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Highlights—December 15, 2012

  • Reuters: IBM's latest retirement move is bad for workers. By Mark Miller. Excerpts: IBM ads urge us all to follow its lead and help "build a smarter planet." Let's hope other companies don't follow Big Blue's latest move: an overhaul of its 401(k) plan that shifts its matching contribution to a once-a-year affair.

    Starting next year, IBM will shift its matching contribution from semi-monthly to a lump sum paid each December 31. Leave the company before December 15, and you'll get no match at all for the year. ...

    For loyal workers, the shift means 11 lost months every year of opportunity for dollar-cost averaged contributions and potential investment growth. And it makes the 401(k) plan less valuable to employees who leave IBM - either on their own or through layoff or disability. They'll lose the entire match for that year. ...

    "They're a major trend-setter, so a lot of other companies will be looking very closely at this move," said Brooks Herman, Brightscope's head of research.

    A national trend toward annual matches would be bad news for workers, especially middle- and lower-income households already finding it very difficult to build significant nest eggs through the 401(k) system. ...

    The change also will give IBM a big cash flow advantage. "They can time the plan contributions and invest the money elsewhere," said Roger Wohlner, a financial planner who advises small and medium-sized workplace retirement plans. "I'm sure IBM has some extremely bright treasury and cash management people who figured out this would be a nice windfall."

    Aon Hewitt reports that just nine percent of plans make annual lump sum contributions now. "These are plans that just set it up this way years ago," Borland said. "IBM is the first large company to make a change like this." ...

    "IBM employees recognize how good the 401(k) plan is, but the company has done a tremendous amount of job outsourcing to places like China and the Philippines. We're worried this will incentivize IBM to make even more job cuts in the U.S." said Lee Conrad, Alliance@IBM's national coordinator.

    "Would they do a mass layoff just before the date-of record?" asks Wohlner. "I'm not saying IBM is anything but an ethical employer, but if this trend took hold and layoffs occur in early December, you'd have to wonder if that's part of the reason. It raises a lot of questions."

  • American Public Media's MarketWatch: IBM remakes its match. By Amy Scott. Excerpts: If your company matches your retirement savings, that payment probably shows up on your pay stub every other week or so. This week IBM notified employees it’s changing its 401(k) match. The company will make one lump-sum payment per year. What’s the difference? Potentially, a lot of money.

    Nancy Hwa with the Pension Rights Center has been keeping lists of companies that have frozen their pension plans or cut their 401(k) matches. When she heard about IBM’s latest move?

    “My first thought was, am I going to have to start another list?” she says. “It seems like it’s just another step in this trend of employers moving away from helping their employees...save for retirement.”

    Here’s one way employees stand to lose. If they leave the company before December 15, they won’t get that year’s contribution, unless they retire. That could amount to several thousands of dollars lost. ...

    “So any gains in the marketplace from this investment money will not be anything in my benefit,” says Earl Mongeon, an IBM worker for 34 years. Mongeon, a senior process operator in Burlington, Vermont, says the 401(k) change is another blow to workers. Four years ago, IBM froze its traditional pension benefits. The company has cut thousands of jobs in recent years.

  • InfoWorld: Tech workers, beware: IBM cuts retirement, Microsoft wants more H-1Bs. IT wages are flat, and employers are still trying to slash costs, push down salaries, and raise the cap H-1B visas. By Bill Snyder. Excerpts: IBM reduces the effective value of 401(k) contributions, If you pay any attention at all to politics, you know that so-called entitlement reform, a euphemism for cuts to Medicare and Social Security, is on the agenda. Employees, argues the right wing, should take responsibility for their retirements and health care, rather than relying on government payments. Politics aside, it's no news to anyone that living solely on Social Security is an invitation to poverty, so it's all the more concerning that employers, who have already eliminated most defined pension plans, are now reducing and, in many cases, eliminating matching 401(k) contributions.

    It's doubly concerning when IBM, a huge employer whose personnel policies are likely to be seen as trendsetting, starts nibbling away at retirement accounts. IBM has been under fire for several years for unfriendly labor practices, such as shipping jobs overseas and even suggesting U.S. workers move to India to keep their jobs. As a result, IBM's U.S. workforce has dropped from about 160,000 to about 92,000 in 10 years, says Lee Conrad, national coordinator for Alliance@IBM, a group trying to unionize IBM. The push to move work offshore has been so successful that IBM now employs more workers in India -- 112,000 -- than it does domestically.

  • Bloomberg Businessweek: IBM Draws Flak for Changes to 401(k) Savings Plan. By Sarah Frier. Excerpts: While IBM isn’t the first company to move to matching contributions once a year, the practice is less common than including 401(k) deposits with each pay period, Kravitz said. The company doesn’t disclose how many U.S. employees it has. Alliance@IBM estimates there are 84,500, out of a total of more than 400,000 worldwide.

    Alliance@IBM, which is affiliated with the Communications Workers of America, has asked IBM management to reinstate the semi-monthly plan. The group is trying to organize workers at the company with the goal of forcing IBM to engage in collective bargaining.

    “This change reflects our continuing commitment to invest in our employee 401(k) plans while maintaining business competitiveness in a challenging economic environment,” IBM said in the statement.

    Selected reader comments follow:

    • The greed gets even more pervasive. This is outrageous and could set a nasty precedent. IBM has turned into an awful company ... I'm glad I left years ago. Death by 1,000 cuts of employer responsibility and employee security / loyalty. At this rate the current working generation will never accumulate enough savings to retire.
    • I actually replied to Randy MacDonald's evil note, and he replied! He said his loyalties as HR executive is to 1) IBM stockholders; 2) IBM; 3) Employees. we were 3rd on the list!
  • betaNews: IBM has a big problem. By Robert X. Cringely. Excerpts: I heard from dozens of readers yesterday morning about a message IBM sent to its current employees concerning their 401K plan -- changing it from a contribution in every paycheck to a single contribution at the end of the year. Of course if you are laid off that means no annual contribution, less retirement savings, but a real bonus to the company. This, in itself, isn’t worth a column. It’s just Scrooge IBM being more Scrooge-like in search of that 2015 earnings target. What is worth a column is putting this news in the context of IBM having failed its recent internal security audit, which should concern IBM customers.

    What, they didn’t tell you?

    How well is this screwing US employees and offshoring their jobs working for IBM? Not very. When IBM supports your IT the company has to meet standards for data protection and security. OS’s will get all their security patches, antivirus software will be current and running, user-ID’s will be closely managed, backups will done, etc. There are industry standards for this stuff. IBM does a self audit before getting its annual industry review. For 2012, IBM failed its internal audit. The annual review has been postponed and there is a big push to fix stuff. If the crisis is not fixed, this could be a huge problem for IBM Global Services.

    Can the offshore support teams do this work? Yes. The problem is their time is tightly managed and they are not allowed to take any initiative. Management is focused on oiling the squeaky wheels so they don’t think past immediate problems. Managers, too, are not allowed or are afraid to take initiative.

    IBM has built a management culture in which you do only what you are told to do when you are told to do it. If you are not told to check the backup reports every day, they are not checked. Often staffing is so tight that 100 percent of the team’s time must be spent fixing active problems. No time remains to check anything that hasn’t already been declared broken. ...

    The immediate story here is IBM employees being screwed out of their 401k match but it soon will be IBM customers whose systems fail an SAS70 audit. If I was an IBM customer the message I would send to Big Blue is “Stop dreaming up ways to screw your employees and focus on actually doing your job”.

    Selected reader comments follow:

    • IBM is going under the implosion is happening...customers are leaving in droves. Missed sales and earnings numbers, this is a knee jerk reaction by Ginni the buffoon to try and fix the numbres....will backfire. Last one out, turn off the ibm server lights.
    • This is really no surprise. I quit a few weeks ago after more than 15 years. It stopped being a company I was proud of in recent years. When I first started, I was very impressed by their processes, the information available, the ability to learn your job independently, etc. If you took your BCGs, IDPs and PBCs seriously, your career would stay on track. Somehow they lost their direction. The abject waste, sloppy processes, sloppy code, etc, the attitude of "shut up and row and quit trying to improve things"...I stopped buying stock several years ago, I could see the writing on the wall. The year-to-year fear of low PBCs-to-layoff regardless of your performance was a psy-op trick to get the 1s and 2+'s to absorb the work of those they cut loose. When my work weeks started exceeding 80 hours on a regular basis, it was time to go. The rapid turnovers around the world made it inevitable that security, cost, and quality would be sacrificed.
  • Pensions & Investments: IBM's plan for once-a-year 401(k) match draws mixed views. By Robert Steyer. Excerpts: IBM's change to a year-end corporate match payment from bimonthly for its 401(k) plan should save the company money, defined contribution experts said, but whether or how much the switch will affect participants' savings and investing activities is not clear. ...

    Participants receiving the annual match “must be employed on Dec. 15 of each year,” said the letter from Randy MacDonald, senior vice president for human resources. ”For eligible participants, the match and automatic contribution “will be deposited … on Dec. 31, 2013 (and on the last business day of each subsequent year).” ...

    “We haven't seen a lot of companies do what IBM is doing” by switching to a year-end payment from bimonthly, Mr. Beebe said. Companies making once-a-year contributions most likely started with that strategy, he added. Mr. Beebe said he expected IBM would save money. ...

    “We want IBM to reverse its decision,” said Lee Conrad, a former IBM employee and national coordinator of Alliance@IBM, Local 1701 Communications Workers of America, Binghamton, N.Y. The union represents 300 dues-paying workers but does not have a collective bargaining agreement with IBM. “If you lose your job on Dec. 1, you don't get your match,” Mr. Conrad said. “The workers are very angry.”

    Douglas Shelton, IBM's director of corporate communications, said in an e-mail that “this change reflects our continuing commitment to invest in our employee 401(k) plans while maintaining business competitiveness in a challenging economic environment.”

    Selected reader comments follow:

    • This is the final nail in the coffin. I don't mean to sound melodramatic but dollar cost averaging is one of the key advantages to the current bi-monthly employer and employee contribution structure. The 401k Plus plan was rolled out in 2008 because IBM wanted to save money, reduce the burden on the company to sustain the pension program, and put the burden on the employee to manage their retirement savings. When IBM rolled this out in 2008, the story was that this program was the replacement for the pension program. That's right, one of the largest IT companies in the world no longer provide pensions to their employees. This new policy raises several more questions:

      How will keeping the employer match help IBM? Will they invest it and earn the profit (or loss) on the money?

      If IBM files bankruptcy on December 14th in a future year, what happens to the employer contribution? Does it go to creditors or is the pro-rated amount given to employees?

      IBM constantly "refines" staffing levels and "skills" through the course of the year. A more apt way of saying this is that IBM lays off employees in favor of cheaper offshore labor, all at the detriment to the end clients IBM supports (cheaper means less skilled labor). IBM will only pay the employer contribution to the employee if they are an active employee as of December 15th. An employee could be laid off on December 14th and they would not be eligible to receive the employer match. This money would be retained by IBM. Would IBM use this information as selection criteria for the reductions? Why should IBM be permitted to keep the employer contribution?

      The Wall Street Journal points out in the Friday, December 7th article that IBM spent $875 million dollars in matching and automatic contributions. The real question is: How much did IBM save since stopping the pension program?

      I wonder how board members and shareholders feel about IBM watering down this program. I hope that the US Department of Labor and the U. S. Treasury officials investigate and force IBM to restore the program. What’s next Big Blue? Requiring employees to pick up more of the cost of medial and dental coverage? Oh wait, that’s already in place.

    • You summarize the truth rather well G. Couple of other things that you may not be aware of are that IBM mobile employees can no longer expense tools they need to do their jobs such as Internet, or phone service. They are limited to $39.99, and anything beyond this the employee foots themselves.

      Awards went away long ago unless you want to send an e-card thanking a co-worker

      Online IBM education is all you get, off-site costs $$, and will never be approved.

      IBM employees, especially those in the US have been nickle and dimed for years. They take it because they need the job. All these long term people that they mention in the articles, trust me their chances for similar employment is very slim.

      There are so many skilled, wonderful people who have been squeezed out of IBM that it's a tragedy. Managers are forced to give performance scores based on percentages provided by their managers. This means that after several years of this, qualified performers are given low reviews because someone has to be at the bottom. And now days, these people at the bottom are let go and replaced by a contractor

      This happens every day at IBM, and there is never any consideration for the well being of the employee, or the service they provide to the customer.

    • Some workers are unhappy??? That is very poor perspective on a reporters part. By and large ALL of the workers are unhappy with this. Anyone passing 6th grade math would be unhappy with this but I would like to thank you for at least shining a light that sub tier consulting firms have no problem showing ignorance in what is supposedly their area of expertise. Common practice? No impact on account balances? Wrong on both fronts.
    • IBM long ago abandoned its core beliefs in including EXCELLENCE. Why would one believe its employees' pensions aren't next. I would encourage businesses considering engaging IBM to look elsewhere.
    • Shoots dollar-cost-averaging all to hell...with that kinda chunk-a-change, would park it in stable value or money market and buy on the dips
  • Investment News: Clients kind of blue over IBM's 401(k) surprise. Corporate bellwether's move to annual lump sum match seen as coming attraction; new planning required. By Darla Mercado. Excerpts: News that International Business Machines Corp. plans to make its contribution to workers' 401(k)s on an annual basis — rather than with each paycheck — has non-IBM workers spooked.

    Reports of IBM's change to the frequency of its contributions, typically amounting to 6% to 10% of workers' pay, were initially published by The Wall Street Journal and heralded as an example that other employers would follow. Starting next year, Big Blue's match will be contributed as a lump sum on Dec. 31. Workers who leave IBM before Dec. 15 won't be able to get that year's match unless they are retiring, according to the Journal.

    Not surprisingly, advisers working with IBM employees say the change has hurt morale. “They're disappointed,” said David L. Blain, president of D.L. Blain & Co. LLC. “Psychologically, it's a big deal for them.”

    The concerns are not limited to IBMers. Advisers say some of their clients are worried that the move will be aped by other employers.

  • Yahoo! IBM Employee Issues message board: "Re: IBM now making their 401k contribution once a year on Dec. 15th?" by "trexibmer". Full excerpt: "People aren't staying at companies for 30 years so the pension is a poor retention tool."

    It was a Gerstner mantra.

    But it is not true.

    Most of the present IBM Executive VPs are still at IBM for just about their entire careers or their entire careers and close if not at 30 years of service or over.

    The executive pension plan, i.e. "top hat plans" like a SERP are enough to keep them around.

    Gerstner was a two faced little Napoleon anyhow. And he knew IBM was a sucker to make him filthy rich in just nine years. One person could not have turned IBM around, but he takes all the accolades with a greedy ego to boot. IBM started to decline in many respects before Gerstner. IBM got to be a monolith, an empire much like the Roman Empire, and lost it's vision in the 1980's. But Gerstner accelerated moral decline in IBM. Morality now in IBM is as extinct as some of my old bronto brethren.

    This new 401(k) change confirms it.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: IBM changes 401K payments - another hit to employees" by "albanyblue2000". Excerpts: IBM can't end its 401K program, as it needs to keep the bones of it to claim equality with its competitors for talented people in this country. Its historic business model, -created by Tom Watson Senior in the 30's, is to induce employment of talented people, implying a bright future, - and then work their expectations downward to a minimum level of compensation. It's face to the customer is one of application leadership that belies its historic lack of creativity in that arena. It merely buys and sells apps at the corporate acquisition level, just like Enron.

    At this time, I believe the executives of IBM are truly worried, as it has to grow into a number of markets where it lacks the talent of, -say a Google or Apple. It has constantly failed to enter the software app market, - much less dominate it. It has shown no ability to grow its gross revenue.

    It has essentially become a highly hyped body shop that buys apps, as it lacks the talent, dedication and business model to do so.

    And, it shows.

    When I retired in 1990, it was a ~$90 billion company. 22 years later, it's grown by less than 10%, and shrunk in real economic terms.

    On the day that IBM fails to continue cost cutting with resultant "profits", - its stock will be hammered. Just like Groupon's.

    That's what keeps Ginny Rommetti awake nights.

    And, I believe it will happen in the next three or four years.

    Can anybody here support or criticize this theory? Please post.

  • Glassdoor IBM reviews. Selected reviews follow:
    • today” Current Employee. Pros: Competitive salary; work at home; might be a good place for new college grads to start—just start only. Cons: Non-linear thinking no longer wanted, rewarded nor embraced. Follow the rules to get ahead, no more or less; do not make waves; boring compared with earlier years; nepotism, favoritism, cronyism. Advice to Senior Management: Careful, not everything can or should be automated. Treat your people better.
    • A well managed high tech giant” Former Advisory Software Engineer in Austin, TX. Pros: You get to work with some of the most talented people in the world. Highly diverse workforce. Great benefits. Unique and very professional culture. Cons: High stress at times. Many times cuts are made in personnel with remaining personnel expected to pick up the workload. Work/Life balance is stressed, but difficult or impossible to achieve. Advice to Senior Management: Invest more in training. Even though IBM is a top tier company, it needs to become the far and above the top tier company it once was.
    • Working at IBM was a great learning experience” Former Mainframe Storage in Dubuque, IA. Pros: The ability to learn a lot of different aspects of mainframe storage and all the capabilities surrounding it, along with a staff the had no egos to deal with and were all willing the help was wonderful, to say the lease. Cons: Over the past 2 years, IBM has detracted from what is important, the customer, or the stakeholders. Too much emphasis has been placed on overburdening staff with work and not enough resources to handle it. The ability to work overtime to address some issues has gone away, which leaves employees discouraged. Advice to Senior Management: Treat employees like they are part of something special, not as a statistic.
    • Great Company...when ur 40+” Former Consultant in Washington, DC. Pros: Great health insurance benefits. When I was there I was fully covered under a PPO plan without paying a dime from my pocket. Cons: Low salary. Really only doing IBM-related product work. As a technical guy I did not like the fact that we were always looking to use IBM products/solutions for customers instead of what is best product/solution for the customers needs. Did not like the 44 hour minimum work week. Advice to Senior Management: Don't be all about selling IBM software and hardware. Do REAL consulting.
    • its good.....to work....till the people around you are good” Current Executive Operational-practioner in Gurgaon, Haryana (India). Pros: its related to ma background...also nw i've too many frnds...... Cons: – some people are just .........BEEP........ Advice to Senior Management: – its good that smtym you must care for the agent as well.........smtyms we must do outing.....or smtyms there shud be some fun otherwise...it'll be just bore.........
    • Extreme Blue Technical Internship” Current Extreme Blue Technical Intern. Pros: Prestigious program that has garnered mention in business strategy books; competitive pay and benefits (i.e. free housing, travel stipends, NYC weekend); brilliant and interesting coworkers; generally relaxed work environment with extraordinary autonomy for interns: you generally set your own pace and level of accountability; good work locations (could be a lot worse than Austin and Raleigh); do a halfway decent job as a technical intern and you'll practically have your pick of full time opportunities.

      Cons: The success of your project and the quality of your experience is too heavily dependent upon the engagement of your project mentors (some teams had awesome mentors--others, not so much). Campus-wide perks are terrible (not even free coffee/tea, let alone anything else), too much time wasted on meetings and other bureaucratic proceedings. Executive presentations can disrupt an entire day which is problematic when you have several in one week.

      Advice to Senior Management: Be more selective about the projects (and mentor teams) you accept if you can. Avoid project sponsorships from groups looking for cheap labor and do what you can to solicit higher profile opportunities that focus on IBM's strengths (analytics, big data, Smarter Planet type stuff).

      Rumor is that a lot of executives think the program is an unnecessary expense, but it's one of the few things keeping IBM relevant to elite CS and engineering students--keep fighting the good fight!

    • Changed for the worse over time” Former Windows Systems Administrator in Boulder, CO. Pros: Large Company. Great Benefits. Flexible Schedule. Great feeling that you are working for a company with lots of tradition. Cons: Too many levels of management. The job role was too focused. Buried in paperwork and useless databases. Much of the work was outsourced. Advice to Senior Management: Make sure that you take more interest in your remote employees.
    • Work you to the bone” Former Renewal Representative. Pros: Flexibility and pay scale compared to other companies. Cons: Bureaucracy, impersonal, just a number. Advice to Senior Management: N/A
    • Great place to work if you can find a way to avoid the salary compression.” Current Employee. Pros: Best thing about my time at IBM were the managers. 3 out of the 4 (two male and two female) I had during the 13 years were great, the 4th was a nice person but in way over her head. She didn't have a clue what our team did or how she could actually help us do it better. Thankfully, she stayed out of our way and let us do our job.

      Cons: Once you start working for IBM you better be prepared to experience a major case of salary compression. In the mean time they are hiring in people that do the same job as you at a much higher rate. I have had several friends leave for a year or two to take a 20% to 30% pay increase with another company and then come back and get another 20% to 30% increase. They pay well to entice you to join them and never again will you get a decent raise. In 13 years my average raise is 1.74%; some years it has been 0% others 3%. Many of those years I was ranked as the best on my team. Now they are in a mode of crowdsourcing/outsourcing everything they can. Less and less stability all of the time. Kind of sad. IBM has such a rich heritage of being such a great place to work for pay, benefits and culture.

      Advice to Senior Management: Quit doing stupid things just to satisfy the stockholders for this quarter. Take a longer more strategic vision.

    • Poor” Former Managing Consultant in New York, NY. Pros: Big brand name, from its long histories and the ThinkPad that it made in the past. A large research presence. Cons: Very poor management style, driven completely by sales. Sales are not professional, and the atmosphere is highly toxic and political, and the team is frustrated at what the leaders are doing.
    • Too much management, lack of direction.” Former Product Engineer in Research Triangle Park, NC. Pros: Flexible work hours. I've never had an issue with regards to having to plan something around family events or emergencies. My 1st line managers have always been good at their jobs, managing people. Cons: Everyone and their mother is a manager. There are too many people in the upper levels of management who have their MBAs. All of them are trying to build their own little castles and they don't care who they have to step on in order to do it. The company lacks direction and suffers from a lack of technical professionals. Likely due to the low wages and terrible benefits. They are not competitive in the job market and make no efforts to retain their worker base. Advice to Senior Management: Try caring more about your employees than your bonuses.
    • Lack of investment in what they have” Current Managing Consultant in Raleigh, NC. Pros: Work/life balance has been decent for a traveling consultant. Typically good consultants to work with. Cons: Company does very little to retain it's employees (e.g., bonuses, salary increases, awards) and focuses on bringing in new talent or people that have left. Professional development is disappointing—no reimbursement for professional organization memberships/conferences, internal/external training has pretty much all but disappeared. Advice to Senior Management: Focus on and reward the talent you have and supplement it with external hires.
    • Occupy Movement Required Across IBM” Current Human Resources Leader in Toronto, ON (Canada). Pros: Size. Depth of skills, knowhow and commitment of employees. Business focus. Brand. Potential. Cons: Executive entitlement. Distribution of corporate wealth. Abuse of power. Competitive salaries. Career opportunity. Lost potential. Advice to Senior Management: In an era of social connection, when people have access to a global conversation that is unprecedented in the evolution of business, we will see that truth, honesty and integrity will not only surface, but reign. Ongoing abuse of IBM employees by current leadership will emerge and be turned inward, bursting your bubble of privilege and long held sense of entitlement. Time and economic tide will shift to reveal a far more competitive employment marketplace at which time the IBM brand will not be enough to stem the exodus.
    • IBM Global Services” Former Global Project Manager in Chicago, IL. Pros: Worked on some great projects. Some nice people. Work from home. Cons: Most US jobs going overseas. Your HR manager has no leverage. Most of the time you don't even meet your manager face to face and most of the time they have no clue in what you are doing. Toxic environment. Advice to Senior Management: From my experience, management could not care less about employees. They care about making numbers and bonus.
    • Love my job, wish I had more stability” Current Systems Analyst in Boulder, CO. Pros: Work at home, flexible schedule. Cons: Offshoring jobs makes me very uneasy. Advice to Senior Management: Keep jobs in US!
    • “Tons of Bureaucracy, too many bad managers, bottomline drive” Current Employee. Pros: Great for gaining experience. Challenging work. Diverse and global workforce.

      Cons: Salary, everyone knows it. The solution to every problem is to add an extra layer of bureaucracy to every process. Bad managers making rushed decisions that only help the short term, and completely disregard the long term. Customer satisfaction is not taken into account when cost cutting comes into effect. Same workload with half the people? No problem! The customer won't even notice it. Everything's rushed because unrealistic promises are made to the customer.

      Advice to Senior Management: Stop cutting costs. Increase your profits by delivering a great service. Word will spread and you'll be signing contracts left and right. If you need to cut costs, seek to eliminate paperwork, not people.

    • Too big to care” Current Sales Representative in New York, NY. Pros: Great resume builder. Good benefits. Extremely flexible work schedule. Cons: Low morale. Minimal raises/promotions if any. Poor training. Advice to Senior Management: Train your employees and motivate them with positive reinforcement.
    • I was excited to start my career with IBM, but the company has changed dramatically and is less employee focused.” Current Senior Analyst. Pros: Flexibility with work/life balance. Working from home. Cons: Lack of training/education. Small bonuses. Minimal to no pay increases. Advice to Senior Management: Take better care of your U.S. employees.
    • One of the very best, Top notch - Unfortunately with major drawbacks” Former Senior Manager in Raleigh, NC. Pros: I am writing this review as a former employee of IBM for a period 11 years and having worked both in AMS and GBS (formerly AIS). I believe I have thorough perspective that is agreed by current IBM Employees. Second to none, great project environments are easy with IBM, excellent company/brand name and good learning opportunities. Basically you are on your own most times, managing projects as well your professional growth. I found salary was at a median level compared to Deloitte and Accenture, but later in the last 3 years I heard IBM paid 25~30% more for even lower band levels in consulting. Check it out for yourself. If you are fortunate to be with the right manager and working for right IBM clients, I bet you would not leave this organization.

      Cons: Your manager matters the most for your professional growth, I did not have a good one for the last 6 years. Your resource deployment lead needs to be understanding your exact skill levels and propose you for good projects, I did not have this either. Many of my colleagues had the same issue, Not just not having good managers/mentors but trouble finding the right project within the clientele. Well, to go above a step, you need to know a senior person (Partner/VP or Associate Partner) that knows you very well and supports you. If you are not in good network, your career growth may be stalled.

      Advice to Senior Management: - Re-tooling the current consultants to advanced level; - Eliminate PA/PBC System; - Work alternatives; - Educate Resource Deployment Managers to understand IBM Consultants and their skills to fit them in right projects. They are doing clerical work only; - Managers are managers for name sake, most cases they are worried about their career growth or their projects. This needs to change.

    • Good resume builder, difficult place to grow a career” Former Recruiting Program Manager. Pros: Resume builder, network builder, invests in training. Cons: Bureaucratic, lacks work/life balance, below market compensation, high turnover, frequent layoffs, pushing more jobs offshore to India. High use of contract labor with no benefits. Advice to Senior Management: Develop the talent you have in the organization rather than promoting based on friendships. Pushing jobs offshore may help short term cost cutting but will hamper long term ability to compete head to head with companies like Infosys, Cognizant, TCS and Wipro.
    • Pro's & Con's” Current IT Architect in Boston, MA. Pros: Exciting company, very aggressive and forward. Cons: They are very quarterly driven and solely focused on revenue profits to drive stock and deliver to investors. They used to be people oriented but that has changed (dramatically). They expect you to do your job (naturally) but they also expect you to work upwards of 60 hours weekly with no regard for your personal life, family and/or time. Advice to Senior Management: They need to get better at understanding their people (employees) and appreciate/respect personal individuals, family, and time. It's a good place to work if you're single and lonely with no friends or family.
    • IBM has its ups and downs. it's secure if you're good, but cost cutting has made it a dull and lifeless existence.” Current Software Development Engineer in Austin, TX. Pros: Innovative people, flexible work schedules, chances to work on cool technology, and depending on your location, the ability to have a "one stop shop" of software, hardware, and services guys all in the same company and room.

      Cons: The sheer size of the organization makes each VP operate like its own company, making them fiercely protective of budget and people. This squashes chances for growth at a personal level. Smart and innovative people are leaving for other companies, and the remaining people are struggling to contain the work. Managers are even leaving now for other opportunities. Cost cutting has eliminated many perks, and even cut retirement plans (see IBM's recent change in 401k match contributions). Overall morale is low.

      Advice to Senior Management: Delivery of EPS growth to shareholders is important. However we cannot grow by continuing to "do the same" in the same markets. Management and leadership view attempts to innovate as "risky," so they are often squashed implicitly ("B" or "C" team contributors or poor project management) or explicitly (no funding).

  • Alliance for Retired Americans: Friday Alert. This week's articles include:
    • A Sign of Hope that the Medicare Eligibility Age will not Rise
    • 102 House Members Send Letter Promising to Vote against Social Security Cuts
    • Michigan Governor Signs Right-to-Work for Less Legislation
    • Candlelight Vigils Drive Home the Point: Don’t Cut Social Security, Medicare, Medicaid
    • Democrats Announce Senate Committee Assignments
    • Ohio Alliance Welcomes a New State President
  • Computerworld: If tech is so important, why are IT wages flat? Unemployment for IT is well below national rates, but wages are barely moving. By Patrick Thibodeau. Excerpts: Despite the fact that technology plays an increasingly important role in the economy, IT wages remain persistently flat. This may be tech's inconvenient truth. ...

    "IT salaries have not really kept pace with inflation," said Victor Janulaitis, the CEO of Janco Associates, which reports on IT wage compensation. In 2000, the average hourly wage was $37.27 in computer and math occupations for workers with at least a bachelor's degree. In 2011, it was $39.24, adjusted for inflation, according to a new report by the Economic Policy Institute (EPI).

    That translates to an average wage increase of less than 0.5% a year. In real terms, IT wages overall have gone up by $1.97 an hour in just over 10 years, according to the EPI. The Washington-based think tank gathered data from the Current Population Survey, a monthly survey of households conducted by the Census Bureau for the Bureau of Labor Statistics. ...

    Microsoft is proposing that companies pay the government $10,000 for H-1B visas in a new annual pool of 20,000 visas for people from foreign countries who hold degrees in the so-called STEM fields (science, technology, engineering and math). The company also proposed that the government annually set aside 20,000 green cards that would be available for $15,000 each.

    The company argues that there is still an IT skills shortage. To back up that argument, it cites its own experience in recruiting workers as well as statistics indicating that there is a shortfall in the number of U.S. students who are graduating with degrees in computer science. In its report, Microsoft says that the U.S. economy each year is producing 120,000 additional computing jobs that require at least a bachelor's degree, but only about 40,000 computer science bachelor's degrees are awarded annually.

    That looks like a clear gap, but EPI report author Daniel Costa, an attorney and immigration policy analyst at the policy research firm, said that less than one-fourth to less than one-half of workers in computing occupations will have a computer science degree.

    Selected reader comments follow:

    • There is no shortage of available skilled tech workers in this country. What there is a shortage of is skilled tech workers willing to work for third world level compensation. 3.4% unemployment only sounds good right now because it is still better than the unemployment rate within the general population. Back in the late 80's and early 90's we would have considered 3.4% to be an alarmingly high unemployment rate.
    • Now as for new graduates - lessee now, if I was entering college, would I choose a career that may not even be recognizable when I graduate, or that could be offshored, or would I favor something that CAN'T be offshored, CAN'T be dispensed with? Will the work of lawyers, executives, nurses, or small businesses that fix your car or clean your carpets be offshored? We hope you can do without lawyers' services, but that still looks like a growth industry, and MBA executives seem usually to be stationed in the home country and to be paid well, regardless of delivered value. You'll still be getting your car fixed, cleaning your carpets, and buying soap 20 years hence. So what's this bright high school grad going to choose? If engineering, probably civil or architecture. If medicine, perhaps surgery over radiology. Maybe s/he opts out of college and starts a business (possibly selling imported goods, or contracting work offshore...)

      Point is, smart people will go where they think they can be rewarded for effort. So the strategy should not be to start more dupes in the direction of unrewarding work (that is, commoditizing the labor market), but to ensure that effort expended where an employer can reap value correspondingly rewards the person expending the effort.

    • Sadly, there is a surplus of highly skilled Microsoft talent – the 5,000 Americans they laid off and replaced with 5,000+ foreign citizens. Peter Cappelli, Wharton Professor and author, Why Good People Can’t Get Jobs: The Skills Gap and What Companies Can Do About It, cites a Manpower survey that shows only 15% employers believe lack of knowledge (typically a skill) is the most important reason for lack of skilled candidates. Employers stated direct experience in a similar job in a similar company, English and lack of business etiquette skills are more frequent reasons for the lack of qualified candidates. If there’s a Microsoft skills gap, then why won’t Microsoft recruit its own workforce, people who understand the business, the technology, the customers and how to get things done within Microsoft (something only learned on the job) BEFORE they hire more visa workers?I forgot - Microsoft believes the Americans they laid off are damaged goods. This quote from Microsoft spokesperson says it all“Microsoft is hiring 2,000 to 3,000 workers over the next 18 months, offsetting the job cuts. Some of those will certainly be on H1-B visas… Laid-off Microsoft employees aren’t always a good fit for new positions. If you have a laid off General Motors engineer, that doesn’t qualify them for a job as a software engineer.” Ginny Terzano, Microsoft Corporation (Bloomberg, February 20, 2009)
    • If companies were serious about using US employees they'd reinstate internal training programs, which not only fills the gap, but keeps current I/T workers up to date. They all slashed or eliminated classroom training to save a few bucks but the bean counters have no clue the ROI they were getting and threw away.
  • AARP: Check the Math: Social Security Is a Good Deal. By Jonathan Peterson. Excerpts: It’s a question lots of people have about Social Security: Do you get back as much as you put in?

    But this question only gets at part of the story: Social Security is a kind of insurance, not just an investment. It protects you and your family from things nobody wants to think about — death and disability. In other words, it contributes to well being and peace of mind in ways that may be impossible to measure.

    A few months ago, Social Security’s actuaries looked at the question of whether people get a positive return on their payroll taxes, as noted in this Reuters article.

    They found that in the great majority of cases, for people born between 1920 and 2004, the answer is yes.

  • The Fiscal Times: Want to Boost Corporate Profits? Pay Employees More. By Gabrielle Karol. Excerpts: Last month, an image featuring former Costco CEO Jim Sinegal touting Costco’s generous wages for employees went viral.

    In case you didn’t see the memo, it said, “Costco CEO pays his employees $17/hr on average, plus benefits, earns less than $500K, refuses Wall Street demands to cut employee salaries and benefits.” ...

    A number of studies–as well as the success of companies with similar attitudes as Costco–have revealed a surprising truth: Happy employees create huge profit margins.

    Yes, the key ingredient is happiness—not intelligence, hours worked or years of experience. ...

    Broadly speaking, keeping employees content helps them to stay engaged and productive at the office, which in turn helps make companies more profitable. Dr. Noelle Nelson, a clinical psychologist and the author of “Make More Money by Making Your Employees Happy,” told Forbes: “When employees feel that the company takes their interest to heart, then the employees will take company interests to heart.” ...

    For example, Costco pays workers 42 percent more than competitor Sam’s Club. While this means higher overhead costs, the increased wages pay for themselves in terms of higher productivity and lower turnover. Additionally, higher wages attract better talent. The Container Store pays its full-time clerks $44,000 a year, and its wages are 50-100 percent higher than the retail industry average. As a result, the company had 1,500 applications for 60 positions when it opened a store in Edina, Minnesota. ...

    These reports and case studies show that putting employees first benefits both workers and companies as a whole.

    As Jason Fried, the CEO of 37 signals, told Fast Company: “Lots of [companies] burn people out with 60, 70, 80 hours of work per week. They know that both the people or the company will flame out or be bought or whatever, and they don’t care, they just burn their resources. It’s like drilling for as much oil as you possibly can. You can look at people the same way.”

  • AlterNet: McDonald’s Worker Makes $8.25 an Hour, McDonald’s CEO Made $8.75 Million Last Year. The CEO makes almost 600 times as much as one Chicago worker. By Alex Halperin. Excerpts: Bloomberg has an article today highlighting the pay gap at McDonald’s. The whole piece is worth a read but the beginning is particularly striking. It highlights Chicago man Tyree Johnson, who holds positions at two different McDonald’s. Between shifts he has to give himself a quick scrubbing in one of the restaurant’s bathrooms because he can’t even show up for work at a McDonald’s smelling like a McDonald’s.

    “I hate when my boss tells me she won’t give me a raise because she can smell me,” he said.

    Johnson, 44, needs the two paychecks to pay rent for his apartment at a single-room occupancy hotel on the city’s north side. While he’s worked at McDonald’s stores for two decades, he still doesn’t get 40 hours a week and makes $8.25 an hour, minimum wage in Illinois.

    This is life in one of America’s premier growth industries. Fast-food restaurants have added positions more than twice as fast as the U.S. average during the recovery that began in June 2009.

    Johnson’s circumstances look particularly grim when they’re compared, as Bloomberg does, to the compensation enjoyed by executives whose pay gives a whole new meaning to “McJob.”

    Johnson would need about a million hours of work — or more than a century on the clock — to earn the $8.75 million that McDonald’s, based in the Chicago suburb of Oak Brook, paid then- CEO Jim Skinner last year.
New on the Alliance@IBM Site
  • Sign the petition at change.org: International Business Machines (IBM USA): IBM must REVERSE the decision changing the IBM match 401(k) contribution. Petition wording: IBM must REVERSE their recent decision to change the timing of the IBM match and automatic contribution for our 401(k) Plus Plan and Excess 401(k) Plus Plan.

    We, the petitioners want IBM to keep the automatic contribution at semi-monthly and NOT an annual contribution.

    IBM, by moving the automatic contribution from semi-monthly to an annual contribution effectively denies employees who are terminated in resource actions up to the cut off of December 15 of the given year, the matching contribution from IBM. Furthermore, the movement of the automatic contribution to the end of the year denies interest generated for the employees 401(K) account. Sign this petition to tell IBM to REVERSE this decision, immediately!

    And if you are an active IBM employee, please Join Alliance@IBM CWA Local 1701.

    Web site: http://www.allianceibm.org; Twitter ID: @Allianceibm; Facebook: Allianceibm CWA

  • Job Cut Reports
    • Comment 12/08/12: I joined the Alliance this week and will actively encourage my coworkers to do so. The 401K rip-off was the last straw for me; totally disgusting. Greedy executives making tens of millions of dollars by ripping off the employees. They are so far removed from us that they don't even treat us like human beings any more.

      We are in an abusive environment and our morale is at an all time low, but only WE can change it. They need to be reminded of what made IBM great; respect for the individual. WE need to remind them, they are NOTHING without the workforce; ZERO! Everyone, please pass the word around at work this week to visit the Alliance page, just visit once a day or once a week.

      For the Alliance folks, PLEASE post the number of members on the top of the pages most visited on your website. If the numbers start to grow, more will join the Alliance. If you also post the number of hits to the page, employees will realize that many more are visiting the Alliance site but may be afraid to join. IBM was one of the best companies to work for in the USA. It has only fallen into the wrong hands. We need to act now. We need to start a movement. (a group of people working together to advance their shared political, social, or artistic ideas : the labor movement.)

      Slowly ask your coworkers who oppose the 401K change to join you for a walk around your building at your lunch time (noon-ish), EVERY day, starting today. NO picket signs or anything like that, ONLY going for a leisurely walk at lunch. Each day the word will spread, the numbers will grow, and employees will SEE that we are uniting and THEY WILL JOIN the Alliance. Is anyone interested in getting some fresh air?

      Alliance, is this something we can do?

      If that's not a good idea then let's brainstorm to get this rolling.

      UNITED WE STAND, DIVIDED WE ARE FALLING! -Had it-

      Alliance reply: By all means, do the walk around. Another suggestion, wear black and blue to signify you are being "mugged" by IBM.

      Keep sending ideas in on what you all want to do to mobilize your co-workers in fighting this 401(k) change.

      By the way, 12 new members, 4 new associate members, and 4 subscribers/supporters joined since last Thursday.

      We need more! Our total of all 3 categories is only 5000. Put your fear behind you and join us. Membership is confidential. IBM won't know unless you want them to. We have had 14,500 unique visitors to the Alliance web site so far this month.

      We know our eblasts are not reaching every employee. If any one has email lists of their co-workers please send to ibmunionalliance@gmail.com Sign the petition! If not enough sign, IBM wins!

    • Comment 12/09/12: I was gone in 08 but employed at IBM for more than 2 decades. Ever since Gerstner, any changes that IBM made to any benefits always were to benefit the company at the expense of the employee. This 401K change is no different. -Ben Dover-
    • Comment 12/09/12: Cry havoc and let loose the dogs of war! If not now when? If not this issue what issue? Live better. Work union! -Exodus2007-
    • Comment 12/09/12: Building a smarter planet means first doing the right thing IBM! -401_ko'ed-
    • Comment 12/09/12: I recently joined. I have also sent the link to sign the petition to other folks and asked them to sign and join. We have to do something about this. We are likely to get canned by 2015 anyway (maybe 2013 by what just happened). Might as well do down fighting. P.S. I am also starting to work on my own exit to another company. The execs should at least be honest with the industry and rename itself to Walmart IT. -JJ-
    • Comment 12/09/12: Well, I've been saving my "walking money" since being told I was not getting my raise this summer. I told my mgmt I would take a March RA. If I don't get it, I think my 2 weeks will be given March 15 (so I get Variable pay if they actually pay it). I am taking my 5 PC holidays and my 5 earned vacation days and walking out the door. Feel free to join me for coffee virtually! - Walking Papers -
    • Comment 12/10/12: Send a message to IBM, withdraw your 2013 ECCC pledge and make your contribution directly to charity. IBM should not get credit for your good deeds. Send a note to: Charity Payroll Services/Endicott/IBM@IBMUS -Fed Up-
    • Comment 12/10/12: Good point, Fed Up. I stopped donating via the ECCC a couple years ago for that exact reason - the things these executives and this company have been doing to their employees (and by extension to customers) are horrible. They're dang sure not taking credit for my benevolence. By the way, I hit up several co-workers today to try and convince them to sign the petition and join the Alliance. I'm also putting together a list of email addresses from former co-workers who have left (actually, most of them were RA'd) and I'm going to ask them to sign the petition too. C'mon folks - if *I* can do this, *you* can do this. -sickofitall-
    • Comment 12/10/12: Let's get going! Let's get the petition signed. I took a look today and there were 425 signatures. It looks like the Alliance is asking for 15,000. If you haven't signed it yet, do it. If you haven't joined the Alliance yet, do it. The IBM executives must be shown that IBMers will NOT accept this 'robbery' again; we will not accept another retirement fund reduction; we will not accept another method that will be used to deny IBMers something they were promised by IBM. Sign the petition! Join the Alliance. Remember the 1999 Pension heist? Fight back now like IBMers did then! Let's do this. Get busy fighting for your job, or get busy losing your job. Your choice. -Soldin2002-
    • Comment 12/11/12: We should have more people signing this petition. What is the problem? -Bill- Alliance reply: A big problem is that IBM workers are letting their fear paralyze them. It is way past time to get beyond this. Do workers think that if they do nothing the "mugging" will stop? Doing nothing just makes management stronger and invites more takeaways. Do you think if you remain silent and let others sign you will be spared being let go in an RA? Dream on. IBM management does not respect you unless you fight for respect!
    • Comment 12/11/12: I'm surprised Randy didn't eliminate the match altogether. Better hit on this one with the press as hard as you can. -sam the man- Alliance reply: There is nothing to stop them if IBM employees remain quiet.
    • Comment 12/11/12: Greedy IBM does not care about it's employees; the 401k benefit cuts is the last straw for many of us. We don't get benefits anymore working here we are just being used. shameful big blue -shamefulbigblue-
    • Comment 12/11/12: The next step may be to tie 401K matching contribution to PBC rating. My fear is that the company will continue to RA hardworking people who keep the business running and default into bankruptcy. We need to join the union and support efforts to hold this company together, or we all lose. -mugged-
    • Comment 12/11/12: There are lots of very good employees in IBM and I know this because I worked with them. All this PBC 2 and 3 ranking is completely bogus, years of weeding the onshore talent has left nothing but high performers in the company. They are paid well because they are good.

      I was too scared to let people know I was affiliated with the Alliance, because for sure I knew I would be targeted for an RA. I understand why membership isn't higher and no one will voluntarily pass out material on lunch hour in the cafeteria. I personally witnessed Rochester HR follow Alliance members and collect all the material they were putting on cafeteria tables during their lunch hour. I know they were being watched.

      When I left IBM, I was nervous because it was the only company I had ever worked for but I totally love my new job and the kicker is, THEY LIKE ME TOO. I was a little stunned someone actually thought I was a GOOD employee. I hadn't felt that in years.

      Now I'm watching more takeaways (at IBM) unfold AGAIN and every day I say to myself how thankful I am to now be in a good place and not a bad place. It's terrible to see the company being eaten up by executives and Wall Street. I believe IBM will become a smaller player with mediocre products. That is, unless the remaining onshore workforce can somehow organize quickly. They can either leave or organize, but it is hard to see the status quo being maintained. Good luck! PS - I signed the petition. -JS-

    • Comment 12/12/12: -Hadit-: GDF workers are brainwashed my management into thinking that if you even mention the Alliance or are caught at their website you will get fired. They have no clue and that's why IBM hired them. Dense Dubuquers no doubt. Here is the skinny to DBQ GDF workers: YOU CAN JOIN THE UNION AND WONT GET IN TROUBLE FOR DOING SO. Quit being so paranoid about management. It's not like they really care about you anyway. -hero4hero-
    • Comment 12/12/12: "Had it", I agree - employees are afraid of being singled out. I have hit up three co-workers who I know are fed up and specifically not happy about the 401k move. All of them had received the Alliance email, none of them had signed it. I encouraged them to sign it, and to join the Alliance. If every member of the Alliance does the same, we'll get some more members. If everyone who is fed up signs the petition and asks family and friends to do so, we'll reach the 15,000 goal EASILY (there's 550-something on there right now, so we're making some progress, let's keep it up!).

      The one thing I encountered among them all was apathy (and I have to believe that they are a little worried they'll prematurely get put on an RA list or have a reduced PBC rating or something too). What I heard was basically - "it doesn't matter if I sign it or join, it's not going to make a difference, the execs don't care about us and whether we're unhappy or not". I provided some arguments against that, most of which were summarized by the "Alliance reply" below: Doing nothing is not going to help - how does that make things better? If you don't speak up, regardless of whether they care or not, they won't even know how you feel and neither will the press or the public, or the handful of politicians on our side (I don't know what they're up to these days, but a big thanks should go to folks like John Hall (NY), Dennis Kucinich, Marcy Kaptur, and Ted Strickland, who have fought for us in the past).

      When you don't at least sign a petition, and get your voice out there somehow, it *looks* like you don't care, like everything bad IBM has done is just fine and dandy as far as you're concerned. And complaining to a sympathetic co-worker is preaching to the choir and no one else is going to hear it or understand how you feel; complaining to your wife or husband - just as fruitless - you need to get your voice heard.

      As IBM is a bellwether, this will spread to other companies, and you'll encounter the same thing everywhere you go (in a lot of ways, it's already going on - many other companies have been offshoring and reducing benefits). Even if IBM doesn't rescind its decision, at least you can feel proud of yourself for speaking up for yourself instead of doing nothing, and start speaking up for your rights more often. The more people that sign the petition, comment on articles about this (I like "I signed it"'s idea as well), the more visibility it gets from the press and just from the public in general.

      Read those articles, comment on them, let people know we're going to stand up for ourselves. Encourage others to do the same, whether they work for IBM or not. IBM *is* going to fire most of us anyway, we know that because of the 2015 roadmap and the *clear* trend in U.S. headcount reduction that's been taking place. So what have we got to lose now?

    • Comment 12/12/12: This is so frustrating. IBM knows the job market sucks. They know it is going to get worse next year. People like me are stuck for at least another year without major financial hardship. It sucks to be held over a barrel. With recent laws passed, unions are going to lose a significant power as well. It is so frustrating and nerve wracking. The gov't is in bed with companies like IBM to insure more dependence. I have no delusions that the 2015 bloodbath is coming. We have been cutting back on personal expenses and socking away as much cash as we can. We will find a way to absorb the tax hit in 2013. I just do not know how much more I can take before all is gone. -Frustrated-
    • Comment 12/12/12: -sickofitall- I hear ya and you are absolutely 1000% correct! As an Alliance member I am proud of your post here ! ALL IBM RETIREES should sign this petition. Show some solidarity. We are all going to be IBM retirees (hopefully) some day. I am basically a forced retired IBMer (RAed before I was 50 years old with over 25 years of service, no FHA). Now am IBM contractor getting...(fill in the blank). Who is willing to stand with me (us)? If we can get most if not all retirees to s
    • Comment 12/12/12: I took an early retirement this year. Looks like perfect timing. There's not much left they can take away but whatever there is you can bet it's in the queue to be put on the chopping block. My dept went from 25 to 2 in 3 years. About half got RA'd, a lot jumped ship and a few of us threw in the towel and called it quits. I feel sorry for the two that are left. -LeftAlready-
    • Comment 12/13/12: I have to be honest. I am one of those 'scared' ones. I have a family to feed and I NEED this job (as crappy as they may treat me). So I stay quiet and take my lumps. I know one day I will be RA'ed. But I just can't take the chance that I will draw attention to myself and get put on the next RA list. This may sound paranoid, but I know IBM watches and if you draw unnecessary attention to yourself you will be RA'ed. They just need the slightest reason to get rid of us. YES, I am SCARED! -scared-

      Alliance reply: We have Alliance officers and members who have been very public in their advocacy for you and other IBM workers for years. They have challenged IBM at stockholder meetings, they have participated in rallies and picket lines, they have handed out flyers. And they are still working at IBM. You don't think they have been scared as well? They too, have families. But they know this fight needs to be fought. Shed your fear and join us. As a public member of the Alliance you have labor rights.

    • Comment 12/13/12: So I joined a call early, and shame on my manager for having the announcement tone disabled on his conference line. I caught the tail end of another call of managers. From what I could identify, a lot of first lines and at least one 2nd line were on the call. From the out of context conversation, it sounds like a HUGE push to force people to retire will be rolled out in 2013. There were a lot of people talking about not being ready to retire, but at their age no place else will hire them. And then somebody else chimed in with "I'm the oldest one here, I'll be first to go I'm sure". And somebody else said their department was 95% "retirement age" people and they were concerned with out it would be phased out. Obviously worried about losing a majority of their department with nobody to knowledge transfer to. Let me just say I'm glad to be out of that mess. I feel for everybody left behind. You have a choice. -evesdropper-
    • Comment 12/13/12: Certain GBS non-directs groups will be RA'd 1Q13. My small dept will be gone. Not so subtle hints from my manager. How much money can possible be saved from firing a dept under 10 people? -anon-
    • Comment 12/14/12: As a retiree I signed the petition as anything that lowers morale or makes it less likely to hire competent people has a direct effect on me. First as a stockholder it affects the long term viability of the company. Second being dependent on a pension the potential of a weaker IBM make a transfer to a PBGC or to an insurance annuity a possibility. Neither of these are as secure for maintaining my current income as the pension plan is. I want to throw out a contrarian viewpoint about employees being afraid to advocate for a union. I posit that the early ones might actually be less likely to be RA'ed. If given the choice of being called on firing a union organizer or "Fred", my guess is they will go for Fred first. The key for IBM is getting rid of folks with the least amount of effort. Letting a union organizer go will draw unwanted attention and take more time and cost. -anonymous retiree-
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
Minimize
  • Washington Post: Health-care dominoes. By Ruth Marcus. Excerpts: Raising the eligibility age for Medicare sounds like a fiscal no-brainer.

    After all, the Social Security retirement age is rising to 67. It would seem sensible for Medicare to have the same rule. ...

    Amid the entitlement mumbo jumbo, raising the eligibility age is attractive to politicians casting about for savings because it is tangible. It is at the top of the Republican wish list. It was part of the never-consummated deal that House Speaker John Boehner and President Obama crafted last year — although House Minority Leader Nancy Pelosi has declared her opposition.

    Here’s the wrinkle: This no-brainer turns out to be exceedingly complicated. The savings aren’t as big as you might imagine, because costs to other government health programs would rise as a result. Meanwhile, the move could have an array of problematic effects, from leaving seniors uninsured to raising premium costs for many others. ...

    Paradoxically, with the higher eligibility age, the federal government would spend less money, but overall national spending on health care would rise because Medicare costs are lower than those of private insurers.

    Meanwhile, with the youngest seniors out of the Medicare system, Kaiser estimated, premiums for the remaining seniors would increase by 3 percent because that population becomes older and sicker. Likewise, premiums on the health-care exchanges would increase by 3 percent, as the average age of enrollees (and therefore the average cost) rises. The risk pools get messed up in both directions.

    And many of the newly ineligible seniors, the CBO said, would pay higher premiums or spend more out of pocket. This is not a problem for better-off seniors who’d simply turn to their employers or their retiree health plans; indeed, it would make them more conscious of costs.

    But consider the 65-year-old who makes $46,000 a year — too much to qualify for federal insurance subsidies — and whose exchange premiums could reach $12,000. How is this affordable?

  • Washington Post: Red Lobster’s Obamacare fail: Why ditching health benefits is really hard. By Sarah Kliff. Excerpts: In the world of health policy, Darden Restaurants may become a cautionary tale. The company, which owns Olive Garden and Red Lobster, recently announced plans to test limiting workers’ hours, in order to dodge the health-law’s mandate that employers with more than 50 workers offer coverage to full-time employees.

    It didn’t exactly go so well: The company revised its earnings projections downward after seeing a backlash to the decision. Thursday, Darden announced it had completed the test period, deciding it would not move forward with the limited-hours model.

    “We have always had a significant number of full-time employees and they are integral to our success,” Darden CEO Clarence Otis said in a statement. “The data we have collected during our test around guest satisfaction and employee engagement has only reinforced this.” ...

    Right now, employers spend $15,000 on an employee’s health benefits when they could be spending…absolutely nothing. No law currently requires employers to offer health insurance. But the vast majority do so because it serves their interests: They can remain competitive when recruiting employees and keep their workforce healthier and more productive. It also helps a lot that health benefits are essentially tax-free compensation, giving employers yet another incentive to deliver workers’ wages in the form of insurance benefits.

    This probably explains why a Towers-Watson survey of 512 large companies found exactly zero planning to drop insurance coverage.

  • Smirking Chimp: A Higher Medicare Age Means a Lower Quality of Life. By Richard Eskow. Excerpts: It’s almost impossible to believe: With the private-sector economy struggling and politicians worried about government spending, the biggest proposal on the table is raising the Medicare age to 67. That would take far more out of household budgets than it would save in government spending – and the savings would be short-lived.

    What’s more, it would impose terrible hardships on lots of people. Why do the truly terrible ideas always seem to become the really Big Ideas? ...

    A Kaiser Foundation study showed that “raising Medicare’s eligibility to 67 in 2014 would generate an estimated $5.7 billion in net savings to the federal government, but also result in an estimated net increase of $3.7 billion in out-of-pocket costs for 65- and 66-year-olds, and $4.5 billion in employer retiree health-care costs.”

    So it would save $5.7 billion from the Federal budget in the first year, but it would cost everyone else $8.2 billion. That means it would increase overall health care costs by $2.5 billion.

  • The Health Care Blog: Health Insurance Exchanges Will Transform Health Care. Magically Increase Transparency. Improve Access. And Maybe Even Lower Costs. But Only if We Get it Right… By Ann Mond Johnson. Excerpts: NPR ran a story recently about how some retailers are retooling efforts to appeal to consumers in light of increased competition, particularly from online vendors.

    Many are striving to be more “customer friendly”; Kohl’s department store was mentioned for adopting a “no questions asked” return policy with the idea that customer loyalty could be enhanced as the retailer made itself easier to do business with.

    Comparisons between health care and retail abound, and while we say it is ideal for the consumer experience to be the same in both industries, in fact they are much different. The gap between the two industries was well-illustrated in this video of a shopper in a grocery store. We see them at the counter having their items rung up. But they aren’t told the prices and when they are given the receipt at the end, they’re told the final amount due may actually differ from what they see on the receipt. ...

    Even with my optimism and with all the market buzz about exchanges, I can’t help but be reminded of disconnects between health care and retail shopping, especially when the differences surface regularly and are so easily remedied. Case in point: Hurricane Sandy caused a longer stay than anticipated on the East Coast, leading to a shortage of prescription medications. I first called our pharmacy benefit manager, asking for a one week supply of meds to be filled at a local Virginia pharmacy. They told me to call the insurance company. Our doctor called the Virginia pharmacy who then called our insurance company for an “override”. The override was approved for five of six prescriptions but declined for the sixth. Why? The patient lives in an area (Chicago) that was not affected by the hurricane. Even though the patient was in Virginia, and not in Chicago. Even though the other five prescriptions were approved. No amount of dialogue could change the insurance company’s decision and the void of logic and common sense (not to mention customer service) was astonishing. I can’t imagine a service person at Nordstrom’s not anticipating this and working proactively on their client’s behalf, especially if they worked at the doctor’s office.

  • NBC News: Health insurance: US paying more for less, report finds. By Maggie Fox. Excerpts: Health insurance premiums have shot up more than 60 percent in the last eight years, and if they keep up at this pace the average family of four will be paying $25,000 a year just for health insurance, according to a report released Wednesday.

    At the same time, deductibles are also going up for employer-sponsored plans, so workers are paying more and more for less and less, the non-profit Commonwealth Fund said.

    “Workers are paying more for less financial protection when they get sick,” said Commonwealth Fund senior vice president Cathy Schoen, who led the team writing the report. ...

    One big reason for the rising premiums? Rising expenses. “Broad evidence of poorly coordinated care, duplicative services, and administrative waste, as well as rising prices charged to those privately insured, signal that greater efforts are needed to slow cost growth in both private and public insurance markets,” the report finds.

    This isn’t controversial. Earlier this year the independent Institute of Medicine made a formal pronouncement on what think-tanks and academic institutions had been saying for years. It said the U.S. health care system wasted $750 billion in 2009, about 30 percent of all health spending, on unnecessary services, excessive administrative costs, fraud, and other problems.

  • USA Today editorial: "Employer mandate" attacks leave sour taste. A few pennies per pizza isn't too high a price to pay so workers can have health insurance. Excerpts: So far, the controversy over ObamaCare has focused largely on the "individual mandate" — the requirement, upheld by the Supreme Court, that uninsured people buy coverage or face a penalty. This has overshadowed another key part of the new health care law: the employer mandate.

    Now, with regulations being written, some business owners have stepped up their complaints about the requirement that companies with 50 or more employees offer coverage to their full-time workers, starting in 2014.

    Much of the resistance has been coming from restaurant chains. Papa John's CEO John Schnatter said companies would "find loopholes to get around" the requirement, adding that "it's common sense" for companies to reduce workers' hours so they no longer fit the definition of full-time. Darden Restaurants, which owns Olive Garden and Red Lobster, said it was experimenting with cutting workers' hours. The owner of the Carl's Jr. and Hardee's chains said it would employ more part-time workers. And one angry Denny's franchise owner in Florida said he'd add a 5% "ObamaCare surcharge" to meal prices.

    Let's cool the coffee before it scalds. Yes, the employer mandate will add to some companies' costs of doing business, and those costs no doubt will be passed along to customers. Papa John's says the price of a pizza could increase 11 cents to 14 cents per pie. But is that such a terrible price to pay to ensure that some of the nation's hardest working, lowest paid employees will get health coverage they've never had?

  • New York Times opinion: The “Yes, Minister” Theory of the Medicare Age. By Paul Krugman. Excerpts: Aaron Carroll can’t believe that we’re still talking about raising the age for Medicare eligibility; his disbelief is easy to understand. It is, after all, a truly terrible idea, for reasons he details in the linked post; it would inflict vast hardship on the most vulnerable, while saving the federal government remarkably little money, and would actually raise overall health spending, basically because private insurers have much higher administrative costs and much less bargaining power than Medicare, so shifting seniors out of the program ends up costing a lot of money.

    Yet the idea just won’t go away. It’s almost surreal. What’s going on here?

    One answer is that conservatives badly want a rise in the Medicare age, never mind the policy virtues or lack thereof. Why? Partly because liberals hate the idea: pay any attention to right-wing rhetoric and you learn that spite against liberals, even if there’s no gain for their side, is a major motivator. Beyond that, there is some actual strategic thinking here: by reducing the number of people receiving Medicare, they hope to undermine support for the whole program. No, really:

    The most important likely effect is political. Reforming Medicare is difficult in part because of resistance by beneficiaries, who hold a lot of political influence … Diminishing the size of the beneficiary class is likely to diminish resistance to further change, and while it’s not enough, it might ultimately make reform easier.

    “Reform”, in this case, means killing the program.

  • AARP: Don’t raise the eligibility age for Medicare. AARP Executive Vice President Nancy LeaMond today reiterated the Association’s opposition to including an increase in the Medicare eligibility age as part of a year-end budget deal. She offered the following statement: Excerpts: “Medicare provides the bedrock of health security for more than 47 million Americans today and must be preserved and strengthened for seniors, their kids and grandkids, and future generations. Proposals to increase the Medicare eligibility age simply shift costs onto beneficiaries and do nothing to lower health care costs. In fact, this idea would dramatically increase costs for younger seniors, drive up premiums for those in Medicare, increase costs to businesses and states, and raise health care costs overall. ...

    “At the same time, removing the youngest and generally healthiest older Americans from Medicare would result in higher premiums for those remaining in the program. Adding older Americans to private insurance risk pools will drive up employer health care costs and premiums for those in the private market. And many low-income seniors would turn to Medicaid, increasing costs to the states.

    “Medicare faces long-term financial challenges that must be addressed, and we have urged elected officials to confront the program’s challenges in a way that is fair for current seniors and future generations. We need to put Medicare on stable ground by making health care more efficient, not by taking away affordable and needed coverage. And we need to improve health care by lowering costs and reducing waste, not simply by asking people to pay more.

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.

  • Bloomberg BusinessWeek: The Liberal Plan to End the Mortgage-Interest Deduction. By Joshua Green. Excerpts: The Center for American Progress, a liberal think tank, unveiled a tax reform plan (pdf) on Dec. 4 to raise $1.8 trillion in revenue. It tackles most of the big-ticket items, including raising top marginal income-tax rates (to a Clinton-era 39.6 percent), the top capital gains rate (to 28 percent), and treating carried interest and dividends as ordinary income (sorry, Mitt Romney).

    It also addresses what may be thought of as the third-rail of tax reform—the cherished but costly mortgage-interest deduction—by eliminating it. Under the CAP plan, mortgage-interest would instead count toward an 18 percent tax credit, which would be phased in over time so as not to upset the fragile housing recovery.

    The effect of this transformation from deduction to credit would be to shift the benefits down the income scale, away from the wealthy, who currently are the biggest beneficiaries of mortgage interest. Here’s how it would work, per an example cited in the plan:

    Under the current tax code … if two families both deduct $10,000 in mortgage interest paid from their taxable income, their actual tax benefit could vary greatly. For a high-income family in the 35 percent tax bracket, that deduction would lower their tax bill by $3,500. For a middle-income family in the 15 percent bracket, that same $10,000 deduction results in only $1,500 in tax savings. Under our plan, since both families paid the same amount of mortgage interest, they would both receive the same $1,800 tax benefit.
  • Huffington Post: Goldman Sachs Receives Fine That Will Take It 24 Minutes To Pay Off. By Mark Gongloff. Excerpts: Who says the government is going easy on Wall Street? Goldman Sachs just got slapped with such a huge fine that the firm might have to miss an entire episode of Spongebob Squarepants making it up.

    That's how much time it will take Goldman to make up its latest regulatory penalty: About 24 minutes, or one Spongebob, if you fast-forward through the commercials.

    The Commodity Futures Trading Commission brought the hammer down on Goldman Sachs on Friday for failing to keep a close eye on a trader who, back in 2007, used fake trades to hide an $8 billion trading position from regulators. Goldman fired the trader, but it also sort of took its sweet time notifying government regulators about the trader's shenanigans, according to the CFTC. ...

    In contrast, it would take Goldman nearly 516 minutes, or a little more than eight and a half hours, to pay for the cost of CEO Lloyd Blankfein's new house in the Hamptons, for which he reportedly paid $32.5 million.

  • Smirking Chimp: Jobs First Because Jobs Fix Deficits. By Dave Johnson. Excerpts: What happened to jobs? The pubic wants government to do something about jobs and getting the economy moving, and in DC the only thing is this weird argument about … anything but jobs and getting the economy moving! “Fiscal cliff?” What about jobs? Fixing the economy will fix the debt, not the other way around. ...

    It’s Demand Stupid. This slowing is not happening because people are “worried about the fiscal cliff.” It is because there are not enough jobs, and the wages of the people who do have jobs are stagnant with all the gains in the economy going to a very few at the very top of the economic ladder. Europe is slowing because they attacked deficits instead of hiring people to do jobs. We are slowing because the government stopped stimulus and started cutting.

    The slowdown is because the jobs are not coming back fast enough, wages are stagnant and falling, and the government is not doing anything about it. And that means that there is not enough “demand” in the economy to cause investment and hiring. Businesses want customers, not tax cuts — and certainly not cutbacks. In fact most of what DC is focused on — austerity — will make the situation worse, possibly even much worse, as it has done in Europe. ...

    A Government Of, By and For We, the People. I recently watched the PBS series The Dust Bowl. One thing that stood out was how the government actually cared about what was going on with the people, was trying to solve the problems, and how the people got it that the government was on their side.

    Today it is a very different story, with the government isolated and largely under the control of wealthy and powerful interests. The current “fiscal cliff” absorption being only the most recent example.

    The public doesn’t get what is going on in DC. They want JOBS first, they want the meager government services they do get preserved and even expanded. And they want a fix to the problem of the last few decades of wage stagnation, corporate domination, outsourcing manufacturing, deferring infrastructure maintenance, union busting, age discrimination, and cancelling TV shows everyone likes. (Just seeing if you are still reading.)

    Economy Has Lots Of Jobs That Need Doing. Jobs solve problems. Right now the country has lots of problems, so the country needs lots of jobs, which solve problems. And by great coincidence right now the country needs lots of things done. The country needs to repair and modernize its infrastructure. The country needs to update its electrical grid. The country needs to make its buildings and homes more energy efficient. All of these are things that improve the economy in the long run. And the remarkable thing is that all of these are things that will have to get done sooner or later.

  • New York Times editorial: Taking Aim at Michigan’s Middle Class. The decline of the middle class in this country has paralleled that of the labor movement, which has been battered by the relentless efforts of business groups and Republicans to drive down wages, boost corporate profits and inflate executive salaries and bonuses. Now that campaign is on the verge of a devastating victory in Michigan, home of the modern labor movement, which could transform the state’s economy for the worse.

    On Tuesday, the Republican-controlled Legislature is expected to pass a law that would allow workers to avoid paying dues to a union that represents their shop. Gov. Rick Snyder, a Republican, has reversed an earlier position and said he would sign the law. Democratic officials, labor leaders and workers are urging him to reconsider, knowing that a business victory in Michigan, of all places, would encourage other states to make the same mistake. ...

    Concern for the rights of individual workers, of course, is not the real reason business is pushing so hard for these laws. Gutting unions is the fastest way to achieve lower wages and higher profits. Last year, in support of an Indiana antidues laws that later passed, the Indiana Chamber of Commerce said the law would draw businesses to the state for lower labor costs. A study by the University of Notre Dame in January found that the average wages and benefits for nonfarm workers in right-to-work states was $57,732, while in states without the law it was $65,567. States with antidues laws have higher rates of poverty and lower rates of health coverage.

    Republican officials also know that depriving unions of dues will hurt Democratic candidates, who usually win the support of labor. As President Obama said at a diesel plant in Redford, Mich., on Monday, “These so-called ‘right-to-work’ laws, they don’t have to do with economics, they have everything to do with politics. What they’re really talking about is giving you the right to work for less money.”

  • Washington Post opinion: The Lansing-Beijing connection. By Harold Meyerson. Excerpts: China has a problem: rising inequality. The gap between profits and wages is soaring. Although elements of the government have sought to boost workers’ incomes, they have been thwarted by major companies and banks “that don’t want to give more profit to the country and let the government distribute it,” Qi Jingmei, a research fellow for a government think tank, told the Wall Street Journal.

    Of course, if China permitted the establishment of unions, wages would rise. But for fundamentally political reasons — independent unions would undermine the Communist Party’s authority — unions are out of the question.

    Meanwhile, the United States also has a problem of a rising gap between profits and wages. The stagnation of wages has become an accepted fact across the political spectrum; conservative columnists such as Michael Gerson and David Brooks have acknowledged that workers’ incomes seem to be stuck.

    What conservatives haven’t acknowledged, and what even most liberal commentators fail to appreciate, is how central the collapse of collective bargaining is to American workers’ inability to win themselves a raise. Yes, globalizing and mechanizing jobs has cut into the livelihoods of millions of U.S. workers, but that is far from the whole story. Roughly 100 million of the nation’s 143 million employed workers have jobs that can’t be shipped abroad, that aren’t in competition with steel workers in Sao Paulo or iPod assemblers in Shenzhen. Sales clerks, waiters, librarians and carpenters all utilize technology in their jobs, but not to the point that they’ve become dispensable.

    Yet while they can’t be dispensed with, neither can they bargain for a raise. Today fewer than 7 percent of private-sector workers are union members. That figure may shrink a little more with new “right to work” laws in Michigan — the propagandistic term for statutes that allow workers to benefit from union contracts without having to pay union dues.

    Defenders of right-to-work laws argue that they improve a state’s economy by creating more jobs. But an exhaustive study by economist Lonnie K. Stevans of Hofstra University found that states that have enacted such laws reported no increase in business start-ups or rates of employment. Wages and personal income are lower in those states than in those without such laws, Stevans concluded, though proprietors’ incomes are higher. In short, right-to-work laws simply redistribute income from workers to owners.

  • International Herald-Tribune: Coffee Break. By Oliver Bullough. Excerpts: LONDON — A slim young man in a green wool jacket sipped from his tall red cup of coffee and watched the protest. He had just left the Starbucks opposite London’s Angel underground station, having squeezed past around 50 protesters accusing the coffee chain of tax evasion, hypocrisy and hating women.

    In the circumstances, his insistence on standing in front of them and finishing off his Starbucks cup of coffee was rather brave. I asked if he was making some kind of anti-anti-capitalism statement.

    “I’m actually doing the P.R. for Starbucks,” he said.

    “Oh, do you want to give me an interview?”

    Definitely not,” he replied with a grimace, turned his back and walked away.

    I have no way of knowing if he was really doing P.R. or simply had a peculiar sense of humor, but much of the Starbucks P.R. team must share his distaste for talking to British journalists right now, given the scale of the challenge they face.

    After an investigation by Reuters published in October revealed the chain had paid no corporate tax in Britain for 14 of the last 15 years, it has become a target for protesters angered by the British government’s austerity program, and for politicians demanding an end to tax avoidance.

    Starbucks U.K. paid another Starbucks subsidiary in The Netherlands royalties for the right to the company brand, and paid a third subsidiary in Switzerland for buying coffee. That meant Starbucks as a whole could book its income in the lower-tax Dutch and Swiss jurisdictions and show no taxable income in Britain at all.

  • Smirking Chimp: When You've Lost the VFW on Budget Cuts, You've Lost America. By Richard Eskow. Excerpts: The "chained CPI" is an attempt to camouflage deep cuts to Social Security and other benefits, along with tax hikes on middle class wages (but not for high incomes), in a forest of numbers and terminology.

    Know who's expert at camouflage? Veterans. And a whole lot of their organizations hate the "chained CPI."

    Sneaky ... But Simple. The headline for Derek Thompson's Atlantic piece calls the "chained CPI" "the sneaky, complicated idea that could end the fiscal cliff showdown." There's ongoing chatter that both parties might use it to solve their budget impasse, in large part because they think it's too complex and wonkish for voters to grasp.

    But while it is sneaky, it's not that complicated. In fact, the "chained CPI" concept can be explained in one sentence: It calculates cost-of-living increases much more slowly than before, by subtracting the cost of the things you can't afford to buy anymore.

    See? I did it in 22 words and 113 characters -- short enough to tweet. I'll bet you understood it even if you hadn't heard of it before. And not only understood it, but sensed its implications: As a financially-strapped public downgrades from fresh food to canned food ... to cat food ... their benefits will keep plunging along with their way of life.

    And yet hope springs eternal among policymakers. Last year the president even said that "most folks would hardly notice" if this cut to the government's cost-of-living adjustment was enacted. Guess what: The nation's veterans noticed.

  • The Fiscal Times: The Alarming Corruption of the Think Tanks. By Bruce Bartlett. Excerpts: Item: U.S. Senator Jim DeMint (R-SC) resigns from Congress to become president of the Heritage Foundation. Item: Former House Majority Leader Dick Armey resigns as chairman of FreedomWorks over $12 million in secret cash payments to the organization, leaves with $8 million payout.

    These two items illustrate an important phenomenon now taking place in Washington: the end of the think tank as we know it. Rather than being institutions for scholarship and research, often employing people with advanced degrees in specialized fields, think tanks are becoming more like lobbying and public relations companies. Increasingly, their output involves advertising and grassroots political operations rather than books and studies. They are also becoming more closely allied with political parties and members of Congress, to whom they have become virtual adjuncts.

    Historically, think tanks like the Brookings Institution were universities without teaching. Indeed, Brookings was originally established as a university and it still has a dot-edu web address. Its goal was to bridge the gap between academia and the policymaking establishment.

    In the 1970s, this model began to change with the founding of the Heritage Foundation. Unlike Brookings, Heritage was not especially interested in research; its goal was to directly influence policy, especially on Capitol Hill.

  • Bloomberg BusinessWeek: Republican Debt Threat Would Reveal Medicare, Social Security Cuts. By Joshua Green. Excerpts: One reason why the fiscal cliff negotiations haven’t gotten very far, at least in public, is that Republicans are hung up on the matter of exactly what they’re trying to achieve. It’s not that they don’t know the answer—they want deep cuts to entitlement spending—but rather they don’t want to advertise it because cutting Medicare, Medicaid, and Social Security is unpopular and therefore politically costly. But it’s hard to move forward if you’re not willing to state your demands, so things have bogged down since President Obama opened the negotiations by asking for $1.6 trillion in tax increases and deduction caps.

    For Republicans, entitlement cuts are a long-sought-after prize, but one that’s difficult to openly acknowledge. Over the years, Democrats have reliably pursued a strategy known as “Mediscare”—frightening seniors by dramatizing how such cuts would affect them. Last year, a television ad attacking supporters of the Republican House budget famously depicted a prominent congressman shoving a wheelchair-bound granny off a cliff.

    Those ads work. So when Republicans want to talk about cutting entitlements, they tend to speak in code, declaring that we need to “get our spending under control” or “shrink government,” rather than specify what programs would be cut or shrunk.

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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