Workers in AMS (Application Management Services) have asked the Alliance to inform their IBM co-workers what the situation in their group is like. This is their report.
"On December 1st/2nd, AMS North America will be holding a Mandatory Quality and Innovation Summit. What irritates AMS workers is that not only is this mandatory and on a weekend, but typical of working in AMS the workers will not get any comp time while the work load continues to get piled on.
This summit is mandatory because workers typically want some time off for Thanksgiving or Christmas/New Years. This is just to drive more 4th quarter revenue. We were also told to do this in June. Employees are given high utilization targets for each quarter. Essentially we are expected to work off normal paid time off, such as vacation and holidays, through extra overtime during other weeks. So essentially we get no real relief from the grind.
For example, in October workers are being told we have to work 220 billable hours for the month. October is a five week month in IBM's AMS calender, so normal work week and month would be 40 hours per week=200 hours expected to be billed. That would be 100% utilization. But management has said that for October we have to have 220 hours or 110% utilization which is a mandatory 44 hours per week.
Most older employees with long tenure at IBM have 4 or 5 weeks of vacation per year by company policy but the reality is most of us rarely take half that as we are threatened by a lower PBC (and an RA) if our utilization falls below 100%.
100% means that anytime off during the year for vacation. holidays, family illness or death, and sick time is made up hour by hour in the weeks we are at working through additional overtime.
So essentially we do not get any time off. Sad state of affairs when workers are driven like slaves, jeopardize their health and can't have quality time with their families.
When the June 9th edict came out there were dozens of Speakups/Open Doors from AMS workers, but the higher ups just basically ignored them because legally there is nothing barring them from doing this for exempt professional employees, and as we all know IBM has no ethical conscience regarding worker morale or respect for the individual.
We need to shine a light on what IBM workers are going through. An AMS worker."
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A few years ago there was a class action lawsuit against IBM. Thirty-two thousand server administrators were being forced to work overtime without extra pay. IBM lost the suit and paid a $65 million settlement. That’s just over $2000 per affected employee before the lawyers took their share. Then IBM gave all those workers a 15 percent pay cut with the justification they’d get it back in their overtime pay. Next IBM restricted the workers to 40 hour weeks so there would be no overtime.
VP approval was required each time someone was needed to work overtime. The net result was all the server admins worked exactly 40 hours a week and for 15 percent less pay. I’m told by some of those IBMers involved that they were then put at the top of the layoff list. At the end of their severance pay period after being laid off many were rehired as contractors — for less money and no benefits. At that point they were at 50-60 percent of their original pay. Eventually most of those jobs were shipped overseas.
Selected reader comments follow:
Making enemies of your employees wins you no favors either.
But then we sit and take it. No one will stand up for fear of losing what they have. Everyone complains but no one acts. If everyone in the US did what they do in France (i.e. have a work stoppage) it might finally get the big boy’s attention. If that is a good thing or not, who knows. I do see it as better than what we have now.
I worked in division 07 (strategic outsourcing) at the time all this was happening. The fact of the matter was that as far as management was concerned, the employees cost too much. They cost too much when compared to foreign labor, and they proved themselves (via the lawsuit) to be a legal liability as well.
IBM management was determined to limit both the financial and legal exposure, and so they did it…end of story.
Ugly? Yes, but not as ugly as it might have been. Disrespectful? Ethically questionable? I would say yes on both counts.
Let it be a cautionary tale to anyone who might consider working for the company. The paychecks don’t bounce (for now), but don’t expect it to be easy or long-lasting. Don’t make any commitments to them, because they sure as hell aren’t going to make any commitments to you.
The last 10 months at my new employer have been, by far, the best months of my career and my life.
My plea is for everyone to stop buying IBM products until such time that they start treating their employees like real human beings.
There are a number of common misunderstandings about the H-1B program, the first of which is its size. H-1B quotas are set by Congress and vary from 65,000 to 190,000 per year. While that would seem to limit the impact of the program on a nation of 300+ million, H-1B is way bigger than you think because each visa lasts for three years and can be extended for another three years after that.
At any moment, then, there are about 700,000 H-1B visa holders working in the USA.
Most of these H-1B visa holders work in Information Technology (IT) and most of those come from India. There are about 500,000 IT workers in the USA holding H-1B visas. According to the U.S. Census Bureau, there are about 2.5 million IT workers in America. So approximately 20 percent of the domestic IT workforce isn’t domestic at all, but imported on H-1B visas. Keep this in mind as we move forward. ...
There is a misconception about the H-1B program that it was designed to allow companies to import workers with unique talents. There has long been a visa program for exactly that purpose. The O (for outstanding) visa program is for importing geniuses and nothing else. Interestingly enough, the O visa program has no quotas. So when Bill Gates complained about not being able to import enough top technical people for Microsoft, he wasn’t talking about geniuses, just normal coders. ...
The whole labor shortage argument is total hogwash. Yes, there is a labor shortage at substandard wages. ...
It’s not hard to suppose from this information that an influx of H-1B workers representing an average 20 percent of the local technical work force (those 500,000 H-1Bs against a 2.5 million body labor pool) would push down local wages.
Selected reader comments follow:
You also fail to mention many of these H1B workers send a good portion of their earning to their families back home. So they don’t fully contribute to the local economy. Wages earned in the USA end up supporting the India communities. So this end up being a double whammy.
These H1B workers are fucking up the system and making it much harder on the families of U.S. citizens. I am happy you are bringing out this dirty secret of the IT industry.
I will tell you – they used to hire Americans. Not anymore. That is why just about every company you go to is H1B land now. I work in a large pharma as a contractor and I am only one of 17 Americans and there are 168 H1Bs. So what happened to all the other Americans. They have been shown the door, that's what. Laid off, had to train their replacement and than shown the door.
I can also tell you this, when the first H1Bs arrived they told us all that we have to move up the value chain to being architects, PMs, BAs, etc… Well guess what? The H1Bs have moved up the value chain as well. I regularly encounter H1B PMs, architects and more. What's more is they now own space. Good luck getting hired.
There is NOTHING that says America has to have an open door policy of providing jobs for foreign nationals when there is high unemployment in this country. Further more I would say that anyone that believes this is a traitor to this country.
People have forgotten the past and why unions where originally formed. Go read your history books and read what corporations will do when there is no counterweight to them where they can do whatever they want to the population.
You are so right. My last client position for IBM, the team management level on-site was from IBM India, and the development team was in IBM India. Training was for new SAP applications, but I could not get approval for inclusion which was mainly for the foreign workers. That level of Americans there were part of IBM’s layoffs. Rumor was that project management was next to be staffed by foreigners. Executives from a prior contract were now at other company headquarters helping them transition to do the same – move their IT teams to foreigners.
Does everyone remember them saying in the 80s and 90s that these jobs were the future of America? That if you were a computer person you would be employed for the rest of your life. Times have sure changed haven't they?
They keep whining that there is a shortage of IT people. My question is where is there a shortage?
Lets think about this in simple economics – the law of supply and demand which dictates if something is in high demand it commands higher prices, if its in lower demand it commands lower prices. This is all the free market wisdom that is constantly shove down everyone’s throat.
So if there is a shortage than where is the money? I am not seeing it because IT salaries have been stagnant since the dot com and in fact have declined if you factor in inflation. We make less now than 10 years ago.
So lets think about this – how can salaries possibly be lower if there is such a “shortage”???
I will tell you how – there is no shortage. The H1Bs have GLUTTED the IT job market. Companies regularly receive 100+ resumes for ANY IT job that is posted. The bodyshops shovel in as many resumes as they will let them submit.
And its not just the H1Bs there is a plethora of other visas that are being used ILLEGALLY by companies so they can bring in even more people. Realize these people are the equivalent of scabs that are used to break the backs of the unions back in the day only they are being used to break the backs of the middle class.
Welcome to the future. Get a backbone because in the future any white collar job that can be offshored or done by foreigners on visas YOU will be replaced.
My point is that there appear to be abusers of the system, and they should be dealt with very harshly. However, we must be very careful not to destroy or undermine the original intent – to enable the import of great talent that can help build and grow our economy. America was founded by immigrants and built by immigrants and their descendants. Anyone doing anything illegal should be punished. But lets not close the doors entirely and become totally xenophobic.
“Liquid” has taken flak. IBM began implementation in Germany, where its liquid workforce policy emerged in the context of large job cuts, according to Handelsblatt, a German economic newspaper. Der Spiegel thought it was a way to end permanent employment. It’s also come under attack from employees who see it as IBM doing cheap outsourcing. ...
In essence, the Liquid Challenge, is about breaking software design and development down into tasks that can be assigned on an open markets basis – and as usual that means you get paid for those parts of your work that are accepted.
There seems to be a broader strategy, though, at IBM to introduce a more liquid, or what we would call, elastic, labor policy and the Liquid Challenge is an instance of this.
I have a suspicion of IBM’s business thinking – based on watching them pour hundreds of millions of dollars into Second Life and in their efforts in social business. Put bluntly, IBM will try to bully its way to a new category because the company’s executives are so fearful of being the one to miss “the next PC thing”.
But in the labor market, IBM have got it right. There is no reason for a professional services firm to have over 400,000 hires on the books. The logic of the elastic enterprise says that many of these roles are better performed by people who have the most up-to-date skills, and the odds on those being found inside the organization are, at best, evens.
Selected reader comments follow:
As executive pay became tied to stock performance, executives who cut pensions and retiree health care were actually doing themselves a favor. As they were cutting regular pensions, they were boosting executive pensions. Often what appeared to be an increase in pension expense was because of the executives, not the regular folks.
Overstate the burden of rank-and-file retiree obligations to justify benefits cuts, while simultaneously using the savings to inflate executive pay and pensions. Hide growing executive pension liabilities, which at some companies now exceed the liabilities for the regular pension plans.
Cons: Too many required conference calls, slim resources through management for training, unrealistic annual goals, too many re-orgs and down-sizings only to re-hire again. Management is aloof and doesn't engage with reports, hard to get internal information, have to rely on the rumor mill. IBM thinks when you walk in the client's door for the first time the sale is 50% over on name recognition. Discontinuing products without fair warning to sales team.
Advice to Senior Management: Clean some of the old guard who aren't producing but work the system to stay employed. Move them to challenging positions so they can't snooze on the job. Develop a better employee review process beyond 1 person's view. Ease travel restrictions for professionals, too much accounting time in expense reports. Get better control of HELP desk for communication equipment issues.
Cons: Very few opportunities to build interpersonal and team relationship(s) with colleagues and coworkers as most are work from home. Spend lots of time on conference calls with cast of dozens or more. Very slow movement on projects due to "too many cooks," political wrangling and landscape. Difficult to build trust, as many are individual contributors focus on impressing management and rather than focusing on projects that help move the organization forward.
Advice to Senior Management: Spend TOO much time on internal status updates - which seem to have little impact on results - internal reporting requires extreme amounts of bandwidth for staff members that could be better utilized on other projects. Spend too much time "weighing the pig than actually working to feed the pig."
Cons: In these new "delivery centers" micromanagement is the encouraged norm not the exception. Be prepared to be forced to sit though lots of useless "GDF education" seminars which rehash the same information over and over about how you should be working (and then management will want you to do it a different way anyway after the seminars.) Also once a year all employees have to use a time tracking tool for about a month, where everything that is done has to be logged and analyzed to decide if the work can be done efficiently by less people or not.
This is an extreme cost cutting environment, instead of having a real catering service they contract that to a local gas station. Things in the building that break will not be fixed for months in the future, if they even are at all. Overtime hours getting revoked is the norm, some teams inside the building have lost entire clients due to the overtime crunches but management doesn't care.
With this new "GDF methodology" the hiring of inexperienced people is also the norm. Plenty of people in low level system administration positions have never even logged into a server before.
Salaries are also below market rate.
The focus on team metrics is also a little extreme, too often it gets to the point where more time is spent trying to game the metrics system rather then trying to improve the real processes.
People see the writing on the wall and know that in a few years most of the jobs will be done from India.
Advice to Senior Management: There is some good stuff in the new GDF methodology but also lots of bad, stop trying to force it as the "one size fits all" solution to all of your problems.
Stop outsourcing critical and high skill jobs to India, those of us in the US spend to much time cleaning things up after India breaks something, it has to be cheaper to just do it the right way to begin with (especially when SLA penalties are factored in).
Stop the cost cutting environment and over-focus on secrecy, we don't even have windows in our office (they are covered with some sort of tint so you can't see in or out.) Comparisons are made all the time to a Soviet-era factory among employees.
Cons: Meeting culture. Too many meetings. The natural politics that occur in a place of this size Too many IBM specific skills that you need to develop -- the bureaucracy gets in the way of progress too often.
Advice to Senior Management: Personally, I was negatively impacted by a narcissistic bully in my management chain. Pleas to HR and management to remedy went unheeded by others in my group. HR or management needs to be empowered to root out these problems.
Cons: As a truly global country, all the money and resources flow to the growth markets like India, China, BRIC countries. For North America, it is nonstop cost cutting and a short term focus on meeting quarterly profit objectives. Example: No raises for North American based employees this year (raises handed out in June for the previous year's results). But the company recorded record revenues profits and free cash flows in the same year. How about sharing some of that success with all the folks that helped you get there?
Advice to Senior Management: This company used to be led by engineering and sales. People focused on creating truly innovative solutions and taking good care of their customers. Now it's led by bean counters, focused on short term profit objectives at the expense of all else. Get back to what made IBM a great company - being a great provider of value to it's customers and a great place to work for it's employees. Not just a great stock to own. Your customers, employees and our smarter planet deserve better.
Cons: Either align yourself with an "executive sponsor" (someone you do the work for so they don't have to) and ride their coat tails from job to job or start the countdown 'til when your number comes up -- and everyone's number comes up usually around when you're 45-50 years old. No loyalty at all no matter if you've been a 2+ performer forever. Once they find a way to outsource your job -- they will, simple as that. You will waste the best years of your life trying to get ahead in a company where NO ONE gets ahead -- unless you're friends with the right folks.
Completely unreasonable expectations for work hours. Nothing is ever enough. Only successful people (besides Sales) have no kids or make their families a completely secondary priority. They will talk about work/life balance but I am surprised they can do it with a straight face. Worst set of internal systems in corporate America. Change jobs internally every three years -- and then learn three new systems because every department has their own.
No training. No positive reinforcement. No hope. Of the 14 managers I had in 14 years, 8 are no longer with the company and I haven't met any of the last 4 face-to-face. Costs too much.
The people I know who HAVE somehow survived now HATE everything the company has become but feel too "trapped" to try and make a change. All that your work experience there readies you for are more lateral jobs within IBM. Nothing you learn is useful outside their walls.
They have lost their soul. People are as expendable as MIPs. Get hired as a Director or don't even consider a job there -- oh yeah, they need scapegoat Directors too for the bad years so tread carefully. All this being said, they did me the biggest favor they could when they forced me to move on.
Advice to Senior Management: Keep doing what you're doing -- it works! Nothing I could offer as counsel will ever matter to you.
One reason is that most people who have it got it through their employer and have given it little thought. Another is that people are not likely to go out and buy it on their own because it is so expensive, the exception being certain occupational groups, like doctors. Yet it does serve an important purpose in replacing a portion of your salary if you get hurt or become sick and are unable to work for several months or more. ...
So how do you make an informed decision?
In line with Economics 101, that increased demand for software engineers means increasing salaries. The national average for a software engineer's base salary is currently $92,648, according to Glassdoor, marking an increase of 2.5 percent compared to 2011. But depending on where you work -- both in terms of your employer and your geographical location -- you could be take home more than $100,000 per year. Then again, even if you work for one of the major tech companies, your base salary may fall below the national average.
Where are the plum jobs these days for software engineers? According to recent data from Glassdoor, Google currently offers the highest average salary among 15 major tech companies at $128,336 per year. Ranked second is Facebook, which pays its software engineers an average of $123,626 per year. (Glassdoor came up with these figures based on at least 20 salary reports per company from October 2011 through October of this year.) ...
On the other end of the spectrum, IBM reportedly offers the lower average salary to software engineers at $89,390 (below the national average of $92,648). Intel, too, comes up short at $92,194. HP, meanwhile, pays its engineers a bit more than the national average at $95,567. Qualcomm qualifies for the Under $100K Club at $98,964 as well.
If you think deepening wrinkles, the need for a more flexible schedule due to multiple kids at home, and a large resume gap because of raising kids are the only reasons to welcome a 40-plus-year-old "returner" into your office, think again.
Those things are great. Wrinkles show character, raising kids is the hardest job in the world and a resume gap shows that priorities are important to you. All good. However, there are plenty more reasons why recent college grads have nothing on women over 40 and why when it comes time to fill your next internship spot, it would make good sense to cast your net into the "returnship" crowd.
And those guesses often appear off the mark, according to the annual Wells Fargo Retirement Survey.
For instance, middle-class Americans say they believe the median cost of their out-of-pocket health care costs in retirement will be $47,000. But the Center for Retirement Research estimates a typical couple at age 65 can expect to spend $260,000 or more over the rest of their lives.
Further, when asked what percentage of their nest egg they expect to withdraw annually in retirement, the median — or typical — withdrawal predicted by middle-class Americans is 10 percent. But most experts recommend annual withdrawals of 3 to 4 percent.
In short, we're senior gypsies. In early 2011 we sold our house in California and moved the few objects we wanted to keep into a 10-by-15-foot storage unit. Since then, we have lived in furnished apartments and houses in Mexico, Argentina, Florida, Turkey, France, Italy and England. In the next couple of months, we will live in Ireland and Morocco before returning briefly to the U.S. for the holidays.
As I write this, we have settled into a darling one-bedroom apartment a hundred yards from the River Thames, a 25-minute train ride from the heart of London. We have a knack for moving in. Within a few minutes of plunking down our belongings in new digs, we have made it our own: The alarm clock is beside the bed; my favorite vegetable peeler and instant-read thermometer are in the kitchen; and our laptop computers are hooked up and humming. Together we begin learning how to make the appliances cooperate.
Given all that, I suppose a better way to describe us is gypsies who like to put down roots. At least for a month or two.
Why we're doing this is simple: My husband and I—in a heart-to-heart conversation during a trip to Mexico—realized that both of us are happier when we're on the road. We enjoy excellent health and share a desire to see the world in bigger bites than a three-week vacation allows. The notion of living like the locals in other countries thrilled us, and after almost 18 months of living "home free," we are still delighted with our choice. Even a "cocooning" day is more interesting in Paris or Istanbul.
According to the National Council on Aging, more than 23 million Americans ages 60 and up are living at or below 250 percent of the federal poverty level, which is $27,925 per year for a single person. Meanwhile, the Social Security and Medicare programs are under attack. Weakened Social Security and Medicare programs would put more costs on the backs of seniors and renege on the promise of those programs. Proposals to privatize Social Security would put retirement funds at the mercy of the same erratic market that wiped out many pension funds in the financial crisis. This fundamental alteration of Social Security into "Social Insecurity" must not be allowed to happen.
And in addition to these problems and threats, employer-sponsored defined benefit and even defined contribution retirement plans are on the decline, taking away a key part of the U.S. retirement system and increasing uncertainty.
That figure is more than two-and-a-half times more than most developed nations in the world, including relatively rich European countries like France, Sweden and the United Kingdom. On a more global scale, it means U.S. health care costs now eat up 17.6 percent of GDP.
A sizable slice of Americans -- including some top-ranking politicians -- say the cost may be unfortunate but the U.S. has "the best health care in the world."
But let's consider what 17 cents of every U.S. dollar is purchasing. According to the most recent report from the Organization for Economic Co-operation and Development (OECD) -- an international economic group comprised of 34 member nations -- it's not as much as many Americans expect.
In the United States:
Social factors can contribute to why these patients end up in the ED, said Susan Mende, MPH, BSN, senior program officer with the Robert Wood Johnson Foundation. A diabetic patient who comes to the ED in a diabetic coma because he or she is not getting adequate, ongoing care may not have a house in which to draw insulin safely, or “might have tumultuous home conditions that don’t support managing diabetes,” she said. “So sometimes emergent medical problems are the tip of the iceberg.”
Abolishing Obamacare would eliminate subsidies for people buying insurance and rescind regulations requiring insurance companies to guarantee coverage and benefits (for instance, to people with preëxisting conditions). Romney’s proposed alternative is to give individuals a tax break when they buy insurance and to push them toward high-deductible insurance plans, which he believes will make them more rigorous and price-conscious in choosing doctors and treatments. Romney also wants to reform Medicare by encouraging more competition among private insurers. The details are skimpy, but the core principle is that unleashing the power of the free market will bring down costs and raise quality.
This is an appealing vision. In most areas of the economy, free-market principles insure that products and services keep improving, and that consumers get better and better deals. But the free market, though it may be the best way of allocating new TVs and cars, falters when it comes to paying for bypass surgery or chemotherapy. The reasons for this were established nearly fifty years ago, by the economist Kenneth Arrow, in a classic article entitled “Uncertainty and the Welfare Economics of Medical Care.” Arrow showed that health care is distinctive in ways that limit the power of the market. Because people don’t have the expertise to evaluate doctors, hospitals, or treatments, it’s hard for them to comparison-shop. Because they can’t pay for major care out of pocket, they must rely on insurance, thereby often losing the final say in what to buy or how much to spend. More fundamentally, markets work only when consumers have the power to say no if the price isn’t right. Yet it’s very hard for people to say no in the case of things like end-of-life care or brain surgery.
The evidence for Arrow’s thesis is all around us. Take the idea that high deductibles will transform the health-care system. It’s certainly true that giving consumers more skin in the game can make them better shoppers. But Americans’ out-of-pocket health-care spending is already higher than it is in most developed countries, and our over-all costs still aren’t any lower. And while a well-known study called the Rand Health Insurance Experiment showed that higher co-pays can encourage people to forgo unnecessary care, the same study showed that higher co-pays also encourage sick people to forgo necessary care, which raises costs in the long run. Increasing co-pays sometimes makes sense, but it’s no magic bullet.
The first thing that is important for retirees to know is that under the Affordable Care Act (ACA) they will see changes in their annual open enrollment benefits materials. This includes the addition of a Summary of Benefits Coverage (SBC) document. SBCs are benefit plan summaries that are intended to provide “clear, understandable and straightforward information on what health plans will cover, what limitations or conditions will apply, and what they will pay for,” according to the U.S. Department of Health and Human Services.
However, retirees should not rely on the information in their SBC alone to make health insurance plan choices. To minimize surprises and make the most of health insurance plan options, consider these eight tips...
In the past year, about 19 million Americans used these incentives to fill prescriptions. Since 2009, the health care industry has seen a nearly fivefold increase in the use of discounts. Today, drug companies offer 395 medications, up from 86 drugs in 2009, under these programs.
In truth, these discounts are a good deal for the drug companies, but not so good for patients or their insurers.
For example, I normally prescribe to patients with high cholesterol the generic statin drug simvastatin, which on average has a monthly co-pay of about $10. But I'm finding more patients requesting Lipitor, Pfizer's brand name statin, because of a Web coupon, which discounts co-pays to $4. But Lipitor costs about $1,400 more a year than simvastatin. So while patients pay less, their insurers pay substantially more.
In fact, drug coupons are estimated to increase prescription drug spending by $32 billion over the next 10 years. Over time, those costs will come back to haunt patients. Though patients with coupons might find that their prescription costs less that month, "overall what it does is to raise costs for everyone, including themselves," according to Susan Pisano, a spokeswoman for the industry trade group America's Health Insurance Plans.
Here are seven ways you or your medical providers play a role, based on a recent report from the Bipartisan Policy Center, a think tank in Washington, D.C.
1. We pay our doctors, hospitals and other medical providers in ways that reward doing more, rather than being efficient. ...
2. We're growing older, sicker and fatter. ...
3. We want new drugs, technologies, services and procedures. ...
4. We get tax breaks on buying health insurance -- and the cost to patients of seeking care is often low. ...
5. We don't have enough information to make decisions on which medical care is best for us. ...
6. Our hospitals and other providers are increasingly gaining market share and are better able to demand higher prices. ...
7. We have supply and demand problems, and legal issues that complicate efforts to slow spending. ...
In fact, only half of large companies tracked by benefits consultant Towers Watson still offer health plans with copays. Its list of 849 large companies includes employers with more than 1,000 employees, most with over 5,000.
What is on tap for the other half of workers is the world of coinsurance - paying a percentage of healthcare costs, which can range from 10 percent to 40 percent, with varying amounts for deductibles. ...
Your employer is not going to change course - no matter how much you complain - but management does not want bad feelings. Companies often pony up incentives such as cash in flexible spending accounts (FSAs) or health savings accounts (HSAs) if you take biometric screenings such as a cholesterol test. Some offer free flu shots, 24-hour nurse lines, health club reimbursement, yoga classes and more.
"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.
ResCap, as it’s known, is a mortgage company located on a nicely landscaped, 17-acre campus. Its 950 employees in Iowa get wages averaging about $35,000 a year — pretty good money for Waterloo — along with health insurance, tuition assistance and other benefits.
Inside the complex, you run into people like Tracy Zobel, who radiates a Midwestern work ethic and an aw-shucks charm.
Zobel, 44, a mother of four married to a dairy farmer, has spent 18 years working her way up from part-time call center rep to vice president in charge of loss mitigation. She loves ResCap, loves her job and loves the fact that she’s the source of health insurance for her family. ...
If this all sounds almost too bucolic and wholesome to be true — well, it may not be true much longer. Waterloo’s future could be determined by an auction being held 1,059 miles away, at the Sheraton New York Hotel in midtown Manhattan, on Tuesday. ...
The auction’s outcome will likely determine whether most of ResCap servicing employees will keep their jobs — and whether the mortgage borrowers that they work with will deal primarily with American loan servicers, as they do now, or with servicers in the Indian cities of Bangalore and Mumbai. ...
Based on our reading of Ocwen’s numbers, it has moved almost every American job in the portfolios it has bought to Bangalore and Mumbai. It would presumably do the same to the ResCap portfolio, absent any restrictions on moving the jobs. This is perfectly legal — and employing folks in India is much cheaper than hiring Americans in places such as Waterloo.
In addition to having cheap labor, Ocwen’s servicing subsidiary also has low taxes. It recently moved the subsidiary’s headquarters to a special Virgin Islands tax zone. Thus, it remained a U.S. company eligible to participate in federal programs — but it will get 90 percent of its U.S. corporate taxes forgiven, thanks to the benefits of the special tax zone. ...
The other known bidder for the ResCap rights is Nationstar Mortgage, controlled by the Fortress Investment Group. As a publicly traded private equity house, Fortress is taxophobic in its own business — but Nationstar is sending ever-larger checks to the U.S. Treasury, despite having tax-loss carryforwards on its books. That’s because it can use only about $11 million of its almost $200 million of carryforwards in any given year.
Nationstar proudly tells all and sundry that all of its employees are in the United States, and that it’s a “high-touch” servicer. “High-touch” is marketing-speak for “trying to provide really good service.” For example, Nationstar says it assigns an account officer to every troubled borrower, so that that the borrower is always dealing with the same person rather than getting whoever happens to be free. The theory is that providing better and earlier service to borrowers, especially troubled borrowers, improves the performance of the loans being serviced. ...
Meanwhile, folks in Waterloo wait and worry about the auction results, “When I started, I was 21, I was a kid,” says Sharon Robinson, who in 28 years has risen from mail clerk to a top consumer-service post. “I wanted full-time employment and benefits, and I was just going to stay here until I found something better. And I haven’t found something better; I’ve never even had a reason to look.” After next week, however, that may no longer be the case.
The New York Times has dubbed it “the global billionaires’ club” — and for good reason. At least of two of the apartments are under contract for more than 90 million dollars each. Others, more modest, range in price from 45 million dollars to more than 50 million dollars. The mega-rich have been buying these places “looking for a place to stash their cash,” a realtor from Sotheby’s explained to the Times. “A lot of what is happening,” she said, “… is about wealth preservation.”
Simultaneously, the powers-that-be have just awarded Donald Trump the right to run a golf course in the Bronx, which taxpayers are spending at least $97 million to build — what “amounts to a public subsidy,” says the indignant city comptroller, “for a luxury golf course.” Good grief — a handout to the plutocrat’s plutocrat.
This, in a city where economic inequality rivals that of a third-world country. Of America’s 25 largest cities, New York is now the most unequal. The median income for the bottom 20% last year was less than $9,000, while the top one percent of New Yorkers has an average annual income of $2.2 million. ...
But as appalling as all this may be, here’s a new revelation of which you may not be aware. The plutocrats know it and love it — and the rest of us should be forewarned: When the Supreme Court made its infamous Citizens United decision, liberating plutocrats to buy our elections fair and square, the justices may have effectively overturned rules that kept bosses from ordering employees to do political work on company time. Election law expert Trevor Potter told us that now “corporations argue that it is a constitutionally protected use of corporate ‘resources’ to order employees to do political work or attend campaign events — even if the employee opposes the candidate, or is threatened with being fired for failure to do what the corporation asks!” ...
Back in the first the Gilded Age, in the 19th century, bosses in company towns lined up their workers and marched them to vote as a bloc. Now, the Gilded Age is back , with a vengeance. Welcome to the plutocracy – the remains of the ol’ USA.
Who stole the American Dream? The short answer to the question in the title of Hedrick Smith's new book is: The U.S. Chamber of Commerce and Wal-Mart.
But the longer answer is one heck of a story, told by one of the great journalists of our time.
In his sweeping, authoritative examination of the last four decades of the American economic experience, Smith describes the long, relentless decline of the middle class -- a decline that was not by accident, but by design.
He dates it back to a private memo -- in effect, a political call to arms -- issued to the nation's business leaders in 1971 by Lewis F. Powell, Jr., a corporate attorney soon to become a Supreme Court justice. From that point forward, Smith writes, corporate America threw off any sense of restraint or social obligation and instead unstintingly leveraged its money and political power to pursue its own interests.
The result was nothing less than a shift in gravity. Starting in the early 1970s, every major economic trend -- increased productivity, globalization, tax law overhauls, and the phasing out of pensions in favor of 401(k)s -- produced the same result: The benefits fell upward.
Anthony Wright, a temp worker at Labor Ready who is named in the suit said in a statement to the media, "There have been so many times I've been told to stay late after my shift to finish stocking the shelves, but I didn't know they wouldn't pay me for it." Wright has worked at some of the area Walmart stores since late last year, he said.
Another worker, Twanda Burk, said in a statement to the media, "I only get paid minimum wage and yet Labor Ready and Walmart still try to cheat me by not paying me for the time I actually work. I've proven that I'm a good worker, and they just want to take advantage of that."
In the presidential debate last Tuesday on Long Island, and through much of this campaign season, Mitt Romney has been raising a similar question. He said last week that middle-class incomes have declined since President Obama took office, while gasoline prices have risen. And much as Mr. Reagan did several decades ago, Mr. Romney suggested that Americans are worse off today than they were four years earlier. ...
Through Friday, since Mr. Obama’s inauguration — his first 1,368 days in office — the Dow Jones industrial average has gained 67.9 percent. That’s an extremely strong performance — the fifth best for an equivalent period among all American presidents since 1900. The Bespoke Investment Group calculated those returns for The New York Times. ...
“What I find most ironic about these numbers is that one of Obama’s weaknesses is said to be his economic record,” said Paul T. Hickey, Bespoke’s co-founder. “While the stock market isn’t a complete reflection of the economy, it is an important indicator, and the stock market is one of the great things the president has working in his favor. But it’s a sensitive subject. With Wall Street so despised by the average American right now, it’s probably something he doesn’t want to be too quick to trumpet. But facts are facts.” ...
It’s often said that Wall Street prefers Mitt Romney to Mr. Obama, Mr. Hickey observed, yet the stock market has flourished under the president — and under Democratic presidents generally. Since 1900, it has returned 7.1 percent annually when Democrats have occupied the White House, and only 3 percent under Republicans. ...
Are you better off than you were four years ago? For stock portfolios, at least, the last four years have been bumpy but they haven’t been bad at all.
The exchange began with a question about the offshoring of American jobs. Part of Mr. Obama’s answer was that federal investments in education, science and research would help to ensure that companies invest and hire in the United States. Mr. Romney interrupted. “Government does not create jobs,” he said. “Government does not create jobs.”
It was a decidedly crabbed response to a seemingly uncontroversial observation, and yet Mr. Obama took the bait. He said his political opponents had long harped on “this notion that I think government creates jobs, that that somehow is the answer. That’s not what I believe.” He went on to praise free enterprise and to say that government’s role is to create the conditions for everyone to have a fair shot at success.
So, they agree. Government does not create jobs.
Except that it does, millions of them — including teachers, police officers, firefighters, soldiers, sailors, astronauts, epidemiologists, antiterrorism agents, park rangers, diplomats, governors (Mr. Romney’s old job) and congressmen (like Paul Ryan).
First, the basics. At last count, government at all levels — federal, state and local — employed 22 million Americans, with the largest segment working in public education. Is that too many? No. Since the late 1980s, the number of public-sector workers has averaged about 7.3 for every 100 people. With the loss of 569,000 government jobs since June 2009, that ratio now stands at about 7 per 100.
Public-sector job loss means trouble for everyone. Government jobs are crucial to education, public health and safety, environmental protection, defense, homeland security and myriad other functions that the private sector cannot fulfill. They are also critical for private-sector job growth in two fundamental ways. First, the government gets its supplies from private-sector companies, which is why Republican senators like John McCain have been frantically warning about the dire effects on job creation if Congress moves ahead with planned military spending cuts. (Republicans insisted upon the cuts as part of their ill-advised showdown over the debt ceiling.) Second, government spending on supplies and salaries reverberates strongly through the economy, increasing demand and with it, employment.
The answer — backed by overwhelming evidence — is that this is what normally happens after a severe financial crisis. But Mitt Romney’s economic team rejects that evidence. And this denialism bodes ill for policy if Mr. Romney wins next month. ...
Red Rocks will most definitely serve as a stunning backdrop for what will likely be Romney's last large-scale rally in the state before Election Day. But as politically innocuous a setting as Red Rocks may seem, its entire existence represents a political philosophy that is in stark contrast to the Romney campaign.
Red Rocks was built by the Civilian Conservation Corps (CCC), a Depression-era public work relief program under President Franklin D. Roosevelt's "New Deal" that put unemployed men, ages 17-23, to work. Over a nine year span, the CCC employed 2.5 million young men which provided them with shelter, clothing, food and a small wage. ...
In a guest blog at The Denver Post, Democratic strategist and speechwriter for former Colorado Gov. Bill Ritter, Laura Chapin brutally highlights the irony of the Romney event at Red Rocks:
Romney said at the Oct. 16 debate that he doesn’t believe government creates jobs. Red Rocks has created thousands of jobs, public and private, contributed to the local economy, and has been a source of happiness for millions of people over the last 70 years. It is a magical place for everyone who goes there.
Red Rocks was built with the peoples’ money and then given back to them to enjoy, the definition of public investment. It took believing in ourselves and believing in our national heart’s ability to build something big and something lasting that created Red Rocks. And next Tuesday that magnificent backdrop will put lie to every small-minded word that comes out of Mitt Romney’s mouth.
ColoradoPols also weighed in on the irony, breathing new life into the critique of the Republican National Convention's day two theme "We Built It:"
Think about it: hundreds of men put to work by the government for five years to build... a concert hall? So Dodge Trucks--another recipient of taxpayer bailout dollars (!)--could sponsor the Red Rocks Summer Concert Series all these years later? Seriously, folks, is there a self-respecting modern-day Republican out there who would not have instinctively called the idea of using taxpayer dollars to build Red Rocks Amphitheatre a "boondoggle?"
You can defend President Obama’s jobs record — recovery from a severe financial crisis is always difficult, and especially so when the opposition party does its best to block every policy initiative you propose. And things have definitely improved over the past year. Still, unemployment remains high after all these years, and a candidate with a real plan to make things better could make a strong case for his election.
But Mr. Romney, it turns out, doesn’t have a plan; he’s just faking it. In saying that, I don’t mean that I disagree with his economic philosophy; I do, but that’s a separate point. I mean, instead, that Mr. Romney’s campaign is telling lies: claiming that its numbers add up when they don’t, claiming that independent studies support its position when those studies do no such thing.
Before I get there, however, let me take a minute to talk about Mr. Romney’s claim that he knows how to fix the economy because he’s been a successful businessman. That would be a dubious claim even if he were honestly representing his business career, because the skills needed to run a business and those needed to manage economic policy are very different. In any case, however, his portrait of his own experience is so misleading that it takes your breath away.
For Mr. Romney, who started as a business consultant and then moved into the heady world of private equity, insists on portraying himself as a plucky small businessman.
I am not making this up. In Tuesday’s debate, he declared, “I came through small business. I understand how hard it is to start a small business.” In his speech at the Republican convention, he declared, “When I was 37, I helped start a small company.”
Ahem. It’s true that when Bain Capital started, it had only a handful of employees. But it had $37 million in funds, raised from sources that included wealthy Europeans investing through Panamanian shell companies and Central American oligarchs living in Miami while death squads associated with their families ravaged their home nations. Hey, doesn’t every plucky little start-up have access to that kind of financing?
Sensata enjoyed record revenues last year – this isn't about making the “hard choices” necessary to save a failing enterprise. The workers in Freeport have been working 24 hours a day, in three shifts. They make $14-17 per hour, with benefits.
According to a report by the Institute for Global Labour and Human Rights, one of Bain's first actions after buying Sensata was to set up “12 Sensata/Bain capital funds 'organized under the laws of the Cayman Islands' so as to avoid paying taxes.” They'll get a small tax break for relocating the plant – the one Mitt Romney insisted did not exist during the first debate – and then use those offshore funds to defer taxes on some of the income the company generates.
American tax-payers, on the other hand, have paid $780,000 to retrain some of Sensata's laid off workers in Illinois, according to the New York Times. One would be hard pressed to come up with a clearer example of capturing private gains while socializing the costs. ...
We've heard a lot about the workers in Freeport. But on this week's AlterNet Radio Hour, I spoke with Charles Kernaghan, director of the Institute for Global Labour and Human Rights, about what life is like for the Chinese workers in Sensata's existing Chinese plants. The podcast below is about 20 minutes long – give it a listen.
That might be considered true—unless moving the most important American auto parts manufacturer to China counts as hurting the U.S. auto industry. But those words now stand as one of Romney’s most glaring falsehoods in the final debate.
Romney’s defensive statement came in response to a remark by Obama noting that the Republican nominee is “familiar with jobs being shipped overseas because you invested in companies that were shipping jobs overseas.” Moments later, he added: “If we had taken your advice, Governor Romney about our auto industry, we’d be buying cars from China instead of selling cars to China.”
Most viewers had little idea what Obama was talking about or why Romney felt the need to rebut him so specifically. But their coded exchange almost certainly referred to an investigative report that broke wide on the Internet, without much attention from the mainstream media so far—Greg Palast’s article in The Nation magazine, exposing Romney’s huge profits from Delphi, a crucial auto parts company that moved nearly all of its jobs to China after taking billions in auto bailout money from the Treasury.
As Palast reported, the Romneys made millions from that intricate deal, put together by one of his main campaign donors, billionaire investor Paul Singer — through a “vulture fund” known as Elliott Management. Having bought up Delphi at fire-sale prices, Singer and his partners essentially blackmailed the Treasury into paying them billions so that Delphi would keep supplying parts to General Motors and Chrysler. They stiffed the company’s pensioners, pocketed the bailout funds, and moved all but four of the firm’s 29 plants to China.
ogle writes about this clash of cultures between investors and speculators in a new book titled, fittingly enough, The Clash of the Cultures: Investment vs. Speculation (John Wiley & Sons, $29.95). He demonstrates, in sprightly if mournful tones, that the average share of stock was traded once every seven years when his career started back in 1951 and is now traded every four months. Wall Street is supposed to be about allocating wealth to businesses so they can create jobs and do all those things Romney keeps talking about. Instead, it's just a big casino, and it doesn't even have Celine Dion or a buffet.
The book is a gem. Well-researched and carefully argued, there's simply no way to argue with Bogle's premises -- that the little guy always loses, that the more you churn the more you lose, that most people's retirements are dramatically underfunded, that management looks out for itself and not the stockholders, and that greed is driving the bus. The book ends with a compelling pitch for Bogle's own Wellington Fund, demonstrating that the author is clearly a salesman to the last.
The plant in Freeport, Ill., which is already scheduled to close at the end of the year, has become an embarrassing campaign issue for GOP presidential nominee Mitt Romney. The factory's 170 jobs are being relocated to China. Activists and workers have called on Romney to use his influence with Bain to halt the offshoring. ...
Sensata's saber rattling looked like an empty gesture to Gaulrapp. "They are moving our jobs to China anyway," he said. "It's a moronic statement by them. Everything we've done has been peaceful."
More than half of the plant's workers have already been laid off. It's unclear how a shutdown would affect the remaining workers. Gaulrapp suggested that it might only affect overtime pay.
Romney has not been in charge of Bain Capital for years, but he continues to reap the benefits from tax breaks based on his Sensata investments.
Versions of the story have appeared in The Free Press, an Ohio Web site, in addition to Salon and in a liberal blog carried by Forbes. In a nutshell: three of Hart’s five corporate board members are executives of HIG Capital, a global private equity firm that made what it called a “significant” investment in Hart last year. Four HIG executives (Tony Tamer, John Bolduc, Douglas Berman and Brian D. Schwartz) have been identified as Romney bundlers by independent watchdog groups such as the Sunlight Foundation. HIG employees as a whole have donated $338,000 to the Romney campaign this year, according to Open Secrets. Three of them (Tamer, Berman and Bolduc) used to work at Bain. Among the investors in HIG is Solamere, the private equity firm run by Tagg Romney, the candidate’s son. ...
The Romney connections kindle bitter memories of 2004, when Walden O’Dell, chief executive of Diebold, the Ohio-based voting machine manufacturer, wrote a fundraising letter declaring his commitment to helping deliver the state to George W. Bush. When machine malfunctions and shortages caused long lines and exit polling showed Democrat John Kerry ahead, there were allegations of a stolen election. But Bush won the state by more than 100,000 votes, and the evidence never held up under close scrutiny. Diebold has since sold its election machine division to ES&S, which does business in the state.
“Fix the Debt” is a coalition of more than 80 CEOs who claim they know best how to deal with our nation’s fiscal challenges. The group boasts a $60 million budget just for the initial phase of a massive media and lobbying campaign.
The irony is that CEOs in the coalition’s leadership have been major contributors to the national debt they now claim to know how to fix. These are guys who’ve mastered every tax-dodging trick in the book. And now that they’ve boosted their corporate profits by draining the public treasury, how do they propose we put our fiscal house back in order? By squeezing programs for the poor and elderly, including Social Security, Medicare, and Medicaid.
Fix the Debt claims their agenda is not just about spending cuts. But when it comes to their tax proposals, they use the slippery term “pro-growth reform” to push for cuts in deductions that are likely to include credits for working families and — you guessed it — more corporate tax breaks. Chief among these is a proposal to switch to a territorial system under which corporate foreign earnings would be permanently exempted (instead of being taxed when they are returned to America).
Mitt Romney has been explicit: inequality should be talked about only in quiet voices behind closed doors. But with the normally conservative magazine The Economist publishing a special series showing the extremes to which American inequality has grown — joining a growing chorus (of which my book “The Price of Inequality” is an example) arguing that the extremes of American inequality, its nature and origins, are adversely affecting our economy — it is an issue that not even the Republicans can ignore. It is no longer just a moral issue, a question of social justice.
This perhaps provides part of the explanation for why inequality and poverty should suddenly appear as part of the Romney-Ryan makeover, as they attempt to portray themselves (to use a phrase of some 12 years ago) as compassionate conservatives. In Cleveland on Wednesday, Paul Ryan gave a speech that might lead one to conclude that the two Republican candidates were really concerned about poverty. But more revealing than oratory are budget numbers — like those actually contained in the Ryan budget. His budget proposal guts programs that serve those at the bottom, and little could have done more to enrich those at the top than his original tax proposals (like the elimination of capital gains taxes, a position from which he understandably has tried to distance himself). Every other advanced country has recognized the right of everyone to access to health care, and extending access was central to President Obama’s health care reform. Romney and Ryan have criticized that reform, but have said nothing about how or whether they would ensure universal access. Most important, the macroeconomic consequences of the Romney-Ryan economic program would be devastating: growth would slow, unemployment would increase, and just as Americans would need the social protection of government more, the safety net would be weakened. ...
But Romney’s campaign likes to play tricks with numbers. When he unleashed a tirade against the bottom 47 percent of supposedly freeloading Americans (for which he has since apologized), he failed to note what should have been obvious and has been pointed out repeatedly since he made that remark: those Americans do pay large amounts in taxes. These include (and I’m hardly the first to point this out) payroll taxes, sales taxes, property taxes, excise taxes, and even part of the corporate income taxes that our major corporations manage to pass on to their customers. He failed to note, too, the many older Americans barely above poverty who receive social security payments, for which they contributed through a lifetime of work. Yes, the rich may pay a high and increasing share of the country’s total tax revenue, but that’s only because they have a high and increasing share of our national income— not because their rates have gone up.
Many of the very rich, like Romney, are avoiding taxes because of numerous loopholes that favor the rich, and capital gains taxes that are taxed at less than half the rate of other income. The 14 percent rate Romney reportedly paid on his income last year is well below that of Americans of comparable income who worked for their money doing things like creating a real business. Tax havens like the Cayman Islands (condemned by the Group20 and all economic experts) facilitate another level of tax avoidance. That the practice is legal is not an economic justification — the loopholes that allow it were put in place by the rich and the bankers, lawyers and lobbyists who serve them so well. We can be sure that the money is not in the Cayman Islands just because it grows faster in the bright sunshine there.
Putting all this together isn’t the politics of envy, as Romney’s camp likes to complain, or even about shaking a finger at the country’s real freeloaders. It’s about cold, hard economics. Tax avoidance and low rates on capital gains — and the inequality they amplify — are weakening our economy. Were the rich paying their fair share, our deficit would be smaller, and we would be able to invest more in infrastructure, technology and education — investments that would create jobs now and enhance growth in the future. While education is central to restoring America as a land of opportunity, all three of these are crucial for future growth and increases in living standards. Tax havens discourage investment in the United States. Taxing speculators at a lower rate encourages speculation and instability — and draws our most talented young people out of more productive endeavors. The result is a distorted, inefficient economy that grows more slowly than it should.
But President Obama has consistently refused to rise to the defense of social security. In fact, in the first debate, he explicitly took the issue off the table, telling the American people that there is not much difference between his position on social security and Romney's. ...
It would be great if we had reason to believe that the generations that followed had better retirement prospects, but we don't. Even in good times, the 401(k) system does more to enrich the financial industry than to provide a secure retirement income. Any reasonable projection indicates that social security will provide the bulk of retirement income for most middle-class retirees long into the future. In this context, the idea of cutting back benefits, even for younger workers, seems misguided. ...
But there is another set of economic considerations affecting the politics of social security. These considerations involve the economics of the political campaigns and the candidates running for office. The story here is a simple one: while social security may enjoy overwhelming support across the political spectrum, it does not poll nearly as well among the wealthy people – who finance political campaigns and own major news outlets. The predominant philosophy among this group is that a dollar in a workers' pocket is a dollar that could be in a rich person's pocket – and these people see social security putting lots of dollars in the pockets of people who are not rich. ...
For this reason, a candidate who comes out for protecting social security can expect to see a hit to their campaign contributions. They also can anticipate being beaten up in both the opinion and news sections of major media outlets. While, in principle, these are supposed to be kept strictly separate, the owners and/or top management of most news outlets feel no qualms about removing this separation when it comes to social security – and using news space to attack those who defend social security.
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