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Highlights—January 21, 2012

  • Binghamton Press-Connects: Lawsuit against IBM will be held in Broome County. Company request to move trial venue denied. Excerpt: In a series of nine lawsuits filed in Broome County Supreme Court beginning in January 2008, about 1,000 plaintiffs have accused the company of releasing contaminants from its former 135-acre site in Endicott that have resulted in illnesses and deaths, damaged property values and hurt business. The first trial is slated to begin by Oct. 1, according to a case management order filed in Broome County Supreme Court last June.
  • Financial Times: Software and services drive IBM profits. By April Dembosky. Excerpts: Pre-tax income from IBM’s hardware business was down 33 per cent. Its global financing segment saw pre-tax income decrease 9 per cent. Instead, the company’s software and services businesses drove overall profits. Software pre-tax income rose 12 per cent, to $3.7bn, while services pre-tax income rose 18 per cent for the quarter, to $1.9bn.

    However, analysts questioned whether the good margins in the services business were due to labour migrations outside the US.

    “We were very specific in our overall business model for the 2010 road map and 2015, of our intention to pull spend and drive productivity as a global corporation,” Mr Loughridge responded. “Services businesses are a big beneficiary of that large structural corporate take-out.”

  • Yahoo! IBM Employee Issues message board: "Record profits" by "workforlife". Full excerpt: All right ! We made a ton of money. I bet my variable pay and next raise will be huge. Okay, so maybe the VPs' and Ginnie's bonus will be huge.
  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by "mr_quarkwrench". Full excerpt: As it should be. Ginnie and the VPs figure out how to drag in this money, you are just an expense. (Editor's note: "mr_quarkwrench" was being facetious with his remarks.)
  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by Paul Sutera. Full excerpt: Revenues are coming from the workers, not the VPs. Rising profits are coming from offshoring and outsourcing and starting exempts here at 42K with far far fewer benefits than you or I ever saw. As a techie, I know where the work is getting done. The strategies of Sam and his ilk have brought the world economy to its knees while creating big bags of money that don't circulate.

    Consumption drives the economy, not profits. You don't get much consumption laying waste to the middle-class, sending millions to the unemployment line and then declaring record profits. 1/2 of all capital gains are "earned" by only 300,000 Americans. Taxed at the lowest tax-rate of 15%.

    I don't want to hear "hats off" to Sam and Ginni, them is fightin' words. Sure it trickled down to us - we who were lucky enough to be (so far) grandfathered into the world of pensions (though mine is frozen), and medical benefits (FHA for me). Quarkie, the world is changing and the new Gilded Age is almost upon us.

  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by "redrock_5432". Full excerpt: "You don't get much consumption laying waste to the middle-class, sending millions to the unemployment line and then declaring record profits."

    You won't have a middle class until the COST of hiring employees in US and expanding businesses here is lowered. I would expect Unions and others would want to lower the cost of doing business is US. Instead the fighting seems to be always Unions/workers versus management. Lowering the cost of doing business in US may sound like a right wing position but I don't think it should be.

    With the current cost per employee for companies in US, companies are sending 'portable' investments overseas and with trade imbalance China and others are buying operations in US (those with cost or location advantages) and taking the profits out of US. History is not a good guide because of the post WW2 global advantage the US had in the world and then the debt driven consumption masked the underlying problems. A strategy which views the company as the only problem will not be a long term winner, in my opinion.

  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by Paul Sutera. Full excerpt: I don't think you have to worry about wages coming down in the USA, that is already happening. GM Union workers make $9.00 with the top manufacturing position at $29.00 an hour. Kind of hard to compete with people who still earn $9.00 a day in the 3rd world. We had a knife factory near me in Ellenville NY that was offshored probably almost 10 years ago. The base pay was $6.00 an hour. For many years before "free-trade" tariffs supported living standards in the first world and Europe still employs many barriers to the dumping of 3rd world goods.

    I see Germany still one of the largest manufacturers in the world with manufacturing some 25% of their economy...versus 15% here. And Germany is certainly highly regulated with high living standards, strong labor unions, and workers rights. What they have that we don't have, is a government that helps keep manufacturing in their country. Also the severance policies in many European nations mean that firing someone can cost up to 2 years pay. So there's fewer layoffs in Europe.

    A lot of conservatives are making the case that Greece, Portugal and Italy are examples what happens when too much "social-reform" interferes with the workings of free trade. To those people I say, stop cherry picking data - the following countries in Europe have LOWER unemployment rates than the USA and higher labor costs: Germany, Sweden, Belgium, Denmark, Norway, Netherlands, Finland, Austria, and more.

    German banks do not readily lend to German entrepreneurs seeking to open factories in China either.

    I think this whole conservative revolution has spawned a rash of amateur economists whose pet theories nicely support the destruction of worker's rights, pensions, healthcare, etc. For years our model worked and the new model causes more money to pile up in the hands of fewer and fewer people. The 6 Walmart heirs now have combined wealth greater than the wealth of 105 million American adults. 1 out of every 105 jobs is a Walmart job. 1/2 of the capital gains from profits now coming from the 8 million middle-class jobs destroyed are going to .1% of Americans. You not only favor this, you think it's sustainable.

    I point up this example again and again - the Chinese worker making iPads cannot afford to pay the US price for one, or probably even the much lower Chinese price. Our recently doubled-profits depend on many well-off people buying the goods produced by many people working in slavery conditions. Eventually profits will have to come down, and eventually, growth in the world must slow, and now only China and India are growing at 9%.

  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by "sby_willie". Full excerpt: I hate to see what will happen to the IBM worker in the USA, Europe, Canada if the European economy goes into a deep recession. Most of the IBM contracts and customers are in the USA and Europe. If Europe struggles mightily then the USA "recovery" will stall or sink. If it gets real bad then IBM India and IBM China will be affected badly too.

    The latest PBC cycle might be an indication that IBM is gearing up for a leaner 1st QTR 2012. That is probably a reason why many, many employees got a lower PBC and more have entered the twilight world of receiving a PBC 3. It is strange that IBM posts higher and higher profits and the employees suffer more and more. Employees make the money for IBM and allow IBM to earn their revenue. So shouldn't the employee's PBC at least stay the same or improve (less PBC 3s, more PBC 2+s and 1s)? I guess now in IBM the executives have convinced themselves and everyone else that they only make the record profits and bigger and bigger revenues and non-executive employees are an evil expense to blame for not making more of a record profit which hurts IBM and also executive compensation, bonuses, stock options, and awards.

    We know how IBM reacts when they beat the 'street each and every quarter. We see it so regularly it's now routine. It's easy to lead and be on top when all is going rosy, but it takes real leadership to do the right things, with conscience and conviction, when storm clouds finally do arrive.

  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by "workforlife". Full excerpt: Sorry my poor humor got so many people going. For those not working at IBM right now. We have 2 distinct variable pay plans. The lettered execs are based on Wall street number. Us workers are based on a matrix that seems to change every quarter. The old, you were above target so we raised the target again and gee you missed it by 10% at year end. So we can not give you a larger variable check. Just fun and games.
  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by "sby_willie". Full excerpt: For folks who have sadly and unfairly gotten a PBC 3 this year: This is not to make you feel any worse, but if you are not yet 55 years old AND do not have 30 years of IBM employment service your FHA (Future Health Account) reverts to a ZERO balance. Don't think IBM is still going to offer you some retirement medical or a prorate retirement medical benefit. They will not offer you any FHA. You lose it all.

    This is another reason IBM is saddling many more employees with unfairly low PBCs. Every little bit of benefits IBM can continue to take from an employee means more IBM profit and ultimately more wealth and entitlements for the likes of Sam and Ginny and the rest of the IBM executives.

  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by Paul Sutera. Full excerpt: I think the policy is different if you are on the old plan. If you are retirement eligible, I thought you could get the FHA, and begin to use it at age 55, (retired). Not so for the Cash Balance (no choicers), they do need both criteria but check with your benefits counselors. I know for sure Cash balance pension folks need to be 55 (or 54 with a 1 year pre-retirement LOA) to get the FHA. Whether they also need 30 years is the question.

    Also some Cash balance folks who were almost 40 in 1999 got an enhanced Annuity option. A friend of mine had Cash Balance, was given a 9 month bridge to 30 years, was age 51, and receives $1500.00 a month from the enhanced annuity. Benefits should inform you of this option but it pays to do your research, and if you have a 3 PBC you might have extra time. I do know of PBC 3's who made their way back to a 2+ recently, but they were absolutely indispensable to their group.

    LOA's and bridges: If you are within a year of retirement eligibility, I believe they are still offering a bridge to full retirement if you lose your job. The 1 year pre-retirement LOA is for when *you* decide to retire, but you get nothing for a year, except maybe COBRA coverage, which is expensive. For that LOA you need to be exactly 54 (with at least 14 years service) or 29 years service regardless of age. FHA eligibility is a factor.

    For the enhanced annuity and the traditional pension there is a bump in payment amounts when you retire at full eligibility.

    Again, most people don't bother to understand their benefits so thinking they might join a union to help our cause is maybe asking a lot. What a placid lot the IBMers are. Maybe it takes slave blood to work here for so many years.

  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by "older_bassman". Full excerpt: Actually there is no separate age limit on the FHA. I retired from IBM at 51 and 31 years of service and started using the FHA immediately. An important note, if you opt to not use the FHA immediately or suspend it later you need to be sure you have no gap in coverage. If you do you will not be able to go back and use the FHA at a later date.
  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by "madinpok". Full excerpt: Just to be clear - there IS an age requirement on being able to use the FHA for some IBMers. If you were not 40 years old with at least one year of service on June 30, 1999, then you must stay employed until age 55 to qualify for the FHA. If you did meet the age/service requirements above, then you can use the FHA at any age once you reach 30 years of service.
  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by "older_bassman". Full excerpt: I stand corrected. I forgot about the under 40 folks.
  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by Paul Sutera. Full excerpt: And I think FHA is collectable at age 55, if retirement eligible, with any number of years of service, doesn't have to be 30 years of service. Hoping this is the case, since I'm 54 with 28 years of service, I hit 30 years at age 56.
  • Yahoo! IBM Employee Issues message board: "Re: Record profits"by "madinpok". Full excerpt: To use the FHA at age 55, you must have at least 15 years of service. So you will be OK.
  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by "netmouser". Full excerpt: If you are retirement eligible and at least age 55 you can get access-only FHA, meaning you get the same FHA plans but pay all the premium. The 15 years is only needed for getting the FHA funds. The funds accumulate through "credits" for up to 10 years of service, but you need 15 years of service to actually have those funds available.
  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by "ML". Full excerpt: I think I got screwed more ways than one...end of June will be my 30th...was 39 and 10 months on June 30, 1999. So if I want to see any of the FHA money I would have to stay at IBM till I'm 55; that would mean for me I'd have to put in 33 years to be eligible...doesn't seem fair.
  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by Paul Sutera. Full excerpt: All is not lost if you make it to 30 years or get a short-term bridge since the enhanced annuity option of your cash-balance pension is not a bad deal and jumps quite a bit upon reaching eligibility. That said the cash-balance deal was one of the most egregious thefts ever perpetrated on employees of a Fortune 500, bar none. When IBM did that I never trusted them again. Of course many people who faced the 1991-1994 layoffs lost their trust before I did, but I didn't harbor any illusions after the Cash-Balance debacle. But yes you have to make it to age 54 and a bridge to get the FHA, though your benefits counselor is the best source of information for that.
  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by "sby_willie". Full excerpt: ML- No. It's not fair. I guess you and a lot of other were born and employed by IBM at the wrong times. Talk about being in the wrong place at the wrong time.

    The only reason I can think of the 40 year old criteria was used by IBM is to avoid age discrimination suits. But you can say you were discriminated based on your age since you were not yet 40 years old at the time of the retirement medical change to the FHA.

    It still amazes me how misinformed and the assumptions IBMers make about the provisions of the FHA since it was instituted in 1999 (the same year of the cash balance pension changes). IBMers are all convinced they'll get it no matter what.

  • Yahoo! IBM Employee Issues message board: "Re: Record Profits" by "kramrengaw". Full excerpt: Welcome to the club. It was even worse for me since I joined the company when I was 19 so the change added an additional 5 years until I could retire with both PPA and FHA (35 years total).
  • Yahoo! IBM Employee Issues message board: "Re: Record profits" by "Steve". Full excerpt: I'm pretty sure that 30 years service makes you eligible for retirement and FHA, regardless of age.
  • Yahoo! IBM Pension and Retirement Issues message board: "Future Health Account" by "ncdad1". Full excerpt: Can someone talk about their experience with the FHA? I understand I will get an account to buy IBM health insurance to use until Medicare kicks in. I understand I can only "buy" IBM insurance and only "buy" it in the US with the fund?

    I am curious on how much the post retirement IBM insurance costs.

    Is it something like $10k a year for a couple with a $10k deducible?

    I am guessing when FHA runs out, I can pay for it. Is IBM's post employment health insurance cost competitive? I was wondering if maybe it is cheaper to buy health insurance on the open market than from IBM.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "alwaysontheroad4bigblue". Full excerpt: See http://www.endicottalliance.org/FHA.html. Also, go to the Fidelity NetBenefits site (www.netbenefits.com/) and select the Health and Insurance tab. At the bottom of the page click on the Future Health Account Details link.

    I believe that for two people (you and a spouse) you can figure on around $15,000 or more a year, not including dental or eye insurance. That will probably go up rapidly year to year as IBM puts its retirees in a different insurance pool than its employees. This saves the company money since the rates for employees (who are younger) will be much lower than those for retirees (who are older.)

    A key point of the FHA is to never spend it down to zero. As long as you have some money in it, you can continue to buy insurance from IBM...at whatever cost they choose to charge you, of course.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "divaberyl". Full excerpt: Good rule to follow. However, it is only necessary to have FHA funds left if you ever leave IBM's plan and plan to come back. That is, if it ever goes to zero and you leave the plan, you can't come back.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "hankharty". Full excerpt: In addition to a non-zero FHA balance, I believe you also have to be able to prove continuous-qualified coverage if you want to come back.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "ncdad1". Full excerpt: Wow ... I called around and it seemed like I could get a much better rate from other companies than buying it from IBM ...
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "thekanck". Full excerpt: When you call for rates you are quoted the "standard" rate which assumes you have NO pre-existing conditions, are the ideal height for your weight (or ideal weight for your height ;-), do not take any drugs that are expensive or "scary" to the insurance company (e.g. anti-depressants), and so on.

    If you are one of those rare individuals who has managed to avoid all health-related baggage you can probably actually get coverage at that rate. More likely, having watched several of my friends go through the process, the insurance companies will find things that cause your premiums to go up, sometimes dramatically, as they go through the underwriting process.

    So, unless the company has offered to actually write YOU coverage at the price(s) you have in front of you be very wary of what you see! TK

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "gjbaker2001". Full excerpt: I may be missing something here but I have to disagree based on my own experience. Some details: I need coverage for both my wife and myself; both Medicare eligible this year; my wife has traditionally had low medical needs until this year when she experienced a ruptured disc; I am the opposite and am treated for multiple conditions - heart disease (heart attack in 1989), diabetes, chronic bronchitis, and other minor ailments.

    I looked at the IBM offerings and considered the Aetna Integration Plan A but because I was comfortable with last years BC/BS PPOII plan I chose to go again with it for myself and to add enroll my wife also this year. The plan includes the features I want and the price was significantly lower on the open market than what a BC/BS plan cost through IBM.

    The IBM BC/BS plan (an HMO) covered things like primary and specialist visits at a lower per visit cost but the monthly premium was $570 for my wife and I. The BC/BS PPOII that I called up for on my own cost $94 for the both of us. Neither of us was asked to verify our health status. This is the second year I am on it and the first year for my wife.

    I just don't see any benefit to the $3000 that IBM contributes for me showing up in the monthly cost if I chose to use it. Am I totally missing something. Thanks, George

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "netmouser". Full excerpt: You can see the open market plans in your location at this website to compare http://www.ehealthinsurance.com/. When you compare, be sure to include only plans with an annual out-of-pocket limit. And one that is reasonable. Not having this is a reason people with insurance go bankrupt.

    And also consider a plan with no cap for prescription. Some plans have none or are capped at a few thousand a year. You never know when a serious illness will hit with huge drug costs (and why we have insurance).

    If you are healthy, consider a high deductible plan. You are essentially self-insuring for the small stuff. This all depends on the risk you can accept and can afford.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "ncdad1". Full excerpt: "You can see the open market plans in your location at this website to compare http://www.ehealthinsurance.com/" Nice...this is what I was expecting and comparing against IBM's $15k/yr offering ... 55 year old husband and wife. <$500/month ($6000/yr) $5000-$10,000 deductible 0-30% copay. The offers on the website are not cheap but less than the IBM offering. It makes me wonder about how well IBM manages healthcare expenses.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "hankharty". Full excerpt: Do those numbers include any pre-existing conditions? How many 55-years olds have no pre-existing conditions? How do those rates change as you get older or get sick? Just asking if this is an apples-to-apples comparison? I know that when you get life insurance quotes, they like to give you the best rate, and not a realistic rate. There is usually a disclaimer that 'your mileage may vary'.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "madinpok". Full excerpt: You bring up some good points. The IBM plan high deductible plan has a lower deductible and lower co-payments than the plan ncdad1 describes. Also important to consider is the maximum out of pocket expenses. There is more to health insurance costs than just the premium amounts. Also, the premiums for open market plans DO tend to increase with age.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "netmouser". Full excerpt: If you select an insurer on the open market, be sure your doctors will accept that insurer. Many doctors are picky about the insurers they accept. It'd be a shame to have a better priced plan but not the doctors you want. Understand the insurer's restrictions on their network list of doctors/facilities and if they even permit out of network if that is important to you. Then, if you are really pinching pennies, changing doctors may not matter.

    Also pre-existing conditions and others issues may change that open market premium. Get a formal quote. Sometimes agents might be a source to help pick the insurer best for your needs. Watch out at renewal as insurers make their money here by auto renewals as people get lazy and don't check premiums/feature changes. (True for auto and home insurance as well).

    If you leave the IBM FHA with zero money in the account or had access-only coverage, you cannot get back in and cannot consider the IBM Medicare supplemental FHA plans. These plans have a different pool of people and different pricing and benefits. But then, you are far away from age 65 and perhaps have different considerations like hopefully getting a job within that 10 year span.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "netmouser". Full excerpt: Also, if this unemployment lasts a while in this crazy economy, know that in 2 years in 2014 the health insurance reform "exchanges" kick in. While we don't yet know what that means, it will hopefully offer good coverage at reasonable premiums and share costs. Crawl to there and this issue of paying for your own insurance will get better.

    Fortunately for newly RA'd IBMers, I assume you still get something similar to the 6 months TEMP coverage (continue with your employee plan "as is", and mine was zero premium), and then the next 12 months (that gives the full 18 months COBRA) paying for the cheaper employee plan (cheaper than early retiree FHA plans). So you only have 6 really painful months until 2014 of paying the higher costs for insurance on the open market or an IBM early retiree FHA plan.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "teamb562". Full excerpt: Good point. 55+ (30+ years with FHA) I just (last week) got a second "3" and a boot to the street (you know, Relative Contribution compared to those 20 somethings, "you're not keeping up"). I got offered the ISAP package (USHR119) which provides 12 months of TEMP coverage at same rate as employee. This gets me to Jan 2013. Being how the 2011 Health Insurance Reform is a crapshoot at this point, the following 12 months will be a gamble. Hmmm...would I spend my green dollars on $$Cobra$$ or burn some FHA for 12 months until Jan 2014? I am hoping by Jan 2013 this question will be easier to answer and I can make a clear choice. Yeah, I know, good luck with that.

    Like ncdad1, I'm also struggling with unemployment/pension decision. I live in a state (yep, one of those southern conservative states) where you cannot collect unemployment with pension. My pension would increase $30 a month (in 6 months) if I delay pension for now and play the unemployment game. Not sure it's worth it. Any comments welcome and thanks to everyone for theirs.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "ol_pops". Full excerpt: Well...$30/mo. for life (hopefully) is a good chunk of change. Same argument for delaying SS past FRA if possible.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "Kady". Full excerpt: I don't know what your job role is, but I did the job search thing for the last half of 2011, and it really wasn't that hard to find good opportunities. We hear how bad the economy sucks, but unemployment for degreed technologists is in the 2%+ range. We benefit from the fact that (a) so many technologists coming out of college these days are on student visas, and (b) they can't get work visas to stay. Kady.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "netmouser". Full excerpt: If it helps, COBRA was way cheaper than early-retiree FHA.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "willbefree25". Full excerpt: teamb562, sorry to hear the man finally did it to you too. I can't talk to the FHA, since I don't (and won't) use it, but so many others here do. I can't help you on the UI either, since NY in their infinite wisdom denies you initially until you send them a letter re the 'IBM froze the pension' yada yada, and then they give it to you.

    I couldn't delay the pension and of course it's peanuts, not an unbelievable amount like some here, but it's something.

    But overall, even given the humiliation of being fired along with 5K others by moronic managers and the joke that is the FHA and the incredible density that is the administration of the UI in NY and the paltriness of the pension for the real workers? Life after IBM is glorious, it's fantastic. It's not economically rewarding or just or even viable, but being out of IBM with a cessation of the soul crushing life shortening stress?

    As they say in the commercial: priceless! Good luck to you, teamb562.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Future Health Account" by "madinpok". Full excerpt: The cost of the FHA plans for employee+spouse range from $13,000 for the High Deductible plan to $20,000 for the Low Deductible plan for 2012. The dental plans are another $700 - $900 per year.

    The low deductible plan has a deductible amount of $507/$1521 for individuals/family. The high deductible plan amounts are $2500/$7500.

    Once the money in your FHA account runs out, you can continue to buy insurance with your own money. There are some restrictions that you have to be careful about if you want to continue to have access to this coverage.

    Once you are covered under Medicare, you can continue to buy supplemental insurance through the FHA plan. Although the IBM plans aren't inexpensive, you will be hard pressed to find insurance on the open market that is less expensive.

  • Washington Post: U.S. losing high-tech manufacturing jobs to Asia. By Peter Whoriskey. Excerpts: The United States lost more than a quarter of its high-tech manufacturing jobs during the past decade as U.S.-based multinational companies placed a growing percentage of their research-and-development operations overseas, the National Science Board reported Tuesday. The rapid expansion of science and engineering capabilities in China and its neighbors pose a more formidable economic challenge to the United States, according to the group, with Asia rapidly boosting the number of engineering doctorates it produces and research dollars it spends. ...

    The number of high-tech manufacturing jobs in the United States has declined by 687,000, or 28 percent between 2000 and 2010, according to the report. Although the long decline of manufacturing employment in the United States is often attributed to the cheaper wages in developing countries, China and developing countries in Asia have in recent years sought to lure more sophisticated manufacturing operations — and better jobs — by expanding their engineering prowess through government investment in education and research.

    The decline in U.S. manufacturing as a share of the nation’s economy and employment over the past decade “is not solely due to low-wage competition,” the president’s Council of Advisors on Science and Technology wrote recently. “We cannot remain the world’s engine of innovation without manufacturing activity.”

  • Toronto Star: IT hiring recovers after recession, study shows. By Dana Flavelle. It’s a good year to be a computer professional. More companies plan to hire in 2012, particularly in the growing areas of data security and privacy, according to an annual survey by Randstad Technologies and IBM Canada.

    Fewer companies plan to use global outsourcing, the practice of sending computer work out to professionals in other countries, the study called 2012 Canadian IT Staffing Outlook reveals. ...

    Some 49 per cent of firms surveyed plan to add more IT staff this year, while only 10 per cent plan to cut staff, the report found. The rest, 41 per cent, plan to hold steady at current staffing levels. Contract employment is recovering faster than permanent jobs. ...

    The use of global resourcing, previously called outsourcing, appears to be on the wane after a period of “explosive growth,” the study said. Some 50 per cent of companies surveyed sent work outside North America in 2012, up from a third of companies in the previous two years.

    However, only 34 per cent of those using global resourcing plan to expand the practice this year, the survey found. “People have tried it but now are starting to see the chinks in the armour, the not-so-rosy side of doing that,” he said, referring to issues that arise when dealing with different languages, cultures and time zones. “People would rather hire locally as long as the price is right and the talent is there.”

  • Glassdoor IBM reviews. Selected reviews follow:
    • IBM Senior Systems Engineer in Pune (India): (Current Employee) “Once Great - Not Any Longer.” Pros: WAS a very good place for people who aspire to pursue a technology career. But mid management politics has ruined over time. IBMers who are with the company with more that 10 years - can be looked up to. They are some of the best minds at work in the industry. Luck if you get to work with them. Support for personal work life balance. Great Working from home for all employees. Great.

      Cons: Middle management has taken to politics big time - and its become a sad state of affairs. I hope IBM goes back to its glory days under Ginni and specifically in India. But the overall mindset of middle level managers is really depressing. Have been with IBM for more than 6 years. and it's sad to see how deteriorated it has become. I have tried to analyze this as rationally as I could - and trust me- the quality has gone from being good to just average.

      Your peers would prefer gossiping more than talking about work at hand. Moreover, I have seen this prevalent across the IBM geography. Have traveled quite a lot - and this is really prevalent.

      Lastly, when taking interviews the set *quality* criteria have been reduced by 70% to increase strength-reducing the overall quality of peer group. These guys (mid level managers) have gone to threatening people if they decide to go against certain policies. There is NO fear among them. Sad state of things.

      Advice to Senior Management: Reverse things that were implemented during last 3 years. You need STRONG people managers at the mid level. Right now I see most as politicians.

    • IBM Anonymous: (Current Employee) “Not that rosy as the picture is painted.” Pros: Pro-people policies make it a good place to work. Cons: Too many processes make it a miserable place to get the work done. Advice to Senior Management: Please do walk the talk.
    • IBM Sales Representative in Atlanta, GA: (Current Employee) “Not bad if you enjoy sales” Pros: lots of opportunity to meet different types of customers. ability to be creative in your sales techniques. Cons: commissions were always very low. Advice to Senior Management: keep your best talent and invest in those who are working really hard (invest meaning training, seminars, conferences, etc)
    • IBM Intern in Tucson, AZ: (Past Employee - 2010) “cool place to work” Pros: smart and nice coworkers. free sodas. Cons: obsolete hardware to use and management is out of touch with employees
    • IBM Technical Service Professor in Omaha, NE: (Past Employee - 2010) “Great benefits and pay but no work/life balance, long hours, profit driven at expense of employees.” Pros: Salary and benefits are competitive. People I worked with were some of the best. Lots of interesting and challenging work. Cons: Company always trying to streamline work and become more efficient, this always resulted in more work with less people and longer hours. A lot of hard work put into standardizing processes which results into easy migration of the work overseas. Advice to Senior Management: Try being more considerate to your employees you have instead of the bottom dollar. I feel this strategy of landing IT support contracts, streamlining, then outsourcing overseas will backfire. I see more and more companies now moving their support back to the US where it belongs.
    • IBM Staff Software Engineer: (Current Employee) “Worst company I have worked for. ” Pros: Ability to work from home so I don't have to deal with my manager. There are a few good people working in my area. Cons: IBM - Where Idiots Become Managers. No respect for the employee. Ratings arbitrarily lowered to target good workers for layoffs. People are afraid for their jobs so they don't speak up. Those that do find a target on their backs and will soon be marked for RA. Advice to Senior Management: Truly value your assets (your employees). Without workers you will soon be without a company. Stop telling managers to lower ratings so IBM does not have to pay out the pittance of a bonus to good performers. Stop demoralizing your employees. You will not get and keep top talent by destroying your current employees.
    • IBM Anonymous in Bangalore (India): (Current Employee) “A good company to work.” Pros: - Provides lot of opportunities for learning. - Can get opportunity to work with many technical experts. - Very flexible work environment. - Opportunity to get to work with services, products and research groups. - Opportunity to work with a global workforce. Cons: - It's a big company and so competition is more. - Promotions may take a bit longer time. - Does not have an effective and efficient performance management/assessment system. - Services group employee attrition rate is high compared to product and research groups. - Good, talented, technical people cannot stay long with promotions in Services group unless they move into management. Advice to Senior Management: - Have a fair performance assessment. - In services group managers must focus on technical quality and not on quantity (headcount!) - Have a thin layer of management in Services group to enable better operation and span of control.
    • IBM Quality Assurance Analyst: (Current Employee) “its good for college grad.” Pros: good for start! it's a good place to enter in field, and a big plus on your resume. there is nothing special about any thing in ibm but a big name. Cons: they pay you peanuts compare to market, but on work no one will bother you what you doing coz they don't know either what suppose to be done. lol. Advice to Senior Management: grow up
    • IBM Advisory Software Engineer in Mulhurddart (Ireland): (Current Employee) “OK” Pros: multicultural environment with many labs in the world. Cons: difficult to have a promotion. people are reshuffled as machines, you might loose your expertise in a specific area as you are moved from one project to another. If you are in SW development, you might be shielded from the customer as an active subject to collect the requirements. You will be involved with customers mostly for problems or beta programs. Advice to Senior Management: help to promote and improve the technical skills.
    • IBM Technical Service Specialist in Bangalore (India): (Current Employee) “Excellent growth, opportunities, flexibility, work-life balance.” Pros: Excellent growth and work opportunities. Great amount of flexibility and trust. Employee's work-life is very well balanced. WFH option. Reputation. Cons: Very little or null salary hikes in most of the year/cycle. Poor bonus scheme. Manager driven/controlled decision making. Heavily process oriented. Advice to Senior Management: Good place to work for and to feel proud to be a part of. Excellent employee work-life balance. But once joined employees financial growth is very minute which need to be taken care of.
    • IBM Senior Systems Engineer in Dubuque, IA: (Current Employee) “The worst management and process, they waste time and money.” Pros: Training after a long time. Cons: They promote the wrong people with no skills. They send the wrong people for training and the people who really needed are held back. Advice to Senior Management: Have all accounts and ID's ready for your new employee to start working immediately. It should not take 4 to 6 months to get ID's to do work.
    • IBM Software Test Engineer in Tucson, AZ: (Current Employee) “Wonderful, though I wish the growth opportunities were better.” Pros: Great people! The atmosphere is great here. Everyone is easy to get along with, willing to help you out, and work schedule is very flexible. Cons: Lack of growth opportunities. Numerous employees have moved to other companies because IBM lacks job openings. Exposure to various technologies is also limited. Only given 4 vacation days a year. Can take more but with no pay. Advice to Senior Management: More appreciation should be shown to employees for doing a good job and working hard. Jobs seems to be valued very minimally by upper management
    • IBM Senior Engineer in East Fishkill, NY: (Current Employee) “This is a messy place to work. It is not the one that I thought of in my graduate school.” Pros: 1. Flexible work/life balance if you work on non-critical projects. 2. Excellent and open minded colleagues on the first line to work with. Cons: 1. If you work on critical projects, please prepare yourself to sacrifice your work/life balance, prepare yourself to work with the frequent high level management decision change. 2. Very poor employee recognition, unless you are a kissing-ass type of employee. Advice to Senior Management: The management would not listen to any useful suggestions at this site. Look at the past several years, too many wrong decisions made.
    • IBM Technical Lead: (Current Employee) “Strongest Survive.” Pros: Great on resume. Exposure to different customers. Exposure to different technologies. Cons: Small cog, big machine. Ran by accountants. Global resourcing. Advice to Senior Management: Look beyond the fiscal quarter.
    • IBM Anonymous in Moscow (Russia): (Current Employee) “A work for those who don't want to work or those who are ready to be management's always waiting/working 24x7 dogs.” Pros: If agreed with manager you can work from home couple days a week. Good location of Moscow office, big open space, big tables, overall good working conditions. 80% of mobile services and medical insurance are paid by the company. On certain positions you can do almost nothing and get paid good for that.

      Cons: I.B.M. - "It's better manual"! No useful applications with user-friendly interface to work with. Not a software company at all! Everything is done manually and as far as people make mistakes other people are employed to control the first ones and some other people to control the second ones and so on and so on. A lot of people who work in a company for 10-15-20 years, who are not ready for changes, are even afraid of young dynamic newcomers.

      Management is more about politics, image, impression, moving themselves forward than about truthful forecasts, caring for employees, there work-life balance, etc. Friends bonuses/promotion mostly. Very bureaucratic. Everything takes a very-very long time.

      Boring. Boring to be on that "certain position" and feel like you're wasting your time, using only 10% of your barin capabilities, sitting in the office doing nothing, just waiting in case your Manager needs some help. At IBM you either work 24x7 or do almost nothing.

      Ability to work abroad or completely change your career path is declared, but rarely fulfilled.

      Advice to Senior Management: Become open to changes, inspire creative ideas, creative approach to work and processes, promote young and dynamic, look around (i.e. outside IBM) and inspire all managers on all levels to do the same. Finally load your software development programmers and write user-friendly software for finance forecasting at least or buy that software!

    • IBM IT Specialist in Saint John, NB (Canada): (Current Employee) “Good work experiences but too much focus on Billable Utilization (BU).” Pros: Impressive for resume to say that work for IBM. Fortunate to have worked on many interesting and diverse projects that have provided excellent work experience - my customer experiences have been excellent (may be looking to them for a job soon...)

      Cons: I was hired to work 40 hours per week but because they keep raising the BU targets (almost 90% for 2012 for my particular situation), they expect me to work many hours OT for free just to meet my BU target. This effectively eliminates my vacation benefit of 5 weeks per year and also 2 of the statutory holidays. Either vacation is a benefit or not, you can't give it with one hand and take it back with the other. This BU target is up over 3% from last year. Oh, and that doesn't include any admin activities (training, time reporting, etc.) that they expect you to do on your own time or heaven forbid that you may be sick or on the bench for a day or two. Makes me wonder if they are just raising BU target each year to see when the uprising will come. For me, it's soon.

      Advice to Senior Management: You're burning your employees out. When I started a few years ago, I kept hearing the message about work/life balance but NEVER hear it anymore. I think IBM Management has changed from a culture of caring about their employees longterm because they wished to retain healthy happy productive employees TO pushing employees so hard that they have no work/life balance. Be warned, this is not sustainable, your workforce is becoming increasingly disillusioned with your company.

    • IBM Anonymous: (Current Employee) “Great company going through many global changes.” Pros: A true global company with opportunities to grow around the world and for those willing to take on international assignments. Cons: Since this is an IT services provider there is a huge push to move all activity offshore and most of the growth and opportunity is outside of the USA
    • IBM Managing Consultant in Copenhagen (Denmark): (Past Employee - 2010) “Would not recommend it to others.” Pros: Good access to IBM methods, and knowledge, access to plenty of courses and seminars. Cons: All projects are transferred to India, and done by offshore resources. Senior management doesn't listen. Cost cutting has gone too far.
    • IBM Managing Consultant in Dallas, TX: (Current Employee) “Great Big Corporation to work for. Looks good on the resume.” Pros: 1. Excellent work/life balance options. 2. Above market rate salaries. 3. Tons of opportunities to learn. 4. Large population of employees and big project teams lends exposure to diverse cultures. Cons: 1. Assignments can be long and hopelessly monotonous. 2. Performance rating system seems to be flawed. You may be held on bench earmarked for an engagement for future project by the Partners/RDM's; but you still will get less rating for your low utilization, which was not your fault in the first place. 3. Performance targets are set in Feb/March for the year. Evaluations for the year occur end of November/December, leaving first 2 months and last 1 month out of the scope. You are left to accomplish the 12 month goals in just 9 months. Advice to Senior Management: Performance rating system seems to be flawed. You may be held on bench earmarked for an engagement for future project by the Partners/RDM's; but you still will get less rating for your low utilization, which was not your fault in the first place.
    • IBM Anonymous: (Current Employee) “IBM treats its employees like commodities.” Pros: There are lots of good people here (but many of them have been leaving). Cons: 1. Long hours with no compensation. 2. IBM does not value people who actually create valuable products or services, preferring instead to reward excessively sales, marketing, and upper management. 3. Everything is always a rush job, so we never have time to do a good job. 4. Obsessiveness about meeting completely arbitrary deadlines, even when they are unrealistic. 5. Employee evaluation system is seriously broken. Advice to Senior Management: 1. Listen to your employees. 2. Rewards should be commensurate with value contributed. 3. Give us time to do a good job. There's nothing worse for morale than to be consistently told that quality is third or fourth in priority.
    • IBM Anonymous: (Current Employee) “Young environment.” Pros: Time flexibility. Young personnel. Possibilities to gain knowledge from broaden business sphere. Cons: Not very competitive salary. Very low package of social benefits.
    • IBM Advisory Software Engineer in Chicago, IL: (Current Employee) “Tiny cog in a giant elephant.” Pros: IBM has a pretty great benefits package. In addition, if you're *very* lucky, you have the chance to do some cutting edge development or research. Cons: IBM is very much a bloated corporation. There is insufficient attrition of poor quality workers and a lack of inspirational vision from the leadership.
    • IBM Staff Software Engineer in Toronto, ON (Canada): (Current Employee) “Good for starter, but not for long term career development.” Pros: Flexible working time. Good first line management in general. Cons: Low salary, sow promotion, rigid process.
    • IBM Anonymous in Beijing, Beijing (China): (Past Employee - 2011) “to be creative” Pros: As a global large company, IBM has a fairly complete administrative system. People there are friendly and willing to share experience with others. Cons: Employees will have to work with an extremely rapid pace under severe pressure. Sometimes even stay up for many days. Advice to Senior Management: I think it is better for IBM to hire more international employees, since the cultural diversity will bring more new thoughts of development.
    • IBM Anonymous: (Past Employee - 2011) “It was stressful.” Pros: Great people to work with. Cons: Downsize every year. Very stressful every year wondering if this will be your year to get the ax.
  • Alliance for Retired Americans Friday Alerts. This week's issue includes these stories:
    • Mitt Romney Wins New Hampshire; Florida Alliance Members Voice Disapproval
    • West Palm Beach a Hotbed of Activity This Week
    • Indiana Alliance Joins with Partners to take on “Right to Work”
    • Racial Divide Emerges Over Mississippi Voter ID Constitutional Amendment
    • State Chapter Report: North Carolina
  • Information Week: U.S. Shelves H-1B Visa Talks With India. India has been voicing concerns that visas for tech workers are becoming too hard to obtain. Now trade talks are postponed indefinitely. By Paul McDougall. Excerpts: Talks between the U.S. and India on high-tech worker visas and other trade issues have been postponed indefinitely, U.S officials said Monday. U.S. Trade Representative Ron Kirk had been scheduled to travel to New Delhi later this week to meet with Indian counterparts, including Commerce minister Anand Sharma, to discuss a range of bilateral issues. Among them was India's claim that rejection rates for applications by Indian IT professionals to work in the U.S. on H-1B or L-1 visas are rising.

    Those talks, formally known as the U.S.-India Trade Policy Forum, are now off indefinitely. Reports suggest the talks fell victim to American negotiators' belief that India would not yield on their number-one priority: Increased access for U.S. firms to India's roughly one billion consumers.

    Indian officials have of late been voicing concerns that it's becoming more difficult for skilled IT workers from their country to obtain work authorization in the U.S. "Uptake of H-1B visas this year is less than half of the annual prescribed limit and the rejection rates have gone up," said Sharma at an economic forum in Washington, D.C., in October. The annual H-1B cap, which stands at 65,000 for overseas workers, has since been reached.

    Experience with U.S. companies not only benefits individual Indian workers, it helps fuel the growth of India's domestic IT market as those returning home facilitate the transfer of key tech and business skills to indigenous firms. U.S. proponents of a more-open immigration system, including New York mayor Michael Bloomberg, have argued that the H-1B program also benefits the U.S. economy by adding to the pool of skilled workers.

    Not everyone is in favor of looser immigration rules for tech workers. Groups that represent American IT workers, such as WashTech and Alliance At IBM, have noted that a number of tech companies, including Microsoft and IBM, have laid off thousands of U.S.-born employees in the past several years even as they have brought in H-1B workers from India, China, and other offshore locations.

    Critics also point to a recent study by the General Accountability Office that found that 54% of H-1B visa recipients were entry-level-caliber workers, even though the program was originally designed for highly skilled professionals.

    Selected reader comments follow:

    • As to the H-1b visa, it has become a business model itself. It isn't about filling a niche skill where there are true shortages. It is primarily about feeding the corporate appetite for cheap labor. The top sponsors of the visa are seeking entry level workers and are almost all offshore outsourcing companies from India. The only jobs being created are for immigration lawyers. We need to be competing with India for service sector jobs, not giving them a competitive advantage enabling them to do to our service sector what Mexico and China have done to our manufacturing sector.
    • H1B does NOT add to a pool of skilled IT workers. It is used as a mechanism to displace American workers and drive down wages because the H1's coming here will settle for peanuts and NOT challenge their master for fear of deportation back to India (or where ever they were brought from for slave labor). This program was INTENDED to hire SKILLED workers when there was not an American capable or available to do a specific job. NOW it is used to bring in Cheap and Docile people who are happy to leave a third world country and happy to come to a second world country (which we are quickly becoming.)

      We (Americans) cannot go to India and compete for their jobs, but they want to have complete control of the IT arena. They are NOT the Best and Brightest as was sold to the politicians and managers within companies; they are ONLY CHEAP.

    • "Microsoft ... [has] laid off thousands of U.S.-born employees in the past several years even as they have brought in H-1B workers from India,..." "... Microsoft [has] complained that Indian authorities turn a blind eye to the piracy of commercial software products such as Windows. Microsoft CEO Steve Ballmer has in the past claimed that 70% of all software in India is pirated." Causality? 'Nuff said.
    • "... a recent study by the General Accountability Office that found that 54% of H-1B visa recipients were entry-level-caliber workers, ..." Replacing average-talent American IT workers with average-talent Indian IT workers is abuse of the system. There's nothing wrong with skimming gifted-level talent from India and China and having them do work in the U.S. that Americans can't do. I know I'm not some kind of genius. On a one-to-one comparison, a small team of those "guest worker" foreigners can solve problems that a same-size team of Americans can't. When the U.S. can employ the top fraction of the top .001% of a gigantic Asian population, good things can happen. Having some of those people start companies here in the U.S. is one of them.
    • Sadly, the leverage is corporate greed, legislative fraud. Thanks to Bill Gates and convicted felon Jack Abramoff, the US Congress passed US laws that legalize employment discrimination against US citizens. Shockingly it is 100% legal for companies to bypass US citizens and exclusively hire offshore for US jobs.
    • I can't speak accurately to other professions. Coming from the IT industry and being in this field for 20+ years, Indians are by far the greatest number of foreign workers. There are far too many of them.

      As the story goes, they came to help us for the Y2K window - they started showing up around 1998 or so. They were to help - as companies needed some extra assistance to review applications and make code fixes etc. Somewhere along the line, the story changed. India built an IT temp worker industry around exploiting the H1B visa, and now there is a sense of entitlement to the share of the American IT market. Supporting evidence is the resistance and complaints to changes and modification to the visa program i.e. increased fees. Running parallel to this, the temp workers began to regard themselves as 'immigrants' - when in reality, the H1B visa is a non-immigrant visa. More on this later.

      As American corporations recognized the value in cheaper labor and easy to dismiss workers that they didn't have to provide benefits for, the Indian body shops became successful and regarded this as a legitimate business model. In support, they began working the resumes, honest or not, to appeal to HR departments and fraudulent resumes became accepted practice. Bear in mind, here in the US as a citizen, you get fired if they find you lied on your resume.

      Resistance from the veteran IT workers that built the industry from the ground up started to grow

      Recognizing that their business model was at risk and evidence began to mount surrounding the fraudulent practices, nepotism and corruption, the Indian body shops began a propaganda campaign through NASSCOM. The program is designed to protect their model by claiming worker shortages, brain drain, inferior American skill sets and recently, the dire potential of these workers going home and the US will lose out on innovation. There are claims of globalization, and the world is flat and free trade... the spin goes on and on.

      The temp workers organize and conspire to find ways to extend their stay in the US as 'immigrants' although it was known that there were no guarantees to citizenship when they set foot in this country - in such groups as immigration voice. They coordinate, as non-citizens, to lobby our politicians to pass bills to further their agenda to enable them to stay. This is where the term 'immigrant' ties to the alarming theory of potential innovation loss. There is an O-1 visa for truly gifted individuals, and the H1B visa recipients are chosen by lottery. Referencing the number of H1B visas available every year, one has to question the true skill sets of so many people waiting to be chosen from the lottery.

      With unemployment rates so high in the US, there is no reason to continue to utilize foreign temp workers. There isn't a shortage of workers, just a lack of willingness to pay Americans a fair wage to support their cost of living.

  • Wall Street Journal: New Tensions Over AMR's Pension Plan: Company Says Retiree Benefits Could Be Cut. By Michael Corkery and Mike Spector. Excerpts: The head of the federal agency that oversees corporate pensions is ratcheting up pressure on the parent of American Airlines to preserve the pension plans of the airline's 130,000 workers and retirees as it seeks to restructure in bankruptcy court. A lawyer for AMR Corp., which filed for Chapter 11 bankruptcy-court protection in late November, has suggested publicly that the airline's pensions are too costly, and may need to be cut.

    On Thursday, Pension Benefit Guaranty Corp. director Josh Gotbaum fired back, stressing that American has benefited from congressional breaks that have reduced its pension expenses. "American has more than $4 billion in cash; some of that money should already have been paid into its pension plans," Mr. Gotbaum said in a statement. "However, Congress, hoping to preserve plans, allowed American to defer the payments. It would be a tragedy if American repaid Congress's generosity by turning around and killing the plans anyway."

  • Time: How 401(k)s Make Many Americans Poorer. By Stephen Gandel. Excerpts: One of the most widely dispensed and universally accepted pieces of financial advice is that you should contribute at least enough to your 401(k) to get the full match from your company. If you don’t, so the wisdom goes, you will be giving up free money. Well, it turns out that money isn’t exactly “free.” In a sense, it’s coming right out of your paycheck.

    That is among the findings of a study by the Urban Institute’s Eric Toder and Karen Smith, which was published last month by the Center for Retirement Research. Traditional pension plans tended to be an extra perk that employers provided on top of salary. In the past decade or so, though, many companies closed those plans in favor of 401(k) savings plans. As part of that switch, it has been well understood that workers need to put more of their income into retirement accounts. What is less understood is that even the money that employers contribute to those accounts is really coming from workers as well.

    Toder and Smith looked at a Census database on pay and pension plans, and how much employers contribute. They looked at workers who had 401(k) plans in which their employers contributed to retirement savings automatically or by matching employee contributions and compared them with workers who had either a 401(k) with no employer contribution or no 401(k) at all. All else being equal, they found that workers at companies that contributed to their employees’ 401(k) accounts tended to have lower salaries than those at companies that gave no retirement contribution. In fact, for many employees, the salary dip was roughly equal to the size of their employer’s potential contribution.

  • Financial Times: Employers eye landmark forced retirement case. By Jane Croft and Brian Groom. Excerpt: A landmark legal dispute brought by a solicitor who claims he was forcibly retired will come before the UK’s highest court on Tuesday in one of the most important age discrimination cases to date. The Supreme Court will examine whether it was legitimate and justifiable for law firm Clarkson Wright and Jakes to retire Leslie Seldon, a civil litigation partner, at 65 using a partnership deed which it claimed allowed it to plan for succession and avoid so-called “dead men’s shoes”.

    The closely watched case has deep implications for whether companies can set their own retirement ages for staff and is likely to prompt the government to give clearer guidance about retirement policies since its abolition of the default retirement age last October. From last year, employers have been unable to make workers turning 65 leave the organisation purely because of age.

  • The Smirking Chimp: Time Is on Our Side: The Survival of Social Security. By Dean Baker. Excerpts: As we approach budget time we can look forward to another burst of hand wringing by the Washington elites, who will once again tell us about the need to cut Social Security and Medicare. News stories and opinion columns will be filled with solemn pronouncements about how these programs must be curtailed before they drive the nation to bankruptcy.

    We can look forward to that famously deceptive graph showing how the cost of Social Security, Medicare and Medicaid are projected to soar as a share of the economy over the next two or three decades. Those with good eyes will notice that it is the cost of Medicare and Medicaid that are soaring, not Social Security.

    This is primarily due to the projected explosion of private sector health care costs, not the impact of aging on the cost of the programs. That would lead honest people to focus on the need to get U.S. health care costs in line with costs in every other country in the world, but no one ever said that the Washington elites were honest. ...

    President Clinton was all set to go along with a plan that would have reduced the annual cost of living adjustment for Social Security by as much as 1.1 percentage points. Had he gotten his way back in 1997, many seniors would be getting checks that are more than 10 percent smaller today. This sort of cut could have been devastating for people struggling to survive in the wreckage created by the incredible economic mismanagement of the last 15 years.

    More recently, President Obama indicated his willingness to support an increase in the age of eligibility for Medicare and a cut of 0.3 percentage points in the annual cost of living adjustment for Social Security. These cuts would be a great hardship to tens of millions of near retirees who have seen much or all of their wealth destroyed by the collapse of the housing bubble.

  • Bloomberg: Look at Jobs Before Leaping on Older Retirement. By Peter Orszag. Excerpts: Has the ailing economy forced older workers to delay their retirement? The conventional wisdom certainly suggests so. A recent front-page story in the Washington Post was headlined: “Ranks of older workers swelling: Data show employment surged among those 55 and over since recession.”

    The reality, though, is more complicated. The financial crisis caused more workers to want to delay retirement, but the labor market limited their ability to do it. The net effect of these opposing supply and demand forces has, if anything, been to reduce the employment rate among older workers. ...

    To offset the adverse effects of the downturn, more older workers planned to defer retirement. But the world didn’t conform to all of these plans. A 2011 survey by the Employee Benefit Research Institute found that almost half (45 percent) of retirees left the workforce earlier than they planned, almost always for negative reasons such as health problems or losing a job. In the midst of a very weak labor market, work may not be available for all the older workers who want to keep working. ...

    The bottom line is that people’s retirement decisions aren’t always entirely voluntary. In the current debate over the retirement age, that’s worth remembering. Just last week, the Congressional Budget Office estimated that raising the age at which Social Security retirement benefits can first be claimed from 62 to 64 would ultimately increase the size of the labor force and the economy by a bit more than 1 percent. That sounds pretty attractive.

    But many people claimed early retirement benefits in 2009 and 2010 out of desperation. Even under more normal conditions, some of the people who want to work longer won’t be able to.

New on the Alliance@IBM Site
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  • CWA Statement On Public Financing of Elections and State of the State. Full excerpt: The following statement can be attributed to Chris Shelton, District 1 Vice President of the Communications Workers of America:
    We commend Governor Cuomo's call to give all New Yorkers an equally important voice in the political process. Like the Governor, we believe that public financing of New York elections will help level the playing field for all candidates and ensure our members' votes matter and their voices are heard. Enacting reform this year will be a enormous step towards removing the many blocks keeping average citizens from participating fully in our Democracy.
    Over the coming weeks and months, CWA Members in New York and nationwide will be fighting back against the money in politics that is destroying our democracy; contacting their legislators and demanding reform at the federal and state levels. Corporations are not people, and should not be afforded the opportunity to manipulate the political process in their favor against the interests of middle-class Americans. We hope other leaders will follow Governor Cuomo's bold example and propose similar measures.
  • Job Cut Reports
    • Comment 01/15/12: The longer everyone who is an employee in IBM and who is not joining the cause of the Alliance WAITS the WORSE the abuse by IBM management will get. If you are disappointed in your PBC 3 rating then continue to sit around, do nothing, and see what is going to be next. If it isn't an RA coming it will be something like taking your growth driven pay or your 401K match away...or something else. -waiting4?-
    • Comment 01/15/12: If all you PBC 3 folks now would rise up, unite, and fight IBM on this injustice then you all have at least a chance to reverse it. If you don't flock together now you will be picked off one-by-one. This is not a threat; it is truth. It is IBM unwritten, unmentioned history. The pension change in 1999 showed what strength IBMs could exert (it could have been more powerful but...) Strength in numbers! Unite. This is the Alliance message. -anonymous-
    • Comment 01/15/12: @ANA has it correct. IBM managers are nothing more than puppets to execute the 2015 road map. IBM designated categories and allotted money for each area: 1 - Promotion - raise. 2+ - Raise. 2 - no raise or very small one that is eaten up by inflation. 3 - Layoff target on your back, (you should have taken this seriously by now). Managers have VERY LITTLE input other than that they have to trim the budget with RA's and other mix of savings. Back in the capitalism days there was such a thing as making revenue. -Tunnel-Light-is-Off-
    • Comment 01/15/12: Fighting PBCs!! In 2009 my good friend got a 3. He fought it and had it reversed to a 2. In April he was selected for a Resource Action. Coincidence? Yeah, right. You will NEVER have a chance without someone fighting for you. A union is your ONLY ONLY hope. But the majority of IBMers just don't get it. So, let's wait for the next bomb to drop!! -Anonymous-
    • Comment 01/15/12: I told my mgr that I wouldn't sign my pbc unless he gave me a worse rating. I wanted my rating to reflect the butchered performance bonus. We continue to perform at the same level, but the money is gone. I for one, am not going to continue doing it. -gadfly-
    • Comment 01/16/12: "Fighting PBCs!! In 2009 my good friend got a 3. He fought it and had it reversed to a 2. In April he was selected for a Resource Action. Coincidence? Yeah, right. You will NEVER have a chance without someone fighting for you. A union is your ONLY ONLY hope. But the majority of IBMers just don't get it. So, let's wait for the next bomb to drop!! " I completely agree. I have seen many examples of what you described. Fighting the PBC rating is a waste of time. You will only anger your manager. You need someone with some real legal clout on your side. There are laws to prevent workplace abuse and protect your job. A Union can help you enforce these laws. Don't be stupid and lose your job. Support the Alliance. -DontBeStupid-
    • Comment 01/16/12: If you have received a '3' then you have nothing to lose by fighting it. When you talk to your 2nd line manager remember he/she is basically just a rubber stamp for your first line's appraisal, So your objective at this meeting should not be to get a reversal of the rating but rather on getting specifics as to why you are being rated a â??3. There is a good likelihood that you'll be able to use the 2nd line's response in your appeal. (Most 2nd lines managers don't have a good idea of the work that you have or have not done during the past year).

      Before filing the appeal you need to read all the info IBM has on appraisals and ratings on their web sites. Then try to use IBM own words, systems (email, labor claiming, change and problem management, etc) and documentation to refute the 3 appraisal. Request a five member panel review. You will get three employees and two managers on your panel chosen at random. Most employees in IBM are aware of how management treats its employees and that the PBC process has been compromised and is now used as a way to suppress wages and reduce/outsource employees. So if you can make a sound case you may have a better chance than you think. -Jake-

    • Comment 01/17/12: -gadfly- it doesn't mean anything that you refuse to sign your pbc. The manager just signs it and states you refused to sign but the pbc was done. you are now considered a rouge employee. you will now move down on the ranking list -dontmatter-
    • Comment 01/17/12: I have been gone for more than 4 years and I am just amazed that people waste their time on here talking about fighting PBC's. After all these years? Seriously? PBC's??? If you are still at IBM at this point, each and every single one of you should be talking to all of your coworkers and organizing to get a union. If you aren't, then lay down and die now. It's not worth working at such a company in this day and age without a UNION! All of us who are gone, and chime in here now and then, all the notes from Exodus, don't get through to those of you who are left? Don't complain about stupid PBC's and what IBM is doing to you this time. I'm saddened that after all these years people are still bitching. Join forces all of you that are left and DO something about it! Get your office and every other office together and vote in a Union and stop complaining about how bad you are being treated. If you don't, you might as well dig a hole and just jump in and lay down. -Gone_in_07_&_amazed-
    • Comment 01/17/12: What does it take to get through to you people? What does the Alliance need to say or have to tell you that will turn the light on for you? The comments that have been coming in here lately, demonstrate a lack of ability to read the replies that Alliance has given to the same comments over and over and over. To prove my point, just "search" this comments page with the words 'alliance reply:' and read the comment it comes to and then read alliance's reply... keep doing that and when you've finished this page, go to the "Your Comments" menu and click on any of the "archives" of comments. Then do the same search on 'alliance reply:'... I'd be willing to bet you'll begin to see what the definition of "repeat" or "review" really is.

      Can you NOT learn anything from these replies? Can you NOT deduce what to do after reading these replies? Can you NOT read at all? Sorry to be so harsh; but it is apparent that the Alliance has been telling you the the ways in which you can bring a union into IBM. They've spelled it out many times, and they've provided links to other sections of their web site to give you MORE information and help so that you can make an informed decision. WTF else do you need? Join the alliance and get busy growing the numbers of US IBMers that join and start standing up to US IBM management. Get busy organizing or get busy losing your job and your livelihood. -Read Much?-

    • Comment 01/17/12: By the time that you receive a PBC 3, you are already marked and on a list for cutting, be it through the next RA or otherwise. This is a check box that just about finalizes it. Trust me, because that is what happened to me in 2009. You have no power working through the current system in place at IBM. You can only work to change the system. -Oatmeal-
    • Comment 01/19/12: Have heard of new layoffs in US GBS - dont have numbers but I know it is happening folks will be told in Feb and exit March -newlayoffs-
    • Comment 01/19/12: If you fight the PBC and win the higher evaluation, then you might get variable pay. Depending on what you bring forth in your PBC defense, you may save yourself from the next round of RAs. With a higher PBC rating, you stand a better chance of changing jobs. I agree, most are let go regardless of winning the increased rating. I say fight it! -AlreadyDone-
    • Comment 01/20/12: Loughridge on analyst call: During the analyst conference call, Loughridge was asked a question about his comments on productivity gains being a part of IBM's growth in profitability. Toni Sacconaghi of Sanford Bernstein asked if that were "a code word for labor migration offshore" or job reductions that were done in the beginning of the year. Loughridge answered by characterizing the productivity moves more as "large structural takeout" that is 'a big assist' to the overall profit margins in services. He added that more is on the way. "We're going to rebalance our workforce" he said, in order to keep skills aligned with opportunities and investments. This "should be roughly consistent with what we've seen over the last for years, more specifically, like what we saw in 2010." -unionyes-
    • Comment 01/20/12: There is talk of employee cuts at the Burlington VT plant. Not sure how many or what areas. The reason is cost cutting. There are a lot of closed door manager meetings going on right now. Stay tuned. -WhistleBlower-
    • Comment 01/20/12: Got Good news fought PBC and won :) you will win if u document right keep and audit trail keep police yourself keep a journal and note everything. It works did for me this year as my manager tried to doc me but my senior manager negated it because I had the appropriate documentation and valid arguments. -NoName-
    • Comment 01/21/12: -NoName-, Now you are really at the top of their list for the next RA. You're not home free. If they didn't want you gone, they would not have given you a PBC that fit their goal for the next RA. I worked for IBM for 11 years. When your numbers up, you may be able to stall a bit, but in the end your name was on their list for a reason (not that it's justified). Just a reality check. Don't get over confident, Start looking outside the company before you have to. -Tony-
    • Comment 01/21/12: If more folks got lower PBCs this time then you can bet variable this year is gonna sucka$$ -anonymous-
    • Comment 01/21/12: As some others have posted here, getting a PBC overturned can likely put you at the top of the next RA list. First lines (and 2nd lines too) do NOT like being challenged and thoroughly dislike being proven wrong on PBCs. Plese let us know how you make out. As to Loughridge, he has those buzz words down to a science. I am actually surprised someone challenged him. Or maybe it was just a plant so he could doublespeak!!! -formeribmslave-
    • Comment 01/22/12: -NoName- it appears that you won the battle but I think you lost the law. My bet is your manager is being counseled by his manager for not following the book on lowering a PBC. You may find yourself in a small reorg. and moved to another manager. Please watch your back. I think you will now be treated differently. Also unfortunatly someone else in your group was moved down to a 3. Good luck -benthere-
    • Comment 01/22/12: Here is a suggestion to all those facing getting lower pbc's and fighting it. Become a public member of the Alliance and fight back. make management sweat! Make a lot of noise! -member- Alliance reply: Absolutely! IBM gets away with its mistreatment of employees based on fear and intimidation. Let's end this now. Fight for a union, organize and let's get a contract that does away with IBM's PBC.
    • Comment 01/23/12: Dont you think it is laughable that on the bottom of the PBC form it says if you do have comments add them here wether you agree or disagree with the PBC assessment you been given. I tried one time before to appeal against a PBC grading and had a paper trail as long as my arm - never got any futher with the claim and as for the so called workers council they were as much use as an ashtray on a motorbike. The sad situation is that you could have accomplished flying to the moon and back in some respects but because the PBC process is completely open to biased opinions you may as well kick back and relax and take the hit. -Tryas Youmay- Alliance reply: We don't advocate "kicking back and relaxing". Do all of you want to keep doing this year after year? Organize for a contract and let's get rid of PBC and negotiate a sane evaluation process.
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
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  • Workforce: Boomers Roll the Dice, Skip Meds to Make Ends Meet. Falling investment returns, rising costs of necessities has pre-retirees cutting back on prescriptions and skipping doctors' appointments, study finds. By Darla Mercado. Excerpts: You know times are tough when people approaching retirement are skipping visits to the doctor in order to save a few bucks. But individuals over age 50 appear to be doing just that as they try to make ends meet amid a rise in the cost of basic necessities and drop-off in investment returns.

    A newly released study by the Employee Benefit Research Institute determined that nearly a quarter of individuals above age 50 were trimming costs by making changes to their prescription medication, including switching to generic drugs, obtaining free samples or going as far as to stop taking their medication entirely. About one in five of those surveyed also said they either skipped or postponed doctor's appointments. ...

    Skipping the doctor's office may not be particularly calamitous for individuals who are in good health. EBRI's study, however, found that individuals who said their heath was "poor" are most likely to avoid health care services or reduce their meds to cut expenses. Of the participants who said they'd cut health care spending—and also claimed to be in ill health—about 30 percent adjusted their medications. More than one in three said they skipped medical appointments.

  • The Commonwealth Fund: Bending the Health Care Cost Curve: New Era in American Health Care? By Karen Davis, PhD. Excerpts: Health care spending in 2009 and 2010 grew at the slowest rates in 50 years. This startling news, published in an article by staff of the Centers for Medicare and Medicaid Services (CMS) in Health Affairs, was largely attributed to the shrinking economy. Loss of jobs and insurance, slow growth in wages and family incomes, and greater out-of-pocket health care costs have undoubtedly caused uninsured, underinsured, and low-wage workers and their families to forgo care, contributing to the slowdown in health spending. An estimated 9 million people became uninsured when they lost a job with benefits over 2008–10, and they were much more likely than those who did not lose coverage to report delaying needed care.

    Future Spending Lower Than Expected. A major point that has been overlooked in the analysis is that CMS is projecting lower health spending over the rest of the decade. While it is almost certainly the case that the poor economy is having an effect on current spending, the recession doesn’t plausibly explain why projected health spending in 2020 is substantially below estimates made just two years ago. Either the original estimates were too high, or the tectonic plates underlying the health system are beginning to shift in anticipation of new incentives under health reform or in response to health care leaders’ efforts to transform care over the last decade. ...

  • New York Times: Is U.S. Health Spending Finally Under Control? By Uwe E. Reinhardt.
  • Council for Affordable Health Insurance: The 2012 Presidential Candidates and the U.S. Health Care System. A CAHI “Plank” Summary (PDF). Excerpt: Although the 2012 presidential election is still a year away, candidates are already positioning themselves on an issue which will take center stage during the campaign—the state of the U.S. health care system. The Council for Affordable Health Insurance’s (CAHI) plank summary provides a current snapshot of the candidates and their various blueprints for reform. Our intent is to be thorough and accurate in compiling what they have said or indicated they will do. As plans take shape, CAHI will explain what the proposals really mean for our health care system and, most importantly, for Americans’ access to affordable health insurance coverage. And we’ll eliminate the “spin” so you don’t have to.
News and Opinion Concerning the "War on the Middle Class"
Minimize "It is a restatement of laissez-faire-let things take their natural course without government interference. If people manage to become prosperous, good. If they starve, or have no place to live, or no money to pay medical bills, they have only themselves to blame; it is not the responsibility of society. We mustn't make people dependent on government- it is bad for them, the argument goes. Better hunger than dependency, better sickness than dependency."

"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.

  • New York Times: The Invisible Hand Behind Bonuses on Wall Street. By Kevin Roose. Excerpts: When asked about his job at cocktail parties, Alan Johnson has a curiosity-piquing line. “You know those big paydays on Wall Street?” he says, typically waiting a beat to deliver the punch line. “I have something to do with them.”

    Mr. Johnson, a consultant who speaks with a light twang from his native Alabama, has never worked for a bank. Nor will his company, Johnson Associates, pay million-dollar bonuses to any of its 12 employees this year. But as one of the nation’s foremost financial compensation specialists, Mr. Johnson is among a small group of behind-the-scenes information brokers who help determine how Wall Street firms distribute billions of dollars to their workers. ...

    In his annual compensation survey, a closely watched report that was sent to roughly 800 of the company’s clients in November, Mr. Johnson estimated that bonuses in the industry would fall 20 to 30 percent from last year’s levels.

    That would still leave employees at firms like Goldman Sachs, where the average worker took home $430,700 in total compensation in 2010, much better off than workers in other industries. But it would represent further slippage from the sector’s highs before the crisis.

    Bonus math in a financial downturn is a delicate art. Because the payments typically make up at least half of an employee’s yearly pay, erring on the low side can mean losing a star performer to a rival firm. “Someone on Wall Street might go apoplectic when he heard he got $3 million and another guy got $3.5 million,” Mr. Johnson said. ...

    Mr. Johnson, whose business does not do executive search, relies on public filings, analysts’ reports and information from industry insiders to compile his compensation data. He says that although he has been responsible for helping firms devise extravagant pay packages — in one case, a single package worth about $100 million — he does so only because the competitive market requires it. “From my personal political standpoint, I wish people got paid less,” Mr. Johnson said of his Wall Street clients. “But my guiding star is not my political belief.”

  • Huffington Post: The Romney Tax Loophole. By Robert Reich. Excerpts: After refusing for weeks to release his taxes, Mitt Romney now says he'll do so -- by tax day, April 15. But the real news is what Romney has now admitted about his taxes -- the fact he doesn't want to become news once the media begin scouring his tax forms. It's not how much Romney earns. Everyone knows he's comfortably in the top one-tenth of one percent. It's how much he pays of it in taxes. Romney says he pays a tax rate of "about 15 percent."

    That's lower than the tax rate most of America's middle class face and far lower than the 35 percent top rate after the Bush tax cut. (To put this in perspective, recall that the top income tax rate under Dwight Eisenhower was 91 percent.)

    Newt Gingrich immediately pounced on Mitt's admission as evidence that Newt's proposed flat 15 percent tax is ideal, and wants to call it the "Romney tax." Newt's flat tax is a fraud. It would dramatically lower the taxes of most of the top 1 percenters and increase the taxes of most of the rest of us.

    The real smoking gun is how Romney manages to pay only 15 percent on what's been his money-gusher of compensation from Bain Capital. Romney hasn't released his tax returns yet, but the most obvious answer is he treats his Bain income as capital gains -- subject to the current capital gains rate of only 15 percent. A loophole in the tax laws allows private-equity managers like Romney to treat their compensation as capital gains. It's legal but it's a scandal. Income from employment is employment income, period. ...

    Congress has vowed for years to close this loophole. But somehow it persists. Even when Democrats have been in charge, they haven't been able to close it. Guess why. The managers and executives of private-equity funds are big donors to Republicans and Democrats alike.

  • The Smirking Chimp: Why Keep The Capital Gains Tax Break? By Dave Johnson. Excerpts: Mitt Romney's ultra-low tax rate on his ultra-high income is reviving questions about the breaks and perks that the wealthiest of the 1% receive from the rest of us. One of these is a special low tax rate for investments -- as if anyone needed special tax incentives to induce them to make a bundle.

    How much does Romney make? We won't know until we get a chance to see his tax returns -- if we do -- but Romney described his $374,328 income from speaking fees last year as "not very much." If $374K is "not very much" of his income ... well ... at least we can understand why he feels he can casually make $10,000 bets as if he was just pulling a dime from his pocket.

    Mitt Romney's admission that he probably pays a 15% tax rate shows us what is going on. For you or me, when our taxable income passes about $35,000, we start paying a 25% rate, much higher than Mitt pays on his millions on income. (That doesn't mean we pay 25% on money up to $35K, which is what most people think. It means any additional money we make after the $35K is taxed at that higher rate rate. If we make $35,001 we only pay an increase of ten cents. That's how tax brackets work.) ...

    The justification for a special tax rate for gains from investing capital is supposed to be to provide an incentive to invest. But there is already a really good incentive to invest: to make a bundle of cash. Piling a special "incentive" on top of making a bundle of cash creates market distortions - moving investors away from deciding where to put their money based on the value and merits of the investment and toward tax-reduction schemes.

  • Wall Street Journal: Romney's Unorthodox IRA. By Mark Maremont. Excerpts: Like many Americans, Mitt Romney has an individual retirement account. Unlike most Americans, Mr. Romney has between $20.7 million and $101.6 million in it, a big chunk of his fortune.

    Experts on estate planning said it is highly unusual to accumulate such a considerable sum in an IRA, an investment vehicle restricted by annual contribution limits. It appears that Mr. Romney's grew so large mostly because it holds investments in Bain Capital, the private-equity firm he helped start.

    Under federal law, Mr. Romney isn't required to pay annual taxes on the account's investment gains, and the bulk of his contributions to the fund are likely to have been pretax dollars, IRA experts say. As such, the Romney IRA has enabled the current Republican front-runner to defer paying taxes on a sizable portion of his wealth—although he could face high tax bills when he eventually withdraws the money. ...

    Tax experts say that might explain why Mr. Romney's IRA includes holdings in Bain entities based in offshore locations, including one Cayman Islands entity that Mr. Romney listed as having a value between $5 million and $25 million. Michael Knoll, a University of Pennsylvania law professor, said using offshore blocker corporations to avoid UBIT "is a form of tax planning that happens all the time." Asked about the offshore investments in Mr. Romney's IRA, his aide said they were "in compliance with rules created to keep it tax deferred, just like it was intended to be."

  • Bloomberg/Business Week: Mitt Romney's Tax Savings. The GOP front-runner's private equity wealth is eligible for a special tax break available to a privileged few. By David J. Lynch, Lisa Lerer and Sabrina Willmer. Excerpts: When Mitt Romney conceded on Jan. 17 that he pays a tax rate of about 15 percent—far less than millions of wage earners whose votes he’s trying to win—he deflected criticism by employing what might be called the Ordinary Rich Guy Defense: Like a lot of people who are wealthy enough not to work, Romney said his income “comes overwhelmingly from investments made in the past.” That’s not quite the whole story. What he left out is that, because of the way he made his money, he is eligible to take advantage of a special tax provision that even some of his richest friends would envy.

    Private equity executives such as Romney, who spent 15 years running Bain Capital, arrange to receive much of their compensation in the form of “carried interest.” This enables them to treat what would be work income for most people, taxed at rates up to 35 percent, as capital gains, taxed at just 15 percent. “It’s a method of converting one’s labor into capital gains in a way that’s unusual outside the investment management industry,” says Victor Fleischer, an associate law professor at the University of Colorado at Boulder whose 2007 paper on the topic helped spur calls in Congress to change the law. “Ordinary people wouldn’t be able to do this.” ...

    Though he retired from Bain in February 1999, Romney negotiated a settlement that has allowed him to continue benefiting from the firm’s lucrative private equity funds and to invest alongside them in so-called co-investment vehicles, both of which generate income taxed at the 15 percent rate. The tax code’s treatment of income from partnerships in private equity, hedge funds, and real estate development means that some of the richest people in the country are taxed as if they made the wages of a bus driver or health aide. Last year three founders of the Washington-based Carlyle Group each earned $275,000 in salary. But they took home $134 million apiece in distributions from their funds, according to a Securities and Exchange Commission filing, making them eligible to pay low rates on much of their compensation. ...

    Private equity firms gather large sums from pension funds, universities, and wealthy individuals, and typically use the money to acquire privately held companies or subpar units of public companies. After improving the companies’ performance, often while working in hands-on management roles or serving on the board of directors, they sell their acquisitions to other investors or take them public. The tax code treats those gains as if the private equity partners were risking their own money—like average Americans who invest in mutual funds—instead of counting it as salary for running or advising the companies they acquire. In most cases, the private equity firms put up only a sliver of the fund’s capital.

  • New York Times op-ed: How Fares the Dream? By Paul Krugman. Excerpts: “I have a dream,” declared Martin Luther King, in a speech that has lost none of its power to inspire. And some of that dream has come true. When King spoke in the summer of 1963, America was a nation that denied basic rights to millions of its citizens, simply because their skin was the wrong color. Today racism is no longer embedded in law. And while it has by no means been banished from the hearts of men, its grip is far weaker than once it was.

    To say the obvious: to look at a photo of President Obama with his cabinet is to see a degree of racial openness — and openness to women, too — that would have seemed almost inconceivable in 1963. When we observe Martin Luther King’s Birthday, we have something very real to celebrate: the civil rights movement was one of America’s finest hours, and it made us a nation truer to its own ideals.

    Yet if King could see America now, I believe that he would be disappointed, and feel that his work was nowhere near done. He dreamed of a nation in which his children “will not be judged by the color of their skin but by the content of their character.” But what we actually became is a nation that judges people not by the color of their skin — or at least not as much as in the past — but by the size of their paychecks. And in America, more than in most other wealthy nations, the size of your paycheck is strongly correlated with the size of your father’s paycheck. Goodbye Jim Crow, hello class system. ...

    The Times recently reported on a well-established finding that still surprises many Americans when they hear about it: although we still see ourselves as the land of opportunity, we actually have less intergenerational economic mobility than other advanced nations. That is, the chances that someone born into a low-income family will end up with high income, or vice versa, are significantly lower here than in Canada or Europe. ...

    Last week Alan Krueger, chairman of the president’s Council of Economic Advisers, gave an important speech about income inequality, presenting a relationship he dubbed the “Great Gatsby Curve.” Highly unequal countries, he showed, have low mobility: the more unequal a society is, the greater the extent to which an individual’s economic status is determined by his or her parents’ status. And as Mr. Krueger pointed out, this relationship suggests that America in the year 2035 will have even less mobility than it has now, that it will be a place in which the economic prospects of children largely reflect the class into which they were born. ...

    Mitt Romney says that we should discuss income inequality, if at all, only in “quiet rooms.” There was a time when people said the same thing about racial inequality. Luckily, however, there were people like Martin Luther King who refused to stay quiet. And we should follow their example today. For the fact is that rising inequality threatens to make America a different and worse place — and we need to reverse that trend to preserve both our values and our dreams.

  • Christian Science Monitor: Is Mitt Romney really a job creator? What his Bain Capital record shows. Mitt Romney is running for president on his business acumen, saying he knows what it takes to create jobs. He puts less emphasis on what he knows about eliminating jobs. Marion, Ind., has experienced both via Romney and Bain Capital. By Ron Scherer. Excerpts: Before Mitt Romney’s Bain Capital bought the rambling SCM factory in Marion, Ind., it was running three shifts a day, making hanging file folders and other office supplies. But on July 5, 1994, everything changed.

    The new owner, American Pad & Paper, owned in turn by Bain Capital, told all 258 union workers they were fired, in a cost-cutting move. Security guards hustled them out of the building. They would be able to reapply for their jobs, at lesser wages and benefits, but not all would be rehired.

    “We were told they bought the assets, not the union or the [labor] contract,” recalls Randy Johnson, who at the time worked as a machine operator and was a union shop steward. The workers – some the third generation in their families to have jobs there – eventually went on strike, and Bain closed the factory 5-1/2 months after acquiring it. ...

    Bain Capital’s activities while Mr. Romney ran it from its founding in 1984 until he left in 1999 are being scrutinized now that he is front-runner in the Republican presidential race. Romney says that he knows business and that his work at Boston-based Bain led to the creation of 100,000 jobs. His business record and management prowess could be deciding factors if he’s the GOP nominee, because credibility on the issue of jobs is likely to determine who resides at 1600 Pennsylvania Avenue next January. ...

    In an analysis of Bain Capital under Romney, the Journal estimated that Bain made $2.5 billion in profits on $1.1 billion invested in 77 separate deals. Of those 77 transactions, 22 percent ended with the firms in bankruptcy after the eighth year of the Bain investment. Bain disputes the Journal’s account as inaccurate. ...

    The jobs track record for private-equity firms in general appears to be a wash. In an analysis issued in September, five economists, using US Census Bureau data from 1980 to 2003, examined what effect private-equity firms had on job creation two years after they had acquired a company. They found that employment at an acquired firm was down 2 percent. ...

    That may be one reason some union leaders do not oppose private-equity takeovers. “To be honest with you, we have good relationships and bad relationships” with private-equity firms, says Leo Gerard, president of the United Steelworkers in Washington, D.C. His union has worked with private investors such as billionaire Wilbur Ross, who bought Bethlehem Steel after it went into bankruptcy. “He did the restructuring in a way that brought efficiency and helped firms survive,” says Mr. Gerard.

    He is less positive about Romney and Bain, his union having dealt with them at least three times. “They take out ... fees [for themselves], flip the company, and away the company goes,” he says. They also fire the senior workers, says Mr. Gerard. “There is a reason the vulture capitalists do that: If they keep the older workers, they have higher pension obligations, obviously, with more years of service, and their health-care costs are probably higher because as you get older you need more medical care.”

    He would get no argument from Loris Huffman. She had worked 40 years at the AmPad factory in Marion and was 59 when the plant closed.

    “I was on the negotiating committee for the union, and we had to give up and give up until we could give no more,” Ms. Huffman recalls. “They tried to make the working conditions not very good.” AmPad began moving automated machinery out of the factory soon after acquiring it. “I think they were planning on shutting the plant down,” she says. “We were union, and they did not want that.”

    Bain Capital bought AmPad in 1992 for $5.1 million. It borrowed heavily, boosting AmPad’s debt from $19.8 million in 1994 to $443.7 million in 1995, and Bain charged it tens of millions in fees. Bain took the firm public in 1996, making tens of millions more. AmPad, still saddled with debt, filed for bankruptcy in 2000. It has since reemerged as a private firm, based in Dallas.

  • Huffington Post: Caterpillar Inc. Sees Surging Profits, Amid Pay Cuts And Rumors Of Plant Closures. By Lila Shapiro. Excerpts: Corporate profits are higher than ever, but for many workers, things just keep getting worse. Take the situation unfolding at Caterpillar Inc.'s London, Ontario plant. The company, the world's largest heavy machinery manufacturer, is insisting that Canadian workers take a 50 percent pay cut, give up their current pension plan and swallow a significant reduction in benefits. On Jan. 1, Caterpillar locked out the plant's 465 workers, refusing to let them do their jobs until they make these sacrifices.

    The moves are familiar to anyone who's watched the auto industry struggle with its workers and union over the past several decades. But Caterpillar, unlike the automakers, hasn't suffered much economically. Indeed the company has long stood out for its profitability, in the last five years hovering above the top 13th percentile on the Fortune 500 list. In the last three months of 2011, as Caterpillar was pressing Canadian workers to give in to its requests, the company reported a 44 percent surge in profits from the previous year. Now, if workers continue to resist, Caterpillar appears to be threatening to take their jobs out of the country. Not to China or Mexico, but just over the border to Muncie, Ind., where desperate Americans are eager to take any job -- no matter how low the pay. ...

    The situation at Caterpillar illustrates an emerging problem with the nascent economic recovery: While corporations are rebounding from the depths of the recession, working Americans aren't. Corporate profits are at their highest level in decades while worker compensation is at a relative 50-year low. Much hope has been placed in the rebound of North American manufacturing, but while the industry has added some 334,000 positions in the past two years, many of the new jobs don't pay the old middle class wages. ...

    This is a major issue, experts say, and not just for those workers facing a lower paycheck. "It's a fundamental problem: Now we have a situation where there's not enough purchasing power in the American economy to feed this recovery," said Thomas Kochan, a management expert at the Massachusetts Institute of Technology.

  • Washington Post: Stephen Colbert, Herman Cain turn spotlight on super PACs in South Carolina. By Melinda Henneberger. Excerpts: Calling himself the “Martin Luther King of corporation civil rights,” Colbert said that in a time maybe not everyone in the audience could remember — two years ago — corporations were sadly limited in the amount of money they could pour into political campaigns.

    But that changed, he said, when “five courageous justices” on the Supreme Court ruled in the 2010 Citizens United decision that “corporations are people,” that people are entitled to free speech, that free speech equals money and that corporations should thus be entitled to dump as much money as they like into the political water table, provided they don’t coordinate with the campaigns they’re funding.

    It’s the super PACs that are funding the flood of negative ads that the candidates all say they hate, even though the Citizens United decision was widely praised by Republicans. ...

    Near the end of the event, Colbert said that “pundits keep asking me if this is a joke,” but if that’s the case, of course, “then they are saying our entire campaign finance system is a joke!” (Nah, couldn’t be.) As Abraham Lincoln said at Gettysburg, Colbert added, “Give me some money!” We must stand for corporations, he said, mock solemnly, “because they have no legs.”

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.

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