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Highlights—March 10, 2012

  • WRAL-TV: As giant IBM learns to run, many U.S. employees left behind. By A Former IBM Employee. Excerpts: BM employees - even former ones - are reluctant to speak with the press about what is happening at the company as it goes through another "resource action" and 'rebalancing" - two IBM terms for layoffs. So in the interest of sharing with WRAL Tech Wire and WRAL.com readers how one veteran really feels about Palmisano and his changes, here is the full text of that letter with the permission of Alliance@IBM:. The article is credited to "An IBM employee:"

    IBM’s shift in workers is not about skill or job rebalancing. Sam is replacing older American workers with low wage college hires, as well as contractors and foreign workers who are typically young, male, and without benefits. The global employee count is almost 500,000, but the decimated American count of 105,000 in 2009 is now estimated to be about 98,000

    Sam is not retraining Americans. He says IBM spent $600 million training and retraining “and people can’t move up the skill ladder. So we have to replace them. I think it appropriate and fair. You give them the opportunity to reboot and help them transition. But if they don’t do it, then they don’t do it.” This rationalization is disturbing and untrue. It shifts responsibility for being fired to employees saying many tens of thousands of Americans are not able to learn.

    instead, while the HR team and written performance objectives require employees to create skill plans, which are used as a determinant as to who is fired, the business end for years has told us there is no longer a training budget. Skill plans and mandatory conference calls that detail improved, sophisticated career path programs are ignored and replaced by the rare approval for a class or conference for a few employees. Paranoia to cut costs is so strong my manager repeatedly chastised me for spending $30 on a company course I had thought was free. The truth is, IBM would not train Americans already targeted for replacement because they are considered expensive – the reason for offshoring so many positions they want filled by low wage workers. The flood of layoffs attests to this. Many laid off employees are required to train their foreigner replacements to do their job. This demonstrates they have the skills.

    Then, it does not matter what skills an American has.

    IBM employees typically find their next project by applying to internal job posts. “Americans need not apply” seems apt. An email reply to an application for a job in my neighborhood stated that the first group considered is foreigners. It reads, “The cost difference is too great. IBM India may not have visa ready resources with the specific skills, so many times U.S. resources do fill seats”. ...

    Sam, your layoffs are mean-spirited robbery. The last work day is 4 days or so before month’s end so we lose a week of earned vacation pay. IBM’s “stealth” layoffs skirt the Warn Act with small numbers at many locations on different dates. Instead of 60 days notice and pay, we get 30. This unfairly gives IBM a massive cost savings as we are kicked rudely to the curb.

  • WRAL-TV: Raleigh homeless woman once worked at IBM in New York. Excerpts: Cris Kent never imagined she’d be homeless, living in a truck with her brother. The 64-year-old Raleigh woman once had a finance and purchasing job at IBM in New York. She moved to North Carolina when her job was downsized, but her life quickly crumbled. Instead of retirement, Kent said she now thinks about where she will sleep at night. After moving to North Carolina, she had a job and a house in Johnston County with a few acres. Her steady employment dried up, and she lost her home to foreclosure, crushing her credit.

    Food stamps, a Social Security check and a modest IBM pension couldn't stop the cycle of bouncing from motel to parking lot. ...

    Julie Sager, financial stability program director at Triangle Family Services, says she "didn't used to see so many successful, college-educated people." “We see a lot more of those now than we ever did," she added.

    Selected reader comments follow:

    • At least the CEOs and execs at IBM have a bed (made of money) to sleep on at night. And now so do others in China and India due to the offshoring IBMs been doing. It's a shame those foreign wages won't do her much good. Personally, I think IBM's management should be ashamed of itself. I'm ashamed of them. Hope she gets some help and some good breaks.
    • I put away 15% of my salary every pay day. But just to survive, pay my healthcare and my gasoline bill, I am having to cut back on that. And even with my retirement and savings, I am DEPENDING on Social Security and Medicare to be there in current of better form. It's easy to say 'save', and I have my entire life. But I also know that if things do not go exactly according to lan, it won't last.
    • Welcome to the typical IBM story - cutting anyone who is approaching the number of years where they would qualify for decent retirement benefits --- all the while top IBM executives take outrageous salaries while shipping U.S. jobs overseas.
    • Even the best financial planning won't help if a company does away with their defined benefit retirement plan through bankruptcy or other nefarious means. My wife's retirement has lost over $150,000 in value due to the company going bankrupt and restructuring. She has worked for them for 28 years. It definitely made us make some changes. Nothing is certain anymore...
    • So long as IBM and other companies like it keep sending jobs overseas, it's only going to get worse. Worse for US workers, poor service for our customers, and the big corporations keep posting record earnings. If our beloved government doesn't put a stop to it, half the country will be homeless and on welfare. If companies want to send jobs overseas, they need to operate like foreign companies, and pay for doing business in the US. Now they get the very best of both worlds while it's workers suffer. I know several people at IBM that were making 70 to 100K a years. They were laid off a few years ago and now live with their parents, unemployed and without health insurance at age 50
  • Yahoo! IBM Pension and Retirement Issues message board: "Recent RA casualty" by "jnhryckowian". Full excerpt: Eligible to retire but still have to work to survive given current living/medical expenses. Fortunately, there is a "Separation Payment", but I am concerned about the wording within. Any recommendations for legal council? Thanks! John.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Recent RA casualty" by "madinpok". Full excerpt: There is little you can do about the legal language if you want to collect the severance pay. Is there something specific that concerns you, or do you just have an overall distrust of the agreement?

    A lawyer who specializes in labor law should be able to help you understand it better, but will probably tell you that it comes down to a take it or leave it choice. There is zero chance that IBM would agree to modifications.

    If you choose not to sign, you will still have access to COBRA coverage (at your expense) and then your retiree health insurance coverage (probably under the FHA). But besides the severance pay, you will probably also be giving up the transition medical plan, under which IBM will continue to pay for part of your COBRA coverage for 6 months to 1 year.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Recent RA casualty" by "chz_whiz". Full excerpt: John, you're welcome to hire an employment attorney, and one might provide a cursory review of the agreement and listen to your concerns at no cost. The odds of the attorney being able to modify the agreement, unless you have a very unique situation, lie between slim and none (and more toward the latter...IBM has good attorneys.) So your options are probably limited to: (A) sign, and leave with separation; (B) don't sign, and leave w/o separation. Sorry for your situation, but at least you are retirement eligible.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Recent RA casualty" by "jnhryckowian". Full excerpt: madinpok and chz_wiz, Thanks for the replies. Probably should have been more specific with my concerns. Basically I still hope to find employment, specifically with a vendor that IBM is currently engaged with. Within the RESOURCE ACTION SUMMARY PLAN DESCRIPTION (SPD) provided to me:
    "Employees who are offered employment arranged by IBM with a third party, and who will initially receive comparable terms and conditions of employment, will not receive the payment or benefits of the resource action. The resource action project office will, in its sole discretion, determine when IBM has arranged employment that initially provides the employee with comparable terms and conditions of employment."

    Since "IBM is providing you with Right Management Career Outplacement services as part of your transition package." Does use of this service constitute "arranged by IBM"?

    Also have concerns with the following: "Any employee going to an IBM subsidiary or affiliate as a regular employee...will not receive the payment or benefits of the resource action."

    When I raised this concern with ESC, I was told "they had no idea who might be IBM subsidiary or affiliate" and HR had to seek legal advice. I am still waiting for a reply. Anyone else familiar or concerned with this wording? Thanks.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Recent RA casualty" by "madinpok". Full excerpt: I've seen a few cases where IBM has offered an employee who was being terminated a new job with another company. In these cases, the employee did not receive severance pay or transition medical benefits.

    I don't think anything that occurs with Right Management would count as employment arranged by IBM with a third party. Right Management is a placement service that will help you write a resume and search for a new job. But finding that new job is up to you. In this case, you should expect to receive the separation package.

    If you find employment with a vendor that IBM is engaged with, I don't think that will count as something "arranged by IBM" unless IBM actually played a role in getting you the job. Nor would I consider them an affiliate. If you get the job due to your own networking with your contacts at that company, you should be able to get the severance package.

    IBM HR should be able to answer these questions. If they can't, then it is probably worth an initial discussion with an attorney who specializes in the labor field. A phone call or letter from your attorney may also motivate IBM to give you an official answer.

  • Yahoo! IBM Pension and Retirement Issues message board: "Pension and New York state unemployment...revisited" by "Gordon". Full excerpt: OK, I am 61 with 33.5 years with IBM. I will be laid off (from IBM) effective 3/28/12. I will start collecting my pension as soon as the paperwork gets processed. I have gotten varying stories concerning collecting NYS unemployment and a pension check from IBM. Most story's lean towards no, but I have heard that if you are collecting a pension that will not or has not grown, then you can collect. Since IBM pensions stopped growing in 2007, would this work?
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Pension and New York state unemployment...revisited" by "madinpok". Full excerpt: Since you are in NY, yes, you can collect both unemployment and your pension. Your initial application for unemployment benefits may be denied because many of the people who process the applications don't understand the fine point of the law that says that if your work over the last 18 months did not increase your pension benefit, then you are eligible for UE.

    If you are turned down, appeal the decision. Make sure you supply documentation that shows that IBM froze the pension plan as of 12/31/2007. There is a statement to this effect on page 5 of USHR113, which is available in the files section of this group in the folder called "IBM Retirement Benefits Info."

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: FHA (Future Health Account) Rates" by "madinpok". Full excerpt: The retiree medical plans have low, medium and high deductible options. The high deductible plan has a $2500 per person, in network deductible in 2012. That's the highest deductible plan IBM offers. The plans are similar as far as the names go to what is offered to active employees, but the deductibles tend to be higher for retirees.

    The low/medium/high deductible plans will cover you in any state you travel to. If you choose one of the HMO or EPO plans, you will be restricted as to where you can get your medical care.

    The plans are indeed expensive, but so is most medical insurance. As an employee, you pay only a fraction of the cost of the plans and IBM pays the rest. As a retiree (especially with the FHA) you are pretty much on your own.

    The cost of the retiree plans is about twice the total cost of the plans for active employees. This is because IBM places retirees in a separate group and, since they tend to be older and have more medical expenses, the premiums are higher.

    Depending on the state you live in and your health, you might be able find a less expensive plan on the open market. But it is far from easy to do and you need to be very careful to make sure you understand what the insurance will really cover.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: FHA Rates" by Gary Brown. Full excerpt: IBM Retiree Prescription (self-funded) coverage is really high-priced for spouse. Middle-name of IBM remains "Business" ! At the end of this year we will we have saved enough to just about pay 65-70% of the cost of 42 MPG Cruze Eco by not using the prescription coverage for a spouse not yet on Medicare. Yes, we shop the open market for her meds and run the risk of her not needing some multi-$thousands meds for about the next 8 months.
  • Yahoo! IBM Pension and Retirement Issues message board: "Re: FHA Rates" by "netmouser". Full excerpt: Whatever plan you choose, be sure it has an annual cap on out of pocket expenses. You may also want to be sure it has no limit on prescriptions like your employee plan - some plans have none or a maximum drug cap that they will pay that may be limited to $1000 or so annually. A major illness can cost zillions of dollars in drugs. Not having these are the reasons many with insurance go bankrupt.
  • Glassdoor IBM reviews. Selected reviews follow:
    • IBM IT Specialist: (Current Employee) “I had high expectations when I joined IBM for opportunities that never materialized. Very Disappointed.” Pros: Work from home and no travel. Cons: Too many levels of managers. BAD management decisions at at every level. Poor execution of critical processes and projects. Performance rating system is a complete joke. Begging for office supplies is embarrassing. Typical politics get in the way of trying to do the right thing. Advice to Senior Management: Morale cannot be any lower than it is today. Revamp PBC system to use clearly QUANTIFIABLE metrics. "Relative Contribution" is completely subjective and results in abuses. PAY FOR PERFORMANCE, like IBM advertises. Salary has barely kept pace with inflation. Not what is expected from such a "respected" company. No raises and pitiful bonus payouts are unacceptable.
    • IBM Staff Engineer in Essex Junction, VT: (Past Employee - 2010) “Average place to work.” Pros: Nice atmosphere to work. Fellow employees are easy to get along with. IBM is reasonable about work/life balance. Cons: The bottom line is profits and always cutting cost. Doing more with less, year after year is the norm. Layoffs come quite often and many good employees are unfortunately lost in the process. Advice to Senior Management: Be patient with the economy's ups and downs. Don't be so ultra reactionary to changes in the market when making cuts. This is especially true when dealing with laying off seasoned employees with much needed knowledge and experience.
    • IBM Anonymous: (Current Employee) “After 29 years, I have seen tremendous changes. It is no longer the prime place to work that it used to be.” Pros: salary, experience, good on your resume, good benefits, educational opportunities, the long-term people are good people to work with, possibility to work from home in some organizations. Cons: The workforce is being heavily globally resourced. More and more jobs are moving to other countries, with IBMers being laid off, with no regard to performance or length of time with the company. If you are exempt from overtime, then you can work your life away, with no recognition. Advice to Senior Management: Be careful about how you are gutting the company. You are removing years of experience and training and replacing it with people with a lack of experience in their jobs, or in the work world in general. Those people are getting their training at IBM and then leaving to other, better paying companies in their own countries. How is that building a new, stellar employee base, with a strong bench strength? Where is the future of the company?
    • IBM Anonymous in Frankfurt am Main (Germany): (Current Employee) “learned a lot but not appreciated.” Pros: great reputation, great brand image, knowledge sharing diversity. Cons: weak development of talents. salary is not good.
    • IBM Project Manager in Chicago, IL: (Current Employee) “In US, pays just enough that you won't leave until you are fired.” Pros: Work with some very smart and wonderful people. The people "in the trenches" are the best around. I have really enjoyed the teams I have worked with inside the company. Very smart and hard working people. Mentoring is available depending on "who you know" Some online training can still be had for free. Paid training is extremely limited and you need to take classes on your own time. Depending on the job, project & manager decent work/life balance and time off can be had. Cons: Lots of jobs in US being eliminated. Work/Life balance can be an issue. Especially when working the global clock (needing to be available to meet with teams in all time zones). Enormous pressure to meet deadlines/cut costs, often not realistic. Advice to Senior Management: Stock goes up, but US jobs are lost. A tough pill to swallow for an employee in the states.
    • IBM Program Manager in Phoenix, AZ: (Current Employee) “Great place to learn about cost cutting. Bad place to grow a career.” Pros: Work from home if legacy employee. Good healthcare. Cons: Your salary today will be your salary 5 years from now. Raises are about 1% a year. Bonus about 3%. Management has no interest in growing or advancing your career. They believe any off-shore or Dubuque person can do your job. Doesn't matter if it takes 3 of them to do it, as long as it is for less money. Management's priority is cutting costs at the lower and mid-level and maximizing profit for those at the top levels. As an employee you are only a means to their end. Advice to Senior Management: The maximize profits at the expense of everyone below senior leadership model will only work short term. Ginny is simply a clone of Sam, that is why she got the job. Accounts have too many PE/DPE and they do not take any time to learn the names of the people working with them to support the customer. Good luck!
    • IBM Software Engineer: (Current Employee) “Always a target.” Pros: * Good health benefits; * Can work from home if needed; * Decent amount of vacation; * Pay isn't horrible. Cons: * IBM is moving all jobs out of the US. * You are always a target for a lay-off - If India or China can do your job you WILL be laid off. * Bonus pool non-existent. * Raises non-existent. * IBM only cares about their stock prices and will cut anyone and anything to get there. Advice to Senior Management: Doesn't matter - they don't and won't listen. Upper management is soooo disconnected from the average worker. They have zero clue about what is going on.
    • IBM Senior Program Manager: (Current Employee) “I no longer respect the senior management of IBM. They no longer respect the US IBM workforce.” Pros: I used to think it was a great place to work with unbelievably smart people. Some are still left, but the numbers are dwindling quickly. Cons: There is no longer respect for the individual in IBM. You may be lucky to have a great first line manager, like I am, but you are constantly worried about the next layoffs. It's a toxic environment. Advice to Senior Management: You are losing your greatest advantage with all of the layoffs in the US and other 1st world countries. You cannot stay in the leadership role if you keep losing your senior leaders. Stop before it is too late.
    • IBM Director: (Current Employee) “Could have / Should have been Great.” Pros: Big Company with Big Resources. Some work and schedule flexibility/ Cons: Poor use of resources. Impossible to get investment even with formal, unanimous approval. Anyone can disagree and stop processes; even when not involved. The "matrix" makes things impossible to get anything done. Lot of talk, virtual no empowerment. Must escalated to senior executive leadership to get anything done. Advice to Senior Management: Lots of smart people, nothing getting done. Stop rewarding people who aren't leaders, empower employees to actually take action, and get rid of the ridiculous matrix environment and create clear lines of authority. No company should have 400,000 employees...
    • IBM Senior Managing Consultant: (Past Employee - 2010) “Good consulting company to work for, must love travel...” Pros Global organization with strong name recognition in industry. Clear criteria for the achievement of each staff level and a honest attempt at evaluations. Co-workers are mostly intelligent and enjoyable to work with. Work is mostly interesting. Cons: Constant travel if you don't work in a large market that has many multinational clients. Huge bureaucracy makes doing the right thing for employees difficult (company policies will override individual circumstances). Relentless push for high utilization towards quarter/annual period end, satisfaction of Wall Street sometimes comes at the expense of clients and staff. Training is an afterthought, the first thing that gets cut and considered to be a sacrifice on the company's part (in terms of billable hours), not an investment in staff. Advice to Senior Management: Treat your staff like the valuable assets that they are. Recognize the impact that over-zealous policies and procedures have on morale. Invest more in training and conferences.
    • IBM IT Project Manager: (Current Employee) “IBM has a good mentoring program. Their performance rating is unfair because they grade using the bell curve.” Pros: Ability to work at home. Project Managers can work on different accounts. Good health benefits package. Cons: The Performance rating is unfair. Some of the Managers do not help with career advancement. IBM is sending some of the technical jobs offshore to India and laying off US workers. Advice to Senior Management: Need to work on work/life balance with employees. Salaried employees are expected to work 15% OT with no additional pay, unfair.
    • IBM ID Administrative in Boulder, CO: (Past Employee - 2011) “Went downhill quick.” Pros: The immediate supervisors were good. The co-workers were good. Cons: Senior management, lack communication, lack of professional growth, lack of promised restoration of compensation, the quasi qualified many, and the select qualified having to cover for the unqualified. Advice to Senior Management: Hire supplementals and full timers, give the carrot once in a while instead of just leading us with the promise of it eventually.
    • IBM Anonymous: (Current Employee) “The company isn't what it used to be.” Pros: It is very large and there are a diverse set of opportunities. Cons: Senior employees seem to be targets for being "rebalanced." Advice to Senior Management: The company is about as thin as it can get...the field personnel are stressed to the limit, there is no Work/Life balance, and employees are no longer valued assets, they are seen as overhead.
    • IBM Senior Consultant in Melbourne (Australia): (Current Employee) “Learning opportunities.” Pros: - breadth and depth of the industries you can work on; - opportunity to travel if desired; - many clever people you can learn from; - great to build foundations; - graduate salary is very competitive to market rate; - many learning opportunities.

      Cons: - salary is not at the higher end of the market rate (it's at the average end); - performance rating can be subjective depending on manager you get; - depending on demand, may not get a role you like; - lots of red tape to do in your own time; - work life balance sometimes hard to find if project is behind schedule.

      Advice to Senior Management: I've seen many great and clever employees leave IBM due to the salary not being competitive enough. It appears like IBM would rather pay more for an experienced hire rather than increase the salary of an existing IBM employee. IBM need to either become more competitive with their salary or improve their employee recognition programs or employee benefits to retain their employees.

    • IBM Sales Representative in Dallas, TX: (Past Employee - 2010) “Experience overall was good. I would give it a 7 out of 10.” Pros: Name branding that customers recognize and respect. Cons: No personalization of workplace and people. You feel like a number at a big corporation. Advice to Senior Management: Treatment of employees in the 70s, 80s and 90s was impeccable. "Think" was one of the mottoes that drove employees to be innovative creative. Today, employees are simply asked to do the job.
    • IBM Anonymous: (Current Employee) “Fulfilling” Pros: Learn to be fully independent and accountable for your own judgement. Take risk, learn from mistake and move on. Cons: Large organizations and focus from top management in relating to guidance, benefits and other perks could not be spread sufficiently and fairly. You need to work doubly hard and long hours to stay visible and to be recognized on the work effort you put in. Advice to Senior Management: Work life balance!!
    • IBM Software Engineer in Costa Mesa, CA: (Current Employee) “Demanding, but can be satisfying” Pros: 100% matching 401K contributions. Use of leading edge technologies and tools. Flexible working arrangements. Great experience in working with highly skilled and knowledgeable technical professionals. Pride of working for a renowned and respected technological giant. When you mention you work for IBM, people automatically respect you and treat you differently, in a positive sense.

      Cons: Too many processes and inefficiencies to get the simplest task completed. While the working arrangements can be flexible (depending on your manager), there is a lot of pressure to get work done even though there are limited resources available. If a team member retires, resigns (yes, that happens) or is "resource actioned" (i.e., laid off), IBM does not replace that member, and remaining team members are expected to pick up the slack. There is no sense of job security, no matter how well an employee performs, or how well the division or business segment does in terms of generating revenue. There does not seem to be any rhyme or reason to decisions to lay off an employee. I've have personally seen IBM lay off highly skilled, knowledgeable, positively-reviewed, and experienced employees, in very successful, revenue generating projects. Too many meetings. By the time I get out of meetings, almost the entire day is gone.

      Advice to Senior Management: Reduce required meetings, and try to eliminate inefficient processes and requirements. Ask the typical employee how much time is lost on attending meetings and trying to obtain needed resources to complete a project on time. You would be shocked!

  • Urban Institute: This Is Not Your Parents' Retirement: Comparing Retirement Income Across Generations. By Barbara Butrica, Karen E. Smith, and Howard Iams. Abstract: This article examines how retirement income is likely to change for boomers and persons born in generation X compared with current retirees. We use the MINT model to project retirement income, poverty rates, and replacement rates for current and future retirees at age 67. We find that retirement incomes will increase over time, and poverty rates will fall. Projected income gains are larger for higher than for lower socioeconomic groups, leading to increased income inequality among future retirees. Boomers and GenXers are less likely to have enough postretirement income to maintain their preretirement standard of living compared with current retirees.
  • Financial Times: Lunatics have taken over the boardroom. By Luke Johnson. Excerpts: Sometimes it can seem as if the executive suites of large organisations are actually lunatic asylums. A director of one of the US’s biggest companies recently regaled me with stories from the front line of corporate madness. Its boardroom has been dominated by infighting for years. Chief executives come and go, the business blunders on, but politics overshadows everything.

    This company is so large it would take a nuclear attack to sink it. Yet its very scale means those jockeying to be captain of the ship can afford to spend their entire time backstabbing, stealing credit from rivals and waging turf wars. Shareholders, customers, staff – they are almost ignored while the various leaders seek status at any cost.

    Possibly in previous eras, bosses were less selfish. Even ambitious types, who clawed their way up the corporate ladder, seemed to care more for the institution where they worked. Now their personal career is all that matters. The individual’s priorities are the only agenda, even if that conflicts with the workplace. Perhaps this is revenge for the way modern capitalism has dispensed with much loyalty towards personnel, how the traditional relationship between employee and employer has frayed and become highly legalistic and hollow. ...

    More likely though, demented office politics represent an external manifestation of various mid-life crises. Boardrooms are overwhelmingly populated by men aged 45 to 60. By this age, most of the players have worked out that more money doesn’t bring happiness; time is taking its toll; maybe the striving and sacrifices weren’t really worth it; and the participants tend to become more acutely aware of their mortality, shortcomings and missed opportunities. Regrets and anger can become the dominant emotions, as optimism and hope gradually diminish.

    Thus the boardroom can end up resembling a psychiatric ward. Motivations diverge violently, and maintaining a rational sense of purpose can become impossible. Meanwhile, new technology, changing demographics, the rise of emerging economies, the financial emergency and other threats mean many western organisations face an existential reckoning. Plenty are standing on a “burning platform”, as the CEO of Nokia put it – yet those in charge bitch and scheme even as the flames lick their boots.

  • Wall Street Journal: What's So Wrong With Roth 401(k) Plans? Workers haven't embraced this savings option, but some experts say they should. By Rachel Louise Ensign. Excerpts: Although fund companies say they have aggressively marketed Roth 401(k)s, the adoption rate has been slow. Fidelity Investments, which administers retirement plans for 12 million workers, found that only 6% of plan participants with the option of enrolling in a Roth choose to do so. At Charles Schwab Corp., that figure is 15%, and at Vanguard Group it is 9%.

    Part of the problem, experts say, is that while the Roth 401(k) is fairly simple to understand, determining whether one is right for you is often anything but, requiring a careful assessment of both your current and future tax situation. "It's both a macro and a micro decision," says Gil Charney, principal tax researcher at the Tax Institute at H&R Block, a division of H&R Block Inc.

    Who might benefit from a Roth 401(k)? Broadly, it is the same population for whom the Roth IRA is a good fit: those who expect their tax rate to be higher in retirement than it is currently. That may include investors who think the government will raise taxes in the future. By contrast, individuals who expect their tax rate to be lower in retirement are better off with a conventional 401(k) that delays the payment of taxes.

New on the Alliance@IBM Site
  • Job Cut Reports
    • Comment 03/04/12: @GLAD ITS OVER--- Read you severance package, YES if you fail to perform your job duties during your 30 days of notice, you can have your severance package pulled. They have you by the balls or some other bodily part. -Be-More-Aware-UNIONIZE-
    • Comment 03/04/12: "cloud employment" will soon be the next new strategy that IBM will use to pay employees on a "per project" basis. No benefits, no holidays, no vacations, 24 hours work day, 7 days a week, no severance, no unemployment insurance (after the "project" is done). Take your measly cash on the barrelhead and scram IT animal! Come back soon for more. We like getting rich off of you. Welcome to the smarter planet. -anonymous-
    • Comment 03/04/12: Consider this: IBM's chairman was paid $170M to retire in January, including full medical benefits for life. IBM has off-shored over 100,000 jobs from the U.S. under his tenure- lost American jobs. The cost to pay his retirement off is the same as approximately 1300 employee's salaries and expenses. He left on Dec. 31, 2011. On January 2, 2012, IBM communicated a layoff to reduce expenses. The number of people in that layoff is - you guessed it - around 1300 U.S. employees. Coincidence? I think not. Corporate execs are siphoning money away from their employees to get rich. The average IBM employee who retires this year, after 30 or more years of working, will GROSS $33,000 a year, with one year of benefits assistance (they will pay only $600 a month out of their 33,000 for the first year) After that, no benefits. That GROSS pay, puts most of the retirees BELOW THE POVERTY LINE! How can this kind of 'employee fleecing' be made illegal? -ournightmare-

      Alliance reply: It can't be made "illegal", but it can be countered and made useless to IBM management by one simple step: Organize IBMers and get a written collectively bargained contract that prevents management from making themselves wealthy on the backs of IBM employees. Executives, right on up to the CEO have contracts that stipulate what the company MUST pay them on their retirement. All of the CEO's benefits, bonuses, stock options, salary, and perks are also negotiated for them in a written contract. It's perfectly legal. And so will a contract between IBM and the IBM employees also be perfectly legal.....IF IBMers decide to organize and stand up and fight back. Get busy fighting for your jobs, or get busy losing them.

    • Comment 03/04/12: any thoughts on the fact that end-dates are assigned which deny the accrued vacation benefit for that last month? -anonymous-

      Alliance reply: Yes, one thought. Not much you can do about it now. It is perfectly legal for IBM to do this. For IBMers still employed, there is only one thing you can do about it: get organized and fight for a union contract. IBM can break its own rules, legally, and there is nothing you can do about that. You are an "At Will Employee". IBM can treat you terribly, upon your RA and there is very little that you can do at that point. US IBMers that are still employed, need to LEARN from the RA experience. ORGANIZE. Get busy fighting for your jobs or get busy losing them.

    • Comment 03/04/12: I am an IBM contractor working for Manpower. Manpower is clearly an IBM overseer outfit. They are just paying IT slaves like myself for IBM. After the latest RA those IBMers than remain in my group are treating me differently and it is not better. One remarked that I don't have to worry about the RA since I am a contractor and have a job. Like I'm lucky to not be an IBM employee? Mind you I have little if any benefits compared to an IBMer. I don't get severance and probably don't even get unemployment if I get released from my contract. I'm being looked down upon now since I am still around and IBMers are RAed. I'm not trying to take work away from anyone. I'm just trying to scrape by myself. I'm would like to leave since IBM work environment is becoming totally toxic. Please IBMers and Manpower contractors for IBM lets unite and get a union here. It has to make a positive difference! -overpowered-
    • Comment 03/04/12: USA survivors of this latest wave of layoffs, take a look around you. 3 out of 4 of you will be gone by 2015. The roadmap for road kill. Save yourself and your family. Think. Where should your loyalty be? -Joe Punchclock- Alliance reply: We recommend organizing. Get busy fighting for your jobs or get busy losing them.
    • Comment 03/04/12: GBS - 20% of my dept RA'ed last week. When's the next one? I figure they'll continue to chip away until my organization is entirely offshored - first level management included. So, bring on the next ones - let's get it over with. -Anonymous- Alliance reply: We recommend organizing. Get busy fighting for your jobs or get busy losing them.
    • Comment 03/04/12: I got promoted to Band 8 last year. Got a 2 year retention bonus but yet was asked to leave IBM this year because the division is not making enough revenue IBM expects. How ironic? This is how IBM values money, before you! -Not an IBMer-
    • Comment 03/05/12: Hello, I found out I was terminated-I am part of IBM S&D sales. I am currently on LOA for medical reasons. My appeal for LTD was denied by MetLife, but I have a lawyer who is working with them and the case is not resolved yet and if necessary she will file suit. Is there anywhere you can point me as a resource to help guide and advise? I would not think this would be legal? But then again, the extent that IBM/corporate America does the wrong thing to employees, never ceases to amaze me. I was a 26 year highly ranked/certified sales employee before falling chronically ill. -Anonymous-
    • Comment 03/05/12: So lied to by IBM. I was with Novus. Told that our Novus time would count in the separation plan. But now find out that it counts only for the first year at IBM. Lost two years of separation pay. -Love it- Alliance reply: This is a lesson many employees outsourced to IBM have learned. Never rely on any verbal "agreement" by IBM. Always ask for it writing. If IBM refuses you know they are lying.
    • Comment 03/05/12: I was "resource reduced" in Feb 2004. The over age 50 reductions began in the early 1990's. In 10 years, my dept in Pok went from 65 to 12 with only 2 people 50+ y/o. About 40 of the 65 were over 50 years old, over 25 years service, and all were top technical specialists in Large Systems Support. After retiring, I watched my Retiree Plus 1 Medical go from $330 per month in 2005 to $1233 per month in 2012. I was under the impression that IBM contributed $7200 reduced from $7500) toward Retiree Medical. Nope. The fine print states "up to $7200". The $250 Life Planning Account payment was ceased for those who retired after 12/31/2003. Then thinking IBM would contribute to Medicare Part B for us, I find that IBM ceased that for those who retired after 12/31/1996. So IBM is the cheapest, most unethical company a person could devote 30 years of their life to. I was all for a union in the late 1990s and stood outside with the CWA banners and the airplane fly overs but I found that IBMer's were too cheap to pay union dues and they stuck their heads in the sand. Well, I dare say, most of them are now gone from IBM. Hey, IBM stock is at an all time high!!! Thanks Armonk. -jsb2b-
    • Comment 03/05/12: All five U.S based members of the GNA Domino Administration team of the IBM Global Account. Jobs going oversees. -Anonymous-
    • Comment 03/05/12: US employees all call in sick on a designated day as a show of solidarity? Tuesday April 24, 2012 would be a good day. It's the day Annual Stockholders Meeting. Let's hit them where it hurts. $$. -Lets_all_DO_something-
    • Comment 03/05/12: I am next on the chopping block. Last day is in 30 days. Nebulous reason given about skills rebalancing. They can't tell me though what skills I should have or don't have, just that skills need rebalancing. Insult to ones intelligence. S&D -justanother-
    • Comment 03/05/12: Ladies and Gentlemen, I have followed this message board since 1999. At that time IBM was forcing the great Cash Balance Plan onto ALL IBM employees. There was such an uproar from the ranks of employees that IBM actually bended, yes bended. They did screw a lot of people out of the defined Pension, but it was noticed and a choice was given to those that met the requirements. I left IBM on my own after 23+ yrs and have to say it was the best move I have made in my life. To those that whine and post here I personally ask "How Much Cheese Do You Want With Your Whine"! I am a member of the Alliance, anyone in RTP want to really let the Government, local news etc what's going on? Get a hold of me and join the Alliance, it's your last life boat people and before you drown, make it to the Life Boat! Best Regards,

      P.S I forgot to add, I worked in the Software Group under the notorious Steve Mills. I worked L2 support. In 1993 when 3 finger Lou came in, lot's of people got let go, some I have to say were bumps on a log, but others it was truly unjust. I am a paying member and no longer belong to IBM, so my question to ALL of you, what's your problem besides not having enough cheese with your whine to join! Aye Captain??? -Steve-

    • Comment 03/05/12: Great interim reviews and great feedback from the teams I worked with in 2011. My HR appeal still open as of Jan 2012. Had applied for scheduled sick leave for surgery before I received my lay off notice. Can IBM HR lay off an employee while one HR appeal is open AND the employee is on sick leave (for surgery?) I find that very surprising. -Anonymous-
    • Comment 03/05/12: "...Can IBM HR lay off an employee while one HR appeal is open AND the employee is on sick leave (for surgery?) I find that very surprising. -Anonymous-" Why do you find that surprising? I'm not trying to be sarcastic or mean, here. You are an "AT WILL EMPLOYEE". Do you know what that means? It means that IBM can do almost ANYTHING they want to you; including firing you when you are ill or even in the hospital. They can fire you while you are appealing your case with their own HR people. Why can they do that? Because there are no labor laws that tell them that they can't. "At Will Employee" is a phrase that identifies any worker that isn't represented by a union contract or written employment agreement. That pretty much means that ALL IBM workers (except for Executives that DO have contracts) are 'At Will Employees' in virtually all 50 states in the US. Alliance has a "Simple Fact Sheet" link on the right column of this page. Click it and read it and be informed. I am very sorry that IBM treated you in such a despicable manner; but, I'm not surprised at all. IBMers need to organize and stop this kind of despicable nonsense from happening. Now! -At_Will_Employee-
    • Comment 03/06/12: Has anyone successfully gotten a job within the 30 days after being RA'd? -Apply?- Alliance reply: You'll find the answer to your question within this comments section and/or the other archived comment sections. Almost all times, it is unsuccessful. IBM does not want you to find a job in IBM within 30 days of your RA. That's why they RA'ed you in the first place. They want you gone.
    • Comment 03/06/12: Will the Alliance also fight for retirees? I was among those RA'd on 2/27. I am lucky that I can retire and at least have that income to help with the salary reduction (assumed). My fear is that our already lessened retirement benefits will be reduced in the future. Is that possible? -In Atlanta- Alliance reply: Can IBM reduce retiree benefits? Absolutely! There is a disclaimer on all their docs saying they reserve the right to modify, change or abolish the plan. That is what happens when you don't have a union contract. IBM retirees need to start challenging IBM. Alliance will help when it can.
    • Comment 03/06/12: Here is a fool proof plan for everyone at IBM who reads this to follow to make their workplace better and stress levels lower. First get the person you see every time you look in the mirror to join the Alliance. Next whenever a coworker complains about things at IBM just ask them have they joined the Alliance and if not they have no reason to waste your time complaining if they are not willing to do even the simplest thing to fix things. Being nice and listening to people whine who will not take action has not gotten us anywhere. Maybe its time to make them put up or shut up. Either way you won't have to stress out listening to them complain so you win either way! I wanna be like Ginny. I want a contract! -Exodus2007-
    • Comment 03/06/12: I've seen a lot of posts about advising & boycotting the clients who do business with IBM. Sounds good, but do you realize that a great deal of IBM customers themselves are also off shoring jobs? Do you think they are going to take the side of the American public when they themselves are screwing their own employees? Someone mentioned getting the government involved...Alliance has some awesome links to articles speaking directly to the legislation on the tables. We need to get vocal outside of forums, emails, Twitter & Facebook and be heard where it counts! I guess I lived in a cave for the past 16 years because I only heard of Alliance once prior to 2/27. I should have climbed out of that cave then and maybe I would still have a job come 3/29. Pass the word, some folks are still living in that cave I was in. -Ciao Big Blue-
    • Comment 03/07/12: Many people here are begrudging IBM for its lavish conferences like Pulse. As a past participant in these types of conferences, I can tell you they are NO fun. Under the thin veneer of IBM innovation and all the rah-rah, there is a cynical undercurrent flowing through the air thick enough to cut with a bread-knife. Seems deep inside, most veteran IBMers know that IBM is a house of cards built on deceptive marketing, senseless layoffs and failed deliveries but nevertheless continue to be the enablers of the masquerade in order to survive. During these conferences, when you are with other senior IBMers in a group, the short-sighted focus on EPS, the offshoring and the insecurity due to cost-cutting are the big elephants ever present in the room but no one dare speak of them. Instead what you witness is soul-destroying cult-like spectacle of empty-suit executives attempting to justify their job using cliched speeches, cronies and lackeys blatantly polishing their butts without asking a single uncomfortable question and the rest walking on eggshells or jockeying to be among the "last-men-standing" in the political survival games being played out in IBM everyday. Ugh! What a toxic environment. -FreeBird-]
    • Comment 03/07/12: The Alliance@IBM has about 250 members. In order to bring the IBM execs to the bargaining table, it needs about 50,000! For my part, I talk about unionizing with other IBMers at least 2-3 times a week but, at the current rate of growth, I just don't see how this union can grow to 50,000 strong in my lifetime :-( Perhaps something different can be tried? Perhaps the Alliance@IBM can announce the start of an electronic sign-up drive of some sort? In the wake of the recent layoffs, if the media is tipped off, such an effort would most likely be mentioned in the papers or on the news. Given the atrocities being committed by IBM, thousands of IBMers would join if only they were made aware. Is this an option? - Discouraged- Alliance reply: First of all it is very difficult to reach all IBM employees by email. IBM has blocked us before and will surely do so again. We need people on the ground pointing workers to our web site and encouraging them to sign up and join the Alliance. We also need strong organizing committees on site and in business units. We need employees willing to be public leaders of this movement. In the meantime, there is much the Alliance can do as an advocate for employees and a pressure group inside IBM. But we need to be stronger.
    • Comment 03/07/12: How many people work form home making organizing a "location" difficult? Not only did IBM reduce their expenses on buildings & property, they "divided & conquered".-working-from-home- Alliance reply: About 40% are work from home or mobile and yes that makes organizing, identifying them and outreach very difficult. For those that have email lists of these people please send to the Alliance at ibmunionalliance@gmail.com
    • Comment 03/07/12: Science and Engineering workforce has stalled in the US? Well Yeah. Given the way companies like IBM treat scientists and engineers this doesn't surprise me at all. Who the heck wants to be a scientist or engineer and get laid off by some big fat slob CEO like 3-Finger Lou, Sammy, or Ginni? What a joke. -engineer and not proud-
    • Comment 03/07/12: Monday Feb 27 was an unforgettable day at IBM Poughkeepsie. I saw almost everyone was openly crying and visibly upset even they weren't affected. As many as 1/4 of the people in my Dept got laid off. From where I came from I could say more. Let me get to the point that the recent resource action had absolutely nothing to do how IBM is doing in America!!!! Not only because IBM had to reduce headcount to meet the goal of $20 EPS by 2015, but because our corporate execs rake in millions dollars for their bonus. I saw my employees work very hard and put in many long hours to help make it look good for our execs. They never thanked us and we were robbed by the fat cats at IBM. -Because of the Fat Cats at IBM-
    • Comment 03/07/12: Did anyone notice IBM has quietly closed almost every office in the US? Reason was given that "IBM is no longer in the real estate business". In Atlanta, for instance, keys to both huge buildings were given back to the owners and IBM sneaked out Dec 31, 2011 after giving the perm office holders 1 wk notice. Cafeteria, Credit Union etc have also closed. Approx 2500 people were perm residents of the buildings, and most were given 60 days to work from home. If they could not find another position that is specifically remote, they must move to Poughkeepsie - or be fired. On the other hand, some were given remote positions with no question. In any event, the buildings are now empty. -Buckwheat-
    • Comment 03/08/12: A request to Alliance: Please create a fresh flyer that refers to the current RA so we can distribute in break and lunch rooms while interest in unionizing is higher than normal. It might also be good to mention Chile's and Argentina's recent successful union campaigns to give folks some evidence that this is not an impossible goal. Thanks. -Flabbergasted- Alliance Reply: Go to this link: Flyers and select the most recent. One is a pdf file and the other is a doc file. They both should download for you. If you have any problems, please let me know.
    • Comment 03/08/12: pbc appeal failed - looks like if any RA in the UK I will be losing my job, you just cannot beat them was told on my call i am a solid pbc 2 but peers performed better even though i brought in revenue- i give and look forward to losing my job and home -beatenInUK-
    • Comment 03/08/12: -myturn- Just called the number you listed (800-796-9876). Selected option 6 and got the following automated message, "Please be advised, we are experiencing high call volumes. Please wait on the line or send an email to...". Looks like the IBM HR department is getting a lot of business. Lots casualties on the Road to 2015. -2015 Roadmap Roadkill-
    • To all, please send us the RA pack so we can track the numbers at ibmunionalliance@gmail.com When reporting job cuts, only count those "Selected" for job cuts, not the whole list. Good luck to all.
    • Editor's note: There are many more comments concerning IBM's latest resource action in last week's highlights.
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Minneapolis Star-Tribune: Small companies working to make health pay. By Jackie Crosby. Excerpts: Each week, owner Pam Sartell stocks the pantry and fridge of the downtown Minneapolis office with healthy food and snacks to encourage her workers to eat better. It's more than a goodwill gesture: Sartell pays 100 percent of the medical and dental costs of all 20 employees -- and their families.

    "My bookkeeper says, 'Ooh, this is kind of high, Pam,'" she said. "But I see the benefits 100 times over. I want my employees to be productive and healthy and happy." Software developer Sartell Group is bucking the trend. Nationally, the number of small businesses offering insurance at any level dropped last year, despite a new tax credit designed to encourage it. ...

    Henry Bromelkamp has been providing fully paid insurance with no co-pays or deductibles for 33 years. He says he does it because it makes good business sense. "People's first reaction is, 'Henry, that's so generous,'" he said. "Actually, I think I'm a very good businessman and capitalist. I'm doing it to make money." Bromelkamp Co., with 16 employees, develops software to help nonprofits and foundations manage grants. ...

    Bromelkamp says it's vital to offer a competitive benefit package to attract the best job candidates. In addition to paying all of his employees' health insurance, Bromelkamp funds the maximum amount allowed in a Simplified Employee Pension Plan account. In return, workers earn significantly less in wages. ...

    "When I advertise for employment, I don't tell people what their salary is," Bromelkamp said. "I tell them what their compensation package is." The trade-off puts more money in the workers' pockets and into the business because of reduced taxes, he said.

    He tells the story of a woman who interviewed at his company four years ago and was making about $80,000. He offered her $55,000. To ease her jitters, Bromelkamp presented a spreadsheet breaking down her current paycheck, showing that about 40 percent of her take-home pay went to pay for health insurance, 401(k) contributions, child care, Social Security, Medicare, and state and federal income taxes. When Bromelkamp picked up the tab for health, retirement and child care, the worker moved into a lower tax bracket, avoided taxes on health care expenses and had more in her pocket despite a 30 percent pay cut. ...

    Bromelkamp said he wins, too. He reduces payroll and the taxes tied to it -- including unemployment, worker's compensation and disability -- and he can deduct the cost of health insurance. "I don't know why every company doesn't do this," Bromelkamp said. "It's not like health care is a luxury. You can't say to an employee 'we can't afford health care anymore.' Somebody's going to pay for it. And it might as well be in pretax dollars."

    Editor's note: The approach taken by these small businesses is actually what IBM followed until the pension and retiree medical heists of the 1990's and beyond. For year, employees were told in department meetings that although they were receiving lower salaries than what they could get at other employers, they would get their payoff in retirement with a generous pension that included regular cost-of-living increases, and lifetime medical insurance. As history shows, though, IBM reneged on its promises in favor of creating "phantom" earnings, thereby driving up the bonuses received by its senior executives. See Retirement Heist for the details.)

  • U.S. Department of Health and Human Services: Under The Affordable Care Act, 105 Million Americans No Longer Face Lifetime Limits on Health Benefits. By Thomas D. Musco and Benjamin D. Sommers. Excerpt: The Affordable Care Act prohibits health plans from imposing a lifetime dollar limit on most benefits received by Americans in any health plan renewing on or after September 23, 2010. While some plans already provided coverage with no limits on lifetime benefits, millions of Americans were previously in health plans that did not. According to the Kaiser Family Foundation’s Employer Health Benefits Survey, 59 percent of all workers covered by their employer’s health plan in 2009 had some lifetime limit placed on their benefits. In addition, 89 percent of people with individually purchased coverage had a lifetime limit on their benefits.
  • New York Times: Digital Records May Not Cut Health Costs, Study Cautions. By Steve Lohr. Excerpts: Computerized patient records are unlikely to cut health care costs and may actually encourage doctors to order expensive tests more often, a study published on Monday concludes.

    Industry experts have said that electronic health records could generate huge savings — as much as $80 billion a year, according to a RAND Corporation estimate. The promise of cost savings has been a major justification for billions of dollars in federal spending to encourage doctors to embrace digital health records.

    But research published Monday in the journal Health Affairs found that doctors using computers to track tests, like X-rays and magnetic resonance imaging, ordered far more tests than doctors relying on paper records.

  • Washington Post: Why an MRI costs $1,080 in America and $280 in France. By Ezra Klein. Excerpts: There is a simple reason health care in the United States costs more than it does anywhere else: The prices are higher. That may sound obvious. But it is, in fact, key to understanding one of the most pressing problems facing our economy. In 2009, Americans spent $7,960 per person on health care. Our neighbors in Canada spent $4,808. The Germans spent $4,218. The French, $3,978. If we had the per-person costs of any of those countries, America’s deficits would vanish. Workers would have much more money in their pockets. Our economy would grow more quickly, as our exports would be more competitive.

    There are many possible explanations for why Americans pay so much more. It could be that we’re sicker. Or that we go to the doctor more frequently. But health researchers have largely discarded these theories. As Gerard Anderson, Uwe Reinhardt, Peter Hussey and Varduhi Petrosyan put it in the title of their influential 2003 study on international health-care costs, “it’s the prices, stupid.”

    As it’s difficult to get good data on prices, that paper blamed prices largely by eliminating the other possible culprits. They authors considered, for instance, the idea that Americans were simply using more health-care services, but on close inspection, found that Americans don’t see the doctor more often or stay longer in the hospital than residents of other countries. Quite the opposite, actually. We spend less time in the hospital than Germans and see the doctor less often than the Canadians.

    “The United States spends more on health care than any of the other OECD countries spend, without providing more services than the other countries do,” they concluded. “This suggests that the difference in spending is mostly attributable to higher prices of goods and services.”

    Prices don’t explain all of the difference between America and other countries. But they do explain a big chunk of it. The question, of course, is why Americans pay such high prices — and why we haven’t done anything about it. “Other countries negotiate very aggressively with the providers and set rates that are much lower than we do,” Anderson says. They do this in one of two ways. In countries such as Canada and Britain, prices are set by the government. In others, such as Germany and Japan, they’re set by providers and insurers sitting in a room and coming to an agreement, with the government stepping in to set prices if they fail. ...

    “In my view, health is a business in the United States in quite a different way than it is elsewhere,” says Tom Sackville, who served in Margaret Thatcher’s government and now directs the IFHP. “It’s very much something people make money out of. There isn’t too much embarrassment about that compared to Europe and elsewhere.” The result is that, unlike in other countries, sellers of health-care services in America have considerable power to set prices, and so they set them quite high. Two of the five most profitable industries in the United States — the pharmaceuticals industry and the medical device industry — sell health care. With margins of almost 20 percent, they beat out even the financial sector for sheer profitability. ...

    The players sitting across the table from them — the health insurers — are not so profitable. In 2009, their profit margins were a mere 2.2 percent. That’s a signal that the sellers have the upper hand over the buyers. This is a good deal for residents of other countries, as our high spending makes medical innovations more profitable. “We end up with the benefits of your investment,” Sackville says. “You’re subsidizing the rest of the world by doing the front-end research.”

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.

  • The Fiscal Times: Why the Fed Let Banks Pay Billions to Shareholders. By Jesse Eisinger. Excerpts: In early November 2010, as the Federal Reserve began to weigh whether the nation’s biggest financial firms were healthy enough to return money to their shareholders, a top regulator bluntly warned: Don’t let them.

    “We remain concerned over their ability to withstand stress in an uncertain economic environment,” wrote Sheila Bair, the head of the Federal Deposit Insurance Corp., in a previously unreported letter obtained by ProPublica.

    The letter came as the Fed was launching a “stress test” to decide whether the biggest U.S. financial firms could pay out dividends and buy back their shares instead of putting aside that money as capital. It was one of the central bank’s most critical oversight decisions in the wake of the financial crisis. “We strongly encourage” that the Fed “delay any dividends or compensation increases until they can show” that their earnings are strong and their assets sound, she wrote. Given the continued uncertainty in the markets, “we do not believe it is the right time to allow transactions that will weaken their capital and liquidity positions.”

    Four months later, the Federal Reserve rejected Bair’s appeal. In March 2011, the Federal Reserve green-lighted most of the top 19 financial institutions to deliver tens of billions of dollars to shareholders, including many of their own top executives. The 19 paid out $33 billion in the first nine months of 2011 in dividends and stock buy-backs.

    The Fed allowed the largest financial firms to pay out $33 billion to shareholders last year, money they won't have to cushion themselves if a new crisis hits. That $33 billion is money that the banks don’t have to cushion themselves – and the broader financial system – should the euro crisis cause a new recession, tensions with Iran flare into war and disrupt the oil supply, or another crisis emerge.

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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