average American consumer, but it's d- close." The financial-services industry sold this personal-responsibility revolution by claiming that complex offerings like adjustable-rate mortgages and health-savings accounts would empower consumers to manage their ever-expanding portfolio of risks.
The new products created billions of dollars in fees that have powered Wall Street's growth -- even in recent years as the stock market stagnated. The financial sector's share of total U.S. corporate profits jumped to 35% in 2007, up from 10% in the early 1980s, according to investment research firm BCA Research. Now, of course, many of the products cooked up by Wall Street are exploding -- and dragging down the financial-services industry with them. Whether the industry will return to record profit levels again is a question mark. If the public veers away from such products, the financial sector could shrink drastically.
Here's why. Say you are a 65-year-old man; your life expectancy is 17 more years. You earned good money, and now you can expect a monthly Social Security payment of $2,000. At least for now, the U.S. government pledges that you will receive those payments, adjusted for inflation, for as long as you live. Having Social Security is equivalent to holding a bond that should produce $24,000 in today's purchasing power every year.
This kind of bond has a name: an inflation-adjusted immediate annuity. How big an annuity would match that $2,000 in Social Security each month? With the help of Allan Roth, a financial planner at Wealth Logic LLC in Colorado Springs, Colo., I was able to answer this question. It takes a $327,000 lifetime annuity -- assuming you bought it from Vanguard, an economical provider, at this week's rates -- to throw off $2,000 a month, after inflation, for the rest of your life. ...
The implicit bond of Social Security makes up about 40% of the total assets of the average household on the verge of retirement, according to Olivia Mitchell, director of the Pension Research Council in Philadelphia. "Having Social Security comprise such a big piece of the typical household's portfolio," says Prof. Mitchell, "makes recent equity-market losses, and home-value losses, relatively less critical."
IBM said its operations in Japan was conducting a voluntary retirement scheme. "IBM Japan is conducting a voluntary retirement scheme, which was publicly announced some time ago. The Career Choice Retirement Plan is a financial assistance program for employees who voluntarily retire at the age of 55. "Since this is a voluntary retirement scheme, IBM Japan cannot predict how many employees will be involved," a company spokesperson said.
At the same time, those groups, which span the ideological and political spectrum, largely have agreed to preserve the employer-based system through which most Americans get their health insurance. The idea of a federal, single-payer system patterned on those in Europe and Canada, long a dream of the political left, is now virtually off the table.
"Our health-care system is fraught with waste," says Gary Kaplan, chairman of Seattle's cutting-edge Virginia Mason Medical Center. As much as half of the $2.3 trillion spent today does nothing to improve health, he says. Not only is American health care inefficient and wasteful, says Kaiser Permanente chief executive George Halvorson, much of it is dangerous.
“Private health insurance is no longer a workable model for health care reform, because the insurance companies sell a defective product and health care costs are so high that even moderate-income families can no longer afford the premiums, co-pays and deductibles,” said Ida Hellander, executive director of Physicians for a National Health Program, a group of 15,000 doctors who support a single-payer system.
So far, though, groups working to create a public insurance plan that exists alongside tightly regulated private plans have grabbed the political high ground — largely because many deem a single-payer system too easy to demonize as socialized medicine.
People who are already sick will generally not be eligible for the new product. Those who do pass a medical review, will pay 20 percent each month of the current premium on an individual policy to reserve the right to be insured under the plan at some point in the future.
Burns’ despondency is understandable: if ever there was a time that the prescription drug industry needed credibility, it’s now. For the first time in recent memory, drug companies are facing the prospects of an end to their free ride of unregulated profiteering. There are already rumblings that both the Obama Administration and the Democratic Congress want to stack up a series of clean legislative victories by going for “low-hanging fruit”—bipartisan, popular initiatives that will pass easily—and there are few juicier targets than Big Pharma.
Several consumer groups sharply attacked the insurance group's plan on Wednesday. "The health insurance industry's vision of healthcare reform lets them keep charging whatever they want and increase their profits while sticking families and taxpayers with high costs," said Richard Kirsch, national campaign manager for Health Care for America Now.
"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.
“Expect fallout, expect foreclosures, expect horror stories,” California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job.
Bowing to aggressive lobbying — along with assurances from banks that the troubled mortgages were OK — regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way.
“These mortgages have been considered more safe and sound for portfolio lenders than many fixed rate mortgages,” David Schneider, home loan president of Washington Mutual, told federal regulators in early 2006. Two years later, WaMu became the largest bank failure in U.S. history.
The administration’s blind eye to the impending crisis is emblematic of a philosophy that trusted market forces and discounted the need for government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s.
The housing mania was in full swing in 2005 when analysts at Moody’s Investors Service, the nation’s oldest and most prestigious credit-rating agency, were pressured to go back to the drawing board. Moody’s, which judges the quality of debt that corporations and banks issue to raise money, had just graded a pool of securities underwritten by Countrywide Financial, the nation’s largest mortgage lender. But Countrywide complained that the assessment was too tough.
The next day, Moody’s changed its rating, even though no new and significant information had come to light, according to two people briefed on the change who requested anonymity to preserve their professional relationships. ...
That was not the only time Moody’s softened its stance on Countrywide securities. It elevated ratings several times after Countrywide complained, the people briefed on the matter say. Since the subprime mortgage troubles exploded into a full-blown financial crisis last year, the three top credit-rating agencies — Moody’s, Standard & Poor’s and Fitch Ratings — have faced a firestorm of criticism about whether their rosy ratings of mortgage securities generated billions of dollars in losses to investors who relied on them.
The agencies are supposed to help investors evaluate the risk of what they are buying. But some former employees and many investors say the agencies, which were paid far more to rate complicated mortgage-related securities than to assess more traditional debt, either underestimated the risk of mortgage debt or simply overlooked its danger so they could rake in large profits during the housing boom. ...
Moody’s current woes, former executives say, were set in motion a decade or so ago when top management started pushing the company to be more profit-oriented and friendly to issuers of debt. Along the way, the firm, whose objectivity once derived from the fact that its revenue came from investors who bought Moody’s research and analysis, ended up working closely with the companies it rated, and being paid by them.
And in 2000, when Moody’s issued stock to the public for the first time, executives hungry to churn out quarterly profit growth had another incentive to redirect the firm’s focus from low-margin ratings of relatively simple bonds to highly lucrative assessments of much more complex debt securities. As it rode the mortgage wave, Moody’s came to enjoy profit margins that were higher than those of the mightiest of Fortune 500 companies, including Exxon and Microsoft.
Like many other 'titans of Wall street,' Bank of America, Key Bank and others are taking their bailout -- supposedly meant to allow credit to get our economy moving again -- and using it to take over other banks, pay bonuses to executives and dividends to shareholders... just about everything except helping businesses continue to employ workers.
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:
The IBM financial controls have grown so onerous as to take on a life of their own. They have become major impediments to smooth and efficient operational excellence. Period. No argument. But then again, does IBM management really care if they think US-Europe is no longer a market worth nurturing?
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