After almost 28 years at Big Blue, Joe Della Pietro was laid off during a 2002 "resource action," less than four months shy of his full pension eligibility. "I know people still working there," he wrote. "The stress is even greater. The latest IBM training method (trick) is for an IBMer here in the US to teach an overseas IBMer how to do a job. Then, once the foreigner learns the job, the US IBMer is let go." According to Williams, IBM Poughkeepsie recently laid off workers in four departments. "Next time you talk with IBM, ask them about it," Williams said.
Such questions routinely get canned replies from IBM, such as, "No announcements have been made," or "IBM does not respond to rumors or speculation." In this case, IBM spokesman Doug Shelton said, "Oh my goodness, you've got sources." According to Shelton, job cuts are continually taking place "throughout the company throughout the year." Asked if employees must train their replacements, Shelton replied, "I have no information to confirm that one way or the other."
For Dow Kim, 2006 was a very good year. While his salary at Merrill Lynch was $350,000, his total compensation was 100 times that — $35 million. The difference between the two amounts was his bonus, a rich reward for the robust earnings made by the traders he oversaw in Merrill’s mortgage business.
Mr. Kim’s colleagues, not only at his level, but far down the ranks, also pocketed large paychecks. In all, Merrill handed out $5 billion to $6 billion in bonuses that year. A 20-something analyst with a base salary of $130,000 collected a bonus of $250,000. And a 30-something trader with a $180,000 salary got $5 million.
But Merrill’s record earnings in 2006 — $7.5 billion — turned out to be a mirage. The company has since lost three times that amount, largely because the mortgage investments that supposedly had powered some of those profits plunged in value.
Unlike the earnings, however, the bonuses have not been reversed.
As regulators and shareholders sift through the rubble of the financial crisis, questions are being asked about what role lavish bonuses played in the debacle. Scrutiny over pay is intensifying as banks like Merrill prepare to dole out bonuses even after they have had to be propped up with billions of dollars of taxpayers’ money. While bonuses are expected to be half of what they were a year ago, some bankers could still collect millions of dollars.
Critics say bonuses never should have been so big in the first place, because they were based on ephemeral earnings. These people contend that Wall Street’s pay structure, in which bonuses are based on short-term profits, encouraged employees to act like gamblers at a casino — and let them collect their winnings while the roulette wheel was still spinning.
“Compensation was flawed top to bottom,” said Lucian A. Bebchuk, a professor at Harvard Law School and an expert on compensation. “The whole organization was responding to distorted incentives.” Even Wall Streeters concede they were dazzled by the money. To earn bigger bonuses, many traders ignored or played down the risks they took until their bonuses were paid. Their bosses often turned a blind eye because it was in their interest as well. ...
The bonanza redefined success for an entire generation. Graduates of top universities sought their fortunes in banking, rather than in careers like medicine, engineering or teaching. Wall Street worked its rookies hard, but it held out the promise of rich rewards. In college dorms, tales of 30-year-olds pulling down $5 million a year were legion.
While top executives received the biggest bonuses, what is striking is how many employees throughout the ranks took home large paychecks. On Wall Street, the first goal was to make “a buck” — a million dollars. More than 100 people in Merrill’s bond unit alone broke the million-dollar mark in 2006. Goldman Sachs paid more than $20 million apiece to more than 50 people that year, according to a person familiar with the matter. Goldman declined to comment.
His question was occasioned by the arrest of the Wall Street money manager Bernard Madoff on charges of running a Ponzi scheme that bilked investors out of billions of dollars, but it wasn’t only that. It’s the whole bloody mess coming out of Wall Street — the financial center that Hong Kong moneymen had always looked up to. How could it be, they wonder, that such brand names as Bear Stearns, Lehman Brothers and A.I.G. could turn out to have such feet of clay? Where, they wonder, was our Securities and Exchange Commission and the high standards that we had preached to them all these years? ...
I have no sympathy for Madoff. But the fact is, his alleged Ponzi scheme was only slightly more outrageous than the “legal” scheme that Wall Street was running, fueled by cheap credit, low standards and high greed. What do you call giving a worker who makes only $14,000 a year a nothing-down and nothing-to-pay-for-two-years mortgage to buy a $750,000 home, and then bundling that mortgage with 100 others into bonds — which Moody’s or Standard & Poors rate AAA — and then selling them to banks and pension funds the world over? That is what our financial industry was doing. If that isn’t a pyramid scheme, what is? ...
The Madoff affair is the cherry on top of a national breakdown in financial propriety, regulations and common sense. Which is why we don’t just need a financial bailout; we need an ethical bailout. We need to re-establish the core balance between our markets, ethics and regulations. I don’t want to kill the animal spirits that necessarily drive capitalism — but I don’t want to be eaten by them either.
FedEx is not the only one. Eastman Kodak, Motorola, General Motors and Resorts International are among the companies that have cut matching contributions to their plans since September, when the credit markets froze and companies began looking urgently for cash. More companies are expected to suspend their matching contributions in 2009, according to Watson Wyatt, a benefits consulting firm. ...
“We have had a 30-year experiment with requiring workers to be more responsible for saving and investing for their retirement,” said Teresa Ghilarducci, a professor of economics at the New School. “It has been a grand experiment, and it has failed.” ...
The latest 401(k) cutbacks underscore workers’ vulnerability in an age when companies have been replacing defined-benefit pension plans with the newer 401(k) design. Modern 401(k) plans give workers the power to opt in and out and require them to invest their own money, bearing market risk on their own. That may be appealing when the markets are rising, but it can be terrifying when they fall, as they have recently.
An employer’s contributions to a traditional pension plan cannot be switched on and off at will. Federal rules set a firm contribution schedule, with deadlines and penalties for companies that fall behind. Employers also get significant tax and accounting benefits from operating a traditional pension plan, so they tend to think long and hard before freezing such a plan to save money when the economy cools. In a 401(k) plan, by contrast, the employer has much greater freedom to stop making matching contributions when times are tough. The contributions are normally measured as a percentage of payroll, and the savings from any cuts are realized immediately. That greatly simplifies planning and making changes.
I was getting my child support checks garnished through IBM US while he was working here (first in Indiana, then he moved to Florida). However, as of October 2008, he moved to IBM Thailand and is now living in Thailand, presumably for the purpose of avoiding child support. He was also obligated to carry the kids on insurance, which he is no longer doing.
I know he believes he has beat the system, but I have to believe that an international company like IBM would NOT condone or support his behavior. I am also confused as to how a company that sells global IT HR solutions wouldn't be able to help with an issue of wage garnishment, especially with the Deadbeat Parent Punishment Act set forth by the federal government. I have called every number I could find but have not been able to get any answers and it appears IBM is locked down tight.
Does anyone know anything about this? Or do you know someone that could help me? I have six year old triplets who are being who might affected by this, as are their older siblings (two children from a previous marriage). So, in total - he has skipped out on five children. I really can't imagine that IBM wouldn't be able to or willing to help with this.
Another option is to go back to court and see if the payment terms can be altered - for example, if he has US assets, the court may allow you to go after them or if he is saving his income in a US bank, you may be able to go after that. Garnishing salary is not the only way to force payment of child support. And since evading child support is a crime, in some states a felony, a warrant could be issued for his arrest which would be executed upon his eventual return to the US. Now, wouldn't that be a nasty surprise!
It's possible, some have said, that there never had been, nor never would be, another presentation that unveiled as many new paradigm-shifting technologies. They included the world's first publicly seen mouse, as well as the introduction of hyperlinks and navigable windows. The presentation, which is visible in its entirety, drew a standing ovation.
To conserve its dwindling cash reserves, G.M. is eliminating lifetime health care coverage for its legions of retirees at the end of this year, leaving people like Ken Hewitt to fend for themselves in deciding how to cover their doctor’s bills and prescription drug costs. “Everybody felt like they were set for life,” said Mr. Hewitt, 81, who retired from the former Chevrolet Engineering Center in 1982 and lives north of Detroit. “It’s been difficult, but the information they’ve given us has been beneficial. Still, when you get to be our age, it’s tough to make any big changes like that.” ...
G.M. has estimated that eliminating the white-collar retiree medical benefits, in addition to pay and staffing cuts in its current white-collar work force, will save the company about $1.5 billion annually. Union contracts prevent the company from revoking coverage for former factory workers. Ford and Chrysler already have cut health coverage for salaried retirees.
In recent years, IBM has paid out about $650 million per year for retiree medical expenses. Of that, $199 million came from retiree premiums and the rest from IBM's pocket. Over the long term, expect this number to decrease as there are fewer retirees on the old medical plan and more FHA retirees who have to pay for almost all the medical coverage out of their own pocket.
At the beginning of 2007, the plan had just $47M in it. IBM added $893M during the year and, at year end, the plan had a surplus of $504M and a predicted future obligation of $4,968M. IBM usually seems to like to have something close to a zero balance in the plan at year end. That says they predicted the expenses pretty accurately and collected the right amount in premiums from retirees for the year.
I'm not sure why IBM added so much (the $893M) to the plan in 2007, when they really only needed to contribute about $300M. Maybe they had the cash on hand and figured they would need to spend it in 2008 and 2009 anyway.
Note that there is no medical benefit trust fund. This "plan" is just a bookkeeping account that the money flows through. Gerstner liquidated the medical trust fund years ago and all retiree medical expenses that are not paid by the retiree premiums are paid from IBM's operating income.
IBM can cancel the retiree medical benefits anytime it wants to. Any money left in the account goes right back to the IBM bottom line with no penalties.
I still have a few "About IBM brochures" with the old medical trust fund so I guess it exists in history now as you stated.....like many other things about the legacy IBM.
As important as these studies are, they do not reflect the varying burdens experienced by families in different states. Just as labor markets, health systems, and economic circumstances vary from one state to another, the impact caused by rising health care costs and stagnant earnings differs considerably among the 50 states.
In 2006, Families USA undertook the first state-by-state analysis of growing health care premiums versus stagnant earnings in the new millennium. Since then, state economies have weakened, while health insurance premiums have continued their upward trend. Health care costs are now an even greater burden on American families. These reports, which are based on data from the U.S. Census Bureau, the Department of Labor, and the Department of Health and Human Services, examine what these trends mean for working families.
In August 2003, Drs. Woolhandler, Campbell and Himmelstein published a study of health-care administrative costs in the U.S. and Canada. They stated that administrative expenditures in the U.S. stood at 31 percent of overall health-care costs. A year later they wrote “only single-payer national health insurance could… allow universal coverage without any increase in total health spending.”
Montanans spent $4.9 billion on health care in 2003. If these authors are right, then Montanans paid over $1,600 in administrative costs for every man, woman and child in the state, including the uninsured. That means that only 69 cents of every dollar spent went to health care needs. Remember, administrative costs are passed on to patients, bill by bill, paycheck deduction by paycheck deduction, and even at the pharmacy!
On May 19, "I was on the floor, doing my work, and I couldn't move," she recalled. "I was like having an out-of-body experience." An employee walked past, and "I couldn't even talk to him. I wanted to tell him, 'Would you please help me?' " She dragged herself home to Lawnside and into bed.
The next morning, her friend and manager, Cheryl Monaco, "told me to go to the hospital because in the 15 years she's known me, I've never been sick. She said go or she was going to call my mother."
Brockington went to Cooper University Hospital - for 48 days. Acute myeloid leukemia. Brockington had been paying $19 a week from her paycheck for health insurance. For 16 months, insurance covered chemotherapy, a bone marrow transplant, five months in hospitals. But on Aug. 28, 2008, a letter came from her plan administrator. Brockington had reached her "lifetime maximum coverage of $2 million." In five days, she would be uninsured. "I started freaking out," Brockington recalled. "We started working on my options, what I could do, and there wasn't a whole lot."
For example, should we try to create more jobs for those making diagnostic scanning equipment?
Probably not. As Health Beat recently reported, we’re already experiencing what some call an “epidemic of diagnostic imaging.” In too many cases, patients don’t benefit. Across the board, 20 to 50 percent of high-tech diagnostic imaging fails to provide information that improves patient diagnosis and treatment. In some cases, false positives lead to unneeded biopsies and surgeries that harm patients. Recent research suggests that an explosion of MRI scans for breast cancer is leading to unnecessary mastectomies. In other words, women lose a breast for no good reason.
So while GE might like more business making diagnostic imaging equipment, all of the medical research suggests that we already have more MRI units than we need, and that they are being overused. (Keep in mind, the goal of health care is not to create jobs: it is to improve the nation’s health.)
Wofford’s presentation began with a mystery quote. Who, she asked the Chamber members in the crowd, said the following?
“Millions of our citizens do not now have a full measure of opportunity to achieve and enjoy good health. Millions do not now have protection or security against the economic effects of sickness. The time has arrived for action to help them attain that opportunity and that protection.”
Wofford revealed the answer at the end of her talk: President Harry S. Truman. ...
“We’ve had over five decades to see how the commercial insurance market works as the key means of providing health care access,” Klein said. “The bottom line is that in all that time health care has gotten neither more affordable nor more accessible. Numerous policy fixes have been applied to goad the private health insurance system toward universality or to rein in costs. As we can see, these goals are no more within reach than they were 20 or 30 years ago.” ...
Harry Truman did in fact propose a “government-run” single-payer plan, Klein said. People often confuse such “government-run” proposals with nationalized medical systems, she said. “Truman believed in expanding social security to include a universal health plan. He wanted to amend the Social Security Act to include national health insurance. Government would replace private insurance companies,” Klein said.
“You have to be careful about 'government run.’ People think that means hospitals are government hospitals, and doctors are government doctors. [Rather] it was about the insurance mechanism. It was about the financing.”
In the past, the benefits of modern medical science have not been enjoyed by our citizens with any degree of equality. Nor are they today. Nor will they be in the future—unless government is bold enough to do something about it. People with low or moderate incomes do not get the same medical attention as those with high incomes. The poor have more sickness, but they get less medical care. People who live in rural areas do not get the same amount or quality of medical attention as those who live in our cities.
Our new Economic Bill of Rights should mean health security for all, regardless of residence, station, or race—everywhere in the United States. We should resolve now that the health of this Nation is a national concern; that financial barriers in the way of attaining health shall be removed; that the health of all its citizens deserves the help of all the Nation. ...
Appreciation of modern achievements in medicine and public health has created widespread demand that they be fully applied and universally available. By meeting that demand we shall strengthen the Nation to meet future economic and social problems; and we shall make a most important contribution toward freedom from want in our land.
Medicare sets a good example for such a plan because it controls costs better than any of its competitors, has produced quality improvements in service through cooperation with organizations such as the Veterans Health Administration and would set strong benchmarks for private health insurance providers, Hacker said in a briefing paper. He released the report in coordination with the Institute for America's Future, the think tank associated with the liberal advocacy group Campaign for America's Future; and Rep. Pete Stark, D-Calif., who chairs the House Ways and Means Health subcommittee.
"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.
This fellow didn’t have anywhere near enough money to pay the $8.2 billion purchase price, but, hey, that’s no problem for a striver. Zell simply got the company’s CEO to let him use the employee’s pension fund as collateral for bank loans to buy the Tribune. Even though their money was put at risk, the employees had no say in the deal, nor in how the company was run. It was run badly. Less than a year after Zell's takeover, the Tribune has had to declare bankruptcy, and employees are likely to lose jobs, severance payments, and pensions.
Those who pulled off this heist, however, have been much more fortunate. The former CEO was given more than $40 million when Zell took charge. Citigroup and Merrill Lynch were paid about $36 million each for being “advisors” on the deal. Another Wall Street bank, Morgan Stanley, got $7.5 million just for writing a “fairness opinion,” stating that Zell’s use of the pension fund was Kosher.
And Zell? He had put up less than four percent of the purchase price to get control of the company, and while he might lose some of that, he cut the deal in a way that makes him a secured creditor. This means that if the Tribune’s assets have to be distributed to creditors as a result of the bankruptcy, Zell will be first in line to get his – standing in front of the employees whose company and pensions he wrecked.
No pirate would do that to his crew.
The global financial system was teetering on the edge of collapse when President Bush and his economics team huddled in the Roosevelt Room of the White House for a briefing that, in the words of one participant, “scared the hell out of everybody.” It was Sept. 18. Lehman Brothers had just gone belly-up, overwhelmed by toxic mortgages. Bank of America had swallowed Merrill Lynch in a hastily arranged sale. Two days earlier, Mr. Bush had agreed to pump $85 billion into the failing insurance giant American International Group.
The president listened as Ben S. Bernanke, chairman of the Federal Reserve, laid out the latest terrifying news: The credit markets, gripped by panic, had frozen overnight, and banks were refusing to lend money. Then his Treasury secretary, Henry M. Paulson Jr., told him that to stave off disaster, he would have to sign off on the biggest government bailout in history.
Mr. Bush, according to several people in the room, paused for a single, stunned moment to take it all in. “How,” he wondered aloud, “did we get here?” ...
But the story of how we got here is partly one of Mr. Bush’s own making, according to a review of his tenure that included interviews with dozens of current and former administration officials. From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone. ...
As early as 2006, top advisers to Mr. Bush dismissed warnings from people inside and outside the White House that housing prices were inflated and that a foreclosure crisis was looming. And when the economy deteriorated, Mr. Bush and his team misdiagnosed the reasons and scope of the downturn; as recently as February, for example, Mr. Bush was still calling it a “rough patch.” ...
As for Mr. Bush’s banking regulators, they once brandished a chain saw over a 9,000-page pile of regulations as they promised to ease burdens on the industry. When states tried to use consumer protection laws to crack down on predatory lending, the comptroller of the currency blocked the effort, asserting that states had no authority over national banks. The administration won that fight at the Supreme Court. But Roy Cooper, North Carolina’s attorney general, said, “They took 50 sheriffs off the beat at a time when lending was becoming the Wild West.” ...
In the 2004 election cycle, mortgage bankers and brokers poured nearly $847,000 into Mr. Bush’s re-election campaign, more than triple their contributions in 2000, according to the nonpartisan Center for Responsive Politics. The administration did not finalize the new rules until last month. Among the Republican Party’s top 10 donors in 2004 was Roland Arnall. He founded Ameriquest, then the nation’s largest lender in the subprime market, which focuses on less creditworthy borrowers. In July 2005, the company agreed to set aside $325 million to settle allegations in 30 states that it had preyed on borrowers with hidden fees and ballooning payments. It was an early signal that deceptive lending practices, which would later set off a wave of foreclosures, were widespread.
Look what's happened to your 401(k)s. With no pension now, how does it feel to know that you'll have to live off your 401(k) as your retirement plan? Most IBMers are highly educated, professional people who should not be losing their jobs. Think Palmisano is losing any sleep on your behalf? Last I heard he was still getting his millions in salary and bonuses while the worker-bees are struggling. Where do you think our kids are going to work, after going to college and assuming loans to pay for their education, if every American corporation thinks it's o.k. to treat the American worker?
Since when has it become acceptable that American workers assume the brunt of IBMs layoffs and downsizing? Where are the executives who make these decisions? Are they being laid off as well? Those who are afraid to say something thinking it won't happen to you, wake up! I didn't think it would happen to me and it did. IBM management says they will help you find a job but most organizations freeze their headcount when a resource action is underway and chances are slim to none that you'll find something. This game has been played for years on IBMers thinking someone is looking out for you and there are opportunities. It's a joke.
Unless you stand up and say/do something, this will continue. The comfort level you think you have working for IBM has long gone. They told us in management school to fear the Alliance; but that seems to be the only group that is working on behalf of employees. I'm sure the automakers UAW union is getting the same response from their members. Someone needs to work on behalf of IBM employees and ensure that even those who've been resource action'd are getting the best deal. -BeenThere-
Once layoffs start and the market gets flooded with tons of pushed out IBMers, sadly, it’ll get a lot harder to stand out to other employers (but things will still work out…). When I chose to leave IBM, I told my manager basically, I’d rather go while the going is good, and on my own terms. He was upset that I would choose to leave the team when everything “looked” great at the time…. I’d bet my words are ringing around in the back of head now… sadly enough. All in all, I wish everyone well this Christmas, and no matter what. If you do get RA’d just remember there will be a brighter tomorrow! -Happily Out of the IBM mess... but still Curious-
Alliance Reply: I have some experience with this issue, so let me share it with you. When you are employed by IBM or any contractor using the "At Will Employment" policy; you are at the mercy of their will. If the company wants to fire you for no reason or if they wish to fire you for a reason they won't discuss with you, it is their right. If you publicly disparage, denounce, or otherwise defame the company, its products or services, or its management policies; they can fire you for just cause and they will call it 'misconduct'. As long as you are employed by a company; what you say publicly can be construed as 'disparagement'. Freedom of Speech is NOT an entitlement when you are employed by a company you're speaking out against.
The contractor is probably an "at will" employer also; and agreed in writing to several of IBM's "at will" policies as well. Frankly, the US Bill Of Rights loses jurisdiction as soon as you step upon private property and begin speaking or acting publicly, against that company. It's unbelievably sad, but it's true. Good luck with your claim. I hope you win. I just wanted to point out that it's not an easy road. Rick White, Organizer & Web Maintenance, CWA Local 1701, Alliance@IBM, www.allianceibm.org.
Yes, I was doing the work of 2 desks & had deadlines to meet but that didn't matter. I told my manager that it was his job to have enough people to do the work - I was going home after 40 hours & that was it. It worked. My manager farmed out some of the excess work & I got my workload down to where it could be done in 40 hours. When I switched to a different position, I told my manager up front that I will work hard for 40 hours & then go home. He responded with a "sure you will" sarcastic kind of attitude. But again, I was able to do my work in 40 hours without too much issue.
Now that some of my work has been sent overseas, I'm not seeking out additional work as I'm planning on leaving IBM anyway. I couldn't care less if IBM succeeds or not. The problems here are so ingrained that things aren't going to change. People are either so frightened or apathetic that they aren't going to unionize. Management is so out of touch that they aren't going to affect any real change either. Like I said, I'm just padding my resume now before I move on to a job that I actually enjoy doing and get rewarded for my effort. -Tulsa employee-
Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. A sample post follows:
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.