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6, 2000 April, 2000

Highlights—March 9, 2013

  • Minnesota Public Radio: 'Stunned silence' as IBM breaks news to Rochester employees. By Elizabeth Baier. Excerpts: IBM's decision this week to move some of its Minnesota operations to New York and Mexico has some wondering how much longer the company will stay in Rochester.

    For more than five decades, Rochester's IBM facility has manufactured products from personal computers to network equipment. But in recent years, the company has downsized its workforce.

    On Tuesday, IBM officials gathered employees in small groups and told them the company will start assembling servers at a facility in Guadalajara, Mexico, according to one worker who expects to be laid off. The worker did not wish to be identified by Minnesota Public Radio News but said cuts will begin in September and affect both full-time and contract employees.

    The worker is concerned that he will be cut from the company sooner if he is caught speaking out. The 10-minute meeting was followed by "stunned silence," he said. ...

    "It'll be a sea-change in terms of Rochester, relative to what we're known about and that's been IBM and Mayo," said state Sen. Dave Senjem, R-Rochester. IBM has been one of the city's leading corporate partners, he said. ...

    IBM officials declined to say exactly how many jobs will be cut or how many people it currently employs in Rochester. A labor union called Alliance at IBM estimates 2,800 people work for the company in Rochester.

  • WRAL-TV TechWire: Two senators blast IBM for changes in employee 401(K) plans. By Rick Smith. Excerpts: When a private company- even a Goliath such as IBM - receives a personal letter attacking corporate policy changes from two U.S. senators, the "suits" in the executive suites take notice. ...

    So when Ginny Rometty, chairman and chief executive officer of IBM, opened her mail last week and saw the letter signed by Bernard Sanders and Patrick Leahy, she had to at least read its contents with interest.

    The two Vermont senators are upset with IBM about recently made changes in 401(K) plans for employees. ...

    One page filled with criticism of IBM and its personnel policies toward U.S. workers. It notes that IBM has cut its U.S. work force "by nearly half" over the last decade. ...

    Here's the letter, dated Feb. 25:

    "Dear Mrs. Rometty:

    "We are writing to express our strong concerns with recent changes in IBM's match and automatic contribution to employees' 401(K) Plus and Excess 401(K) Plus plans. We respectfully request that IBM review this decision and reinstate matching funds on a biweekly basis as soon as possible.

    "Over the last decade IBM has greatly reduced pension benefits for tens of thousands of loyal and hardworking employees, despite the fact that the same period yielded 40 consecutive quarters of growth in earnings per share from the previous year. Given IBM's reported earnings in 2012, this most recent decision to terminate biweekly contributions in favor of one annual payment at year's end seems severe.

    "In the last decade IBM has cut its U.S. workforce by nearly half. Due to this policy change, employees who leave for any reason other than retirement or who are laid off before December 15 will not receive any annual contribution from IBM to their 401(K) plans. As is consistent with dollar-cost averaging, employees will also lose a year of interest which could have been gained by these contributions.

    "If this change remains, we are concerned that IBM will benefit greatly at the expense of thousands of loyal employees in Vermont and across the country. When a company makes a promise to its employees regarding their pension, it must not renege on those commitments by cutting or deferring their retirement benefits, especially when employees who have worked at IBM the longest have already seen their benefits reduced. Given that reality, we respectfully request that you reconsider this policy.

    Thank you for your attention to this important matter. We look forward to receiving your prompt response."

    The Skinny wonders if any IBMers in North Carolina have reached out to their senators for support. Maybe if IBMers across the country could convince their senators to join Leahy and Sanders in bringing pressure on the company the policy could be reversed.

    Selected reader comments follow:

    • What many people don't seem to realize (or maybe just admit) is that this is just one step in IBM getting more aggressive at cutting the US workforce.

      For employees that do stay, there is not much of a cost difference. The savings comes into effect when employees leave (either voluntarily or involuntarily). Since the match has not been paid, it reduces the costs to let someone go.

      And, with creative accounting, you could probably even negate the costs of terminating someone since the 401k match is cash that is now back in IBM's pockets. In other words, IBM budgets for the 401k match on a per-pay-period basis, but then realizes that as savings against severance costs. Thus making it easier to do layoffs (oh, I'm sorry, Resource Actions) as it doesn't affect quarterly results as much. Note, I don't know accounting laws, so don't know if this is even a legal approach.

    • Well, look at it like this. IBM announced Tuesday that they are moving two plants to Mexico, laying off around 800 people. Those folks, since they did not stay for the entire year, won't get IBM Contributions into their retirement accounts.

      So yes, IBM is definitely using questionable tactics on American workers.

  • KTTC-TV (Rochester, MN): Inside IBM: workers say 350 jobs are leaving Rochester. By Noel Sederstrom. Excerpts: Anger is starting to bubble among IBM employees over Big Blue's decision to shift 350 computer manufacturing and refurbishing jobs to Mexico and upstate New York. Workers say IBM is targeting 200 full-time employees and also 150 temps hired through Manpower.

    The shock set in for people working at IBM's sprawling campus in northwest Rochester Tuesday, as IBM executives shared a decision in meetings with workers that hundreds of manufacturing jobs are moving to Guadalajara, Mexico. ...

    Because the creation, manufacture and support of the eServer iSeries and pSeries lines has its roots deep inside the massive IBM Rochester facility, this shift may actually signal an end to computer manufacturing in Rochester. Recent IBM descriptions of itself and its Rochester organization allude to 4,400 employees aligned with 30 different IBM organizational units inside the high-security complex. But it has become impossible to verify the accuracy of this summary since a wave of change inside IBM the past four years. One IBM insider estimates that current employment at IBM Rochester is now at 2,200. If that's accurate, the new round of cuts would drop the total to below 2,000. ...

    IBM told its Rochester employees that manufacturing of PowerPure Systems and PureFlex systems are both moving to Guadalajara, Mexico. In addition, the used and refurbished power system manufacturing is going to be shifted to the IBM complex at Poughkeepsie, New York. These production lines are for mid-range computers for business applications.

    Selected reader comments follow:

    • Nice to see the headlines speak the truth. IBM does nothing for Rochester as far as being a great employer. Unless you consider giving the temporary agencies a lot of business. But it's the new norm nowadays, no benefits, no job security, just look at the financial bottom line and screw everyone. They are in good company with a lot of other employers.
    • Some interesting comments ... but let's not forget to consider the $18 Billion, yes that's Billion with a "B" that IBM is currently holding in cash. What's the story with that and why is it not being used to buy back stock or pay dividends for those savvy investors? Forget the employees that actually do the work that generate the profits. Let's also take a look at executive salaries and how they have fared relative to the non-executive pay bands, how the retirement and benefit packages have continued to shrink. The list goes on and on, IBM is just another US corporation that had been hijacked by it's executives whose only concern is for their own personal wealth.
    • Let's all move to Mexico, China or India! We can start our own communities over there! I know it is a stupid idea. But there is nothing we can do about this. Corporate greed is the new norm. Just like our elected officials, we need to live with it. Nothing is going to change for the better for us. The rich get richer on the backs of the worker. Can you imagine what Mr. Watson would have to say about this? Respect for the individual is gone from IBM philosophy. Such a shame this has happened. Why do you think our economy is in the shape it is? No jobs for the American People. Pretty soon, we will be looking to other countries for economic assistance.
  • Network World: IBM's Rometty nets $16.2 million in first year as CEO. More than half of CEO Ginni Rometty's $16.2 million pay package came from stock awards valued at $9.3 million. By Ann Bednarz. Excerpts: In her first year as IBM's CEO, Ginni Rometty earned a $16.2 million pay package. That's nearly double the compensation Rometty earned in the year before her appointment as Big Blue's chief executive, but less than half that paid to former CEO Sam Palmisano, who remained IBM chairman until October and netted $37.1 million in 2012.

    Rometty's 2012 compensation package included a $1.5 million salary, $3.9 million bonus, stock awards worth $9.3 million, and $823,002 attributed to changes in the value of her pension and retention plans, according to documents filed this week with the U.S. Securities and Exchange Commission.

    Rometty also received $687,725 in perks and other compensation. Her perks included: $304,376 for personal travel on company aircraft; $21,551 in tax reimbursements; $297,000 for company contributions to benefit plans; and an undisclosed amount for financial planning, personal use of company cars, personal security, annual executive physical, and family attendance at company-related events.

  • WRAL-TV TechWire: IBM's top 2 execs earn more than $38M in 2012. Excerpts: Times are good for the executives at the top of the food chain at IBM. Current Chairman and Chief Executive Officer Ginny Rometty and Sam Palmisano, who before he retired preceded her in both positions, pulled down more than $38 million in compensation for 2012, according to IBM filings on Monday. ...

    Palmisano, who had been IBM's CEO for a decade, served as a senior adviser to the company after retiring as chairman. He received a total 2012 package valued at $22.3 million, by AP's calculations. That's slightly less than the $24.2 million he received in his final year as CEO, but more than the roughly $21 million that he made annually from 2007 through 2010. ...

    If IBM calls on Palmisano’s expertise after his retirement, he will be paid $20,000 in in consulting fees for days he provides more than four hours of service and $10,000 for days he provides less, IBM said.

  • Glassdoor IBM reviews. Selected reviews follow:
    • Stable but too busy” Current Research Scientist in Fishkill, NY. Pros: Stable, friendly, not too much worry. Cons: Busy, busy, busy, busy. Work more than 14 hour per day.
    • IBM Software Labs is a great company to work with” Current Senior Software Engineer in Bangalore (India). Pros: Great work-life balance. High importance to innovation. Cons: Vast organization and at times bit difficult to get visibility and recognition. Learning is not great; it's mostly stagnant unless you have urge to learn new technologies. Advice to Senior Management: Better project planning needs to be done.
    • Counter innovative” Current Software Developer in Vancouver, BC (Canada). Pros: Don't have to do anything, pays on time. Cons: Everything else. Every initiative is pushed back; no willingness to change or update, efficiency is unheard of. It's a dinosaur, and it feels like one.
    • Not setup for success” Former Business Development Executive in Columbus, OH. Pros: Big company with a great customer base and world wide name recognition. i.e. good for the resume. Cons: Very little ability to adapt new and needed practices associated with acquisitions. Very high pressure on sales side and definitely a "good ole boys club" component. Internal competition between various groups and political jockeying means that the customer gets what's best for the biggest player at IBM, not what's best for the customer. Advice to Senior Management: Way too much to list here. The entire company needs to be overhauled from the inside out...much like our government.
    • Too many processes, not enough free time to drive sales...innovation doesn't penetrate all levels” Former Software Sales Specialist in Mexico, Distrito Federal (Mexico). Pros: Stability, home office, sales training, diversity. Cons: Internal competition, bureaucratic (too many managers), complex sales structure. Not near the highest salaries in the industry. Advice to Senior Management: Cut off layers of useless managers, get rid of rigid processes, improve sales incentives (HPC), and define sales hierarchy better.
    • Good place to start a career but don't expect to stay.” Former Staff Software Engineer in Rochester, MN. Pros: Good place to start a career and gain experience. Be prepared to work lots of hours and don't be afraid of accepting new challenges. Flexible hours are great. Cons: IBM has become a company that only cares about stock price and dividends. They no longer have respect for the individual. You have a lot of flexibility, but don't be fooled—you will always put in more than they are willing to give back. If you can do your job from home it can be done from ANYWHERE in the world, including "low cost country". Advice to Senior Management: Every job you send offshore increases profit and dividends. It also takes high paying jobs from the US, reducing taxes being paid in. Once you were proud to be an American Company, now you are just another disappointment.
    • There is no sense of teamwork in the company culture. IBM stands for "I'm By Myself"” Current Senior Project Manager in New York, NY. Pros: Smart, hard working colleagues that will challenge you to measure up to high performance standards. Lot of opportunity to learn while on the job. Cons: Management only cares about quarterly results. Lots of layoffs in US. Most of the opportunity is in India and other countries. Very little formal training and most education is done on your time nights and weekends. Advice to Senior Management: Never will be a world class company until you change the culture and get IBMers to work as a team.
    • A great learning experience and insight into the technology world” Former Managing Consultant in London, England (UK). Pros: 1. The range of technology expertise that exists within the local team and globally. 2. Clients give significant weight to your advice with the brand permission of IBM. 3. Opportunities to try new things and reinvent yourself. Cons: 1. The different lines of business make working as 'one IBM' nearly impossible, often compromising the relationship with the client. 2. Renumeration. 3. All significant decisions are made in 'command and control' style, normally from the US.

      Advice to Senior Management:

      1. Think about how targets drive behaviours. Getting rid of targets is not an option; however understanding the difference between 'hard & soft' targets, and at what level to measure them is critical in the SOX world.
      2. Change the culture in GTS!!!! Coming from GBS, the lower ranks are bullied during sales by execs not in touch with the problem statement and desperate to win the business. Is it any wonder there are very very few 'good people' in delivery and so many accounts are troubled??!?
      3. ITS grows at the expense of GTS & GBS. They need to be a service line in one or the other, without conflicting execs butting heads, refusing to give ground (which is why we lost one major deal in the UK recently).
      4. Create space in the GBS operating model to allow for pre-sales & training activities BELOW BAND 10 level! 'Investment' is false as long as people do not feel they can do 4-day weeks on client site and regularly spend time on management authorised projects. NOT everyone, just the good (e.g. E2E resources).
      5. Invest in face-to-face training for GBS-SWG teams. GBS cannot and should not 'sell' software. However making them fully aware of what IBM has will mean they can demonstrate it to clients, which will lead to sales.
      6. Online training. This does not work for the vast majority. Everyone should do their 5 days training a year, the majority of which should be a relevant week long training course on a residential basis. Current policy is to IBM's long-term detriment and makes me very sad that IBM is willing to make such short term gains and long term damage to its people and future.
    • Slow moving giant elephant with a big brand name” Former IT Analyst in Sydney (Australia). Pros: Work-life balance is better than average comparing to big 4. Options to work from home. Family friendly if you have got kids to send to school or pick up. Slow paced environment. Good if you are a contractor, too. Cons: Pay is lower than market rate. Too many noncompetitive people who are relaxing back and getting paid some big money. The theory of putting a bunch of grads or unskilled people out to client is a total fail. Most talented people will not stay for more than 5 years. Advice to Senior Management: Retention of talented people is very poor.
    • Software Sales” Current Software Sales in Atlanta, GA. Pros: Great company with tremendous people and resources. Benefits and compensation packages are very strong. Extensive job options allow for upward mobility. Strong in the local community. Cons: Large and slow at times. Many of the tools and databases are outdated, ironic for the world's premier information technology corporation. Workload expectations can be high.
    • GBS (Global Business Services) Strategy & Transformation Consultant” Current Global Business Services, Strategy & Transformation Consultant in New York, NY. Pros: There are A LOT of opportunities within IBM; but, YOU need to find it and network very hard to get it. Not very many people are going to look out for you, so you need to determine what you want and do your very best to get there. Cons: Consulting pay rate isn't industry average for amount of work and travel required. Bonuses are peanuts. If you do even get one, it might range from $700-$1500.
    • Marketing - inside scoop” Former Marketing Director in Armonk, NY. Pros: Marketing is very well respected within IBM. Cons: Challenge for IBM to keep top talent. Advice to Senior Management: Seek ways to improve retention.
    • Senior Software Engineer @Beijing” Current Senior Software Engineer in Beijing (China). Pros: 1. Formal culture, which is good for graduates. 2. Students can learn how to grow their career. 3. You can get advice from senior people as your mentor. Cons: 1. Budget control is the major focus of management team now. 2. Everything has a long process 3. No real innovation in recent decades.
    • An amazing company when you figure out how to make it work for you and your clients” Current Partner in Detroit, MI. Pros: IBM can do anything in technology. Incredible R&D org and output. Super smart people. Cons: Hard to navigate at times. Lots of rules. Have to use Notes. Advice to Senior Management: Incent client facing people to sell and deliver everything that IBM has to offer.
    • Losing their way” Current Associate Partner in London, England (UK). Pros: Brand; variety of work; some great people. Cons: – silos; - politics; - arrogant.
    • Non-challenging” Former Senior Recruiter in Washington, DC. Pros: Steady paycheck; low market. Too much emphasis on process and not enough on production. Cons: Borg. Process, process, process without any feedback to results. Advice to Senior Management: Stop following trends
    • IBM was a great opportunity, and they always have a job available, but they refuse to hire anyone and prefer contractors” Former Operations Manager in Boulder, CO. Pros: Great work environment. Excellent colleagues. Relaxed environment. Nice IBM managers. Plenty of free time on the job. Extra days off. Cons: No chance at direct hire. Long work hours. No advancement opportunities. Little chance to speak with contract managers. Long drive to north Boulder. Advice to Senior Management: Give some incentive to good employees
    • Great Learning Experience, Low Benefit” Current Consultant in Jakarta Pusat (Indonesia). Pros: Working in GBS Indonesia will get you a flexible time; Good work life balance; Great learning experience, and friendly and helpful colleagues and boss. On terms of career, you can have a boost of career, depends on how great your contribution and eagerness in work. Cons: Working in GBS Indonesia do not provide great benefit if you start at low/medium level career, a low salary, low mileage on project, very little perks to makes the employee comfy at the office (no espresso machine, no tissue, etc.) Advice to Senior Management: Increase the comfort level at IBM Indonesia office and do improvement on the employee benefit rate; if not you will start losing good employees.
    • Go In with your eyes open—IBM” Current Managing Consultant in London, England (UK). Pros: Looks good on CV. IBM does have a good brand image. Possible choice of roles (if you actually get a response). Cons: You have to find yourself a role in IBM or sit on the bench. Lack of communication with managers and senior execs when you have the skills needed to deliver projects to clients. It's not what you know, it's who you know. Large unresponsive organization. Resource managers do not help with role allocation. There is no work life balance—it's an IBM-only balance. No support for new starters—sink or swim mentality.

      Advice to Senior Management: Create processes to support your employees; help them grow their career as it will be beneficial to the business in the long run by keeping retaining their knowledge. Look at work life balancewhile some employees may want to travel and not have a social calendar, others do want this. Be honest and truthful on how the employee finds work for themselves or be on the bench. Explain the bench and how this affects utilisation and career opportunities if you're on it too long

    • Thinking of coming to IBM—stay well clear” Current Project Manager in Manchester, England (UK). Pros: None, unless you are an executive or shareholder Good to have on your CV. Cons: Morale—there isn't any. Pay rises— there aren't any. Expected to work longer and longer hours for no extra. End of year review is a joke (PBC cycle). Forced onto unsuitable projects. Advice to Senior Management: You know exactly what is happening but you still do nothing about it.
    • Senior Accountant - IBM Global Services” Current Accountant in New York, NY. Pros: Work from home; flexibility; comp days. Cons: Salary, salary, salary, salary, bonus. Advice to Senior Management: Once in a while give a raise to the good employees.
    • IBM is not the employer it used to be” Current I/T Specialist, Architect, Consultant in Charlotte, NC. Pros: Ten years ago, I could have stated some; however, times have changed. Cons: Work-life balance has become work-life integration. Training is non-existent. Offshoring is rampant. Benefits are cut year after year. Raises and bonuses, if given at all, are insulting. Top rated individuals have gotten 1%-2% in the past few years, despite record profits. Company has become an SAP shop.

      Advice to Senior Management: Invest in training and budget it yearly. Employees cannot be expected to have 100%+ utilization and train on their "off" hours. If Monday is a holiday, don't demand employees work the following Saturday. You should be able to forecast better than that. Utilization should be calculated after vacation, holidays, and training. Employees should not be penalized for time off. The offshore model has failed. On site resources can do the job better and faster.

    • GBS Public Sector” Former Industrial Trainee in London, England (UK) Pros: Great working environment (work from home usually 1-2 days a week). Great on the CV (& references carry a lot of weight). Exposure and experience is invaluable. Money is very competitive against other internships. Cons: Performance reviews need overhaul; extremely political and often the biggest ass-kissers got the most rewards with HR. Advice to Senior Management: The development of Industrial Trainees could be analysed better with more numeric, periodic performance reviews. e.g. a weekly performance tracker of 10 areas and ranking.
    • Middle managers need more oversight when dealing with employees” Current Senior Project Manager. Pros: Diverse, global company, good reputation, good place to start. Cons: Weak and inconsistent middle management; treat employees as fungible. Advice to Senior Management: Provide greater oversight of middle management; walk the talk about employees importance to the company.
    • Awesome” Current System Service. Pros: Benefits, extras, opportunities are excellent. Cons: Lost in the giant IBM world. Advice to Senior Management: More thanks for job well done, just a pat on the back
    • IBM trips over dollars to save dimes.” Current Manager - Information Architects in Chicago, IL. Pros: Large company with a lot of options across the company. A lot of products to bring together to solve a customers problem. Vacation is managed between you and your manager. Cons: Draconian cost controls. Low morale across the company. Death by conference call. 401K is only funded in October - so if you leave before (or are laid off), you get nothing. The out of pocket cost for insurance for an average family is nearly $1000/month. Advice to Senior Management: Bring the little things back. Thank you awards. Sales comp plans that make people feel they can make money.
    • Challenging, rewarding, high expectations of executive team/strong work-with attitude of highly qualified peers” Current Sales. Pros: Calibre of personnel. Quality of offerings. Ethics. Pride of representing company with deep customer commitment from organization, deep quality and service commitment in offering portfolio. Executive leadership. Strong HR policy. Work at home options. Daily interaction with employees and clients, globally. Cons: Stress, globalization/staffing economies over time have resulted in increased workload. Unstated expectation to be responsive during vacation periods.
    • Nice place to work but very "old-fashioned"” Former Financial Analyst in Somers, NY. Pros: Lots of opportunities for networking. Cons: Very boring environment to work in. Advice to Senior Management: Needs new interior renovations and HIRE MORE PEOPLE. It's a ghost town.
    • Great company...but a machine...no human element” Former Manager in New Delhi (India). Pros: Processes do work and things get done on time. Customer focus is high. Sales culture-all policies and rewards for sales profiles. Cons: No human element; it feels like you are a small cog in a huge machine. Politics at the senior levels. Large number of non-productive resources that are sitting like toads in the company. Advice to Senior Management: shake the system and remove the toads that are not performing.
    • One of the worst companies I have ever worked for (VERY disappointing)” Former employee. Pros: Very disappointing experience, poor management Cons: Very poor management, favoritism within the creative services department and how work is assigned to the contractors. Contractors are expected to come in without having a charge code to charge time to. Very unstable, unpleasant work environment. Advice to Senior Management: Set "clear" expectations, provide regular feedback for development and make sure your department has the tools and support to do the work assigned. Ask your staff what they need to be successful, have a better approach to change management and learn how to make better profitable strategic choices. Get your software upgraded...it's 2013 and you're still using Microsoft 2003 and get rid of that slow, antiquated Lotus Notes.
    • Client Advocate” Current Client Advocate in Calgary, AB (Canada). Pros: Flexibility, benefits, lots of resources, lots of training. Cons: Sweat shop, high stress, high pressure,
    • Slow advancement, but flexible environment and good benefits.” Current Advisory Software Engineer in Raleigh, NC. Pros: IBM has been around forever, so it's very possible to work there for 20 or more years. Their benefits package has historically been very good. They have also made steps toward adopting a more flexible and casual work environment. Work-from-home flexibility is increasingly common.

      Cons: Slow advancement. Mediocre salary. The upper technical ranks are clogged with old school engineers that have little exposure to modern innovations or methodologies. This leaves little room for new, exceptional talent to innovate, create fresh product value, or bring new offerings to the marketplace.

      Advice to Senior Management: IBM will fail to keep pace with younger, more agile companies that are able to bring innovative and more easily adopted solutions to market if it continues to grant such deference to its antiquated senior technical staff. Unless IBM finds a way to accelerate the careers and influence of talent with more modern approaches to problem solving and engineering in general, IBM will increasingly be seen as a relic of a bygone era.

    • Good place to work, typical corporate issues” Current Senior Financial Analyst in Somers, NY. Pros: Flexible work schedule, work from home, challenging and fun assignments. Cons: Staffing is tight, workload is high. Joke about working from home is you can do on weekends, and at night, and then of course you drive in for the 9x5. Yearly staff reductions. Advice to Senior Management:– Ignore 4-year laptop refresh policy, increase productivity, refresh 2-3 year range. There is an easy business case, analyze ROI and consider productivity improvements.
  • Alliance for Retired Americans: Friday Alert. This week's articles include:
    • Alliance, AFGE, Acting SSA Commissioner Detail Sequester Effect on Social Security
    • Senator Bernie Sanders Reintroduces “Keeping Our Social Security Promises” Act
    • Health Insurers Launch Ad Campaign over Medicare Advantage Cuts
    • Viral Video Shows the Shocking Reality of Wealth Inequality in the United States
    • California Senior Dies after Nurse Refuses to Perform CPR
  • Retirement Solutions, LLC: Anti-401(k) Agenda? By Jane White. Excerpts: The U.S. has one of the least generous pension systems in the advanced world; only six member countries of the OECD have lower pension wealth. What's more, seven of the eight OECD countries that have a mandatory defined contribution system featuring employer contribution rates that are more generous than our measly 3% rate--including Mexico. Denmark's is 11.8%, Hungary's is 8%, Mexico's is 6.5%, Poland's is 7.3% and the Slovak Republic's is 9%. You know things are bad when the country south of our border has twice as generous a 401(k) style plan than we do. ...

    As I observed in my book, "America, Welcome to the Poorhouse," Ted Benna, the consultant who "invented" the 401(k) plan in 1980 intended it to add security to an existing defined benefit plan--not to replace it. When the Wall Street Journal published a ridiculous article in 1997 claiming that the accounts made some people millionaires he wrote an article attacking it, insisting "the major concern of most knowledgeable individuals is that we may be facing a serious retirement crisis."

  • Pension Rights Center: Remarks by Karen Friedman at the 2013 NAPA/ASPPA 401(k) Summit. Excerpts: But this story illustrates what we believe is one of the biggest weaknesses of 401(k) plans. No matter how you play the game, 401(k) plans are a gamble. From our perspective, 401(k)s work well as a supplemental plan for many people, but they are failing millions of people as a primary retirement plan. Why? The fact is, 401(k) plans put all the risks and responsibilities on individuals. They have to decide:
    • Whether to participate.
    • How much to contribute. At time when millions of folks are struggling to stay afloat, pay the health care bills, housing costs, cover the kids’ education – they are going to be hard-pressed to put away sufficient money into a retirement account. According to government statistics only five percent of those participating in 401(K) plans put away the maximum contribution.
    • How to invest the money. Most people are not money managers and really have no idea how to invest – or even have the desire to invest. While defaults into life-cycle and similar investment vehicles address some of these issues, we worry that there are substantial differences in lifestyle fund allocations (some are still heavily equity-oriented at later ages and others are not). No matter what we know, we may misjudge the markets or invest wrong. Some people will put some of their money into life-cycle funds but invest in other funds that end up distorting the idea behind life-cycle funds. Many such funds also add a new layer of fees.
  • CNN/Money/Fortune: Why layoffs are for lazy corporate overseers. By Eleanor Bloxham, CEO of The Value Alliance. Excerpts: Probably every worker today has experienced -- or known someone who has experienced -- at least one layoff. Layoffs are an abomination -- for the pain they cause innocent victims -- and the lack of accountability they often represent. ...

    Many workers today don't know of a world without layoffs. But they haven't always been common. I was in New York attending a disaster recovery conference in 1992 when IBM announced its very first layoff. I remember the shock among the IBMers attending that conference. The Big Blue rug had been pulled out from under them, and they told me they would never feel the same way about IBM again. ...

    Large corporations, labor, and government all realized job security was in their mutual best interests, beginning in the late 1800s, he said. When layoffs did happen in the 1930s, the government stepped in. Politicians of all stripes agreed that job security was important -- and job security increased over time until the mid-1970s. Since then, "we've been going away from it."

    The corporate movement away from job security coincided with the advent of big executive bonuses and the rise of global competition. Consulting firms seized the moment and devised practices to teach companies how to eliminate staff.

    But the recommendations of the consulting firms are not agnostic. They rarely, if ever, recommend cutting the heads of those who hired them.

    Compensation also insulates most executives from layoff shocks. Executive compensation has changed dramatically since the mid-1970s. Today, top executives receive huge bonuses that they can stash away, shielding them from any layoff distress should it strike them. In contrast, the workers most subject to cuts are unable, given their wage rates, to scrape together that level of financial freedom. ...

    HP's Meg Whitman has a net worth of $1.7 billion, according to Forbes (as of September 2012). And the company is in such bad shape, it seems, that it needs to cut nearly 30,000 employees. So the HP board used its own "pay for performance philosophy" to justify annual compensation of over $15 million for Whitman for 2012. While her 2012 office may have been small (you can see it here), the accounting showed she traveled in grand style last year. Her paycheck included $200,000 for personal aircraft use. (That alone is the equivalent of a job or two.)

    What happened to the idea of shared pain? One of the most insincere signs I see hanging in some corporate offices is the poster that says, "TEAM – together everyone achieves more." Boards should make sure they live up to that sign -- or take it off the wall.

  • Washington Post: Steering America toward a more secure retirement. By Harold Meyerson. Excerpts: To the let’s-cut-entitlements crowd, what’s wrong with America is that seniors are living too high off the hog. With the cost of medical care still rising (though not as fast as it used to), the government is shelling out many more dollars per geezer (DPG) than it is per youngster (DPY). The solution, we’re told, is to bring down DPG so we can boost DPY.

    We do indeed need to boost DPY. And we need to rein in medical costs by shifting away from the fee-for-service model of billing and paying. But as for changing the way we calculate cost-of-living adjustments for seniors to keep us from overpaying them — an idea beloved of Bowles, Simpson, Republicans and, apparently, the White House — this may not be such a hot idea, for one simple reason: An increasing number of seniors can’t afford to retire.

    Nearly one in five Americans age 65 and over — 18.5 percent — were working in 2012, and that percentage has been rising steadily for nearly 30 years. In 1985, only 10.8 percent of Americans 65 and older were still on the job, and in 1995, that figure was 12.1 percent. ...

    What advocates for reducing Social Security adjustments fail to consider is that corporate America’s shift away from defined-benefit pensions to defined-contribution 401(k) plans — or to no retirement plans at all — has diminished seniors’ non-Social Security income and made the very idea of retirement a far more risky prospect. Today, more than half of U.S. workers have no workplace retirement plan. Of those who do, just 35 percent still have defined-benefit pensions. In 1975, 88 percent of workers with workplace retirement plans had defined-benefit pensions. ...

    The shift from traditional pensions to 401(k)s is one of the main reasons most seniors aren’t able to set aside enough income to guarantee a secure retirement. A 2010 survey by the Federal Reserve found that the median amount saved through 401(k)s by households approaching retirement was $100,000 — not nearly enough to support those households through retirement years, as seniors’ life expectancy increases. And as most Americans’ wages continue to stagnate or decline, their ability to direct more of their income to 401(k)s diminishes even more.

    With the eclipse of the defined-benefit pension, Social Security assumes an even greater role in the well-being of American seniors. But advocates of entitlement cuts don’t even discuss the waning of other forms of retirement security: Listening to Alan Simpson, you’d never know that America’s elderly aren’t getting the monthly pension checks their parents got.

    And it’s not as if those employers are suffering. Just as U.S. businesses have been able to raise the share of corporate profits to a half-century high by reducing the share of their workers’ wages to a half-century low, so, too, their ability to reduce pension payments has contributed not just to their profits but also to the $1.7 trillion in cash on which they are currently sitting.

  • AARP: Can you really count on working until you're 70 — or older? by Jane Bryant Quinn. There's a myth going around that I'd like to swat down. It's supported by working people — maybe even you — who aren't saving enough money to live comfortably when their paychecks stop. The myth says you'll be OK, even if you don't increase your 401(k) contributions or other savings. You'll make up for your small nest egg by working longer. The usual phrase is, "I'll work till I drop."

    Many retirement experts tell the same tale. If everyone works and saves until 70, most of the retirement income problem does go away.

    That's a big "if." In 2011, only 32.3 percent of men and 18.7 percent of women age 70 or older were still employed in some capacity, the Bureau of Labor Statistics reports.

    "It's terrible public policy to advise people that they can plan on solving their financial problems by working longer," says Jack VanDerhei, research director of the Employee Benefit Research Institute (EBRI). "You should take control of your retirement now, while you have the chance." That means reducing expenses and pouring everything you can into savings during the time you have left to work.

    You might be able to stay employed until 70 if you're healthy, lucky, well-off, work for a company that keeps older employees, or run a business of your own. But the more familiar story is that of older workers forced out of jobs they'd hoped to keep.

    Half of the people retired today say they left work early and unexpectedly, most because of health problems, disability or changes such as downsizing, according to an EBRI survey. Those aren't great odds, if you're counting on working to pay the bills.

  • Wall Street Journal: Say Goodbye to the 4% Rule. If the conventional wisdom no longer holds about spending in retirement, what are the alternatives? Here are three of them. By Kelly Greene. Excerpts: Can your nest egg last your whole lifetime? It's getting tougher to tell.

    Conventional wisdom says you can take 4% from your savings the first year of retirement, and then that amount plus more to account for inflation each year, without running out of money for at least three decades.

    This so-called 4% rule was devised in the 1990s by California financial planner William Bengen and later refined by other retirement-planning academics. Mr. Bengen analyzed historical returns of stocks and bonds and found that portfolios with 60% of their holdings in large-company stocks and 40% in intermediate-term U.S. bonds could sustain withdrawal rates starting at 4.15%, and adjusted each year for inflation, for every 30-year span going back to 1926-55.

    Well, it was beautiful while it lasted. In recent years, the 4% rule has been thrown into doubt, thanks to an unexpected hazard: the risk of a prolonged market rout the first two, or even three, years of your retirement. In other words, timing is everything. If your nest egg loses 25% of its value just as you start using it, the 4% may no longer hold, and the danger of running out of money increases. ...

    "The mind-blowing aspect of retiring is all these years you're accumulating and accumulating, and then you need to start drawing down, and you have no idea how to do that," says Al Starzyk, a 66-year-old retired printing executive in Williamsburg, Va.

  • Huffington Post: Retirement Index Ranks United States 19th In Quality Trailing Behind Most Industrial Nations. By Anthonia Akitunde. Excerpts: Retirement as the previous generation has known it is taking a beating thanks to diminished incomes, a need to tap into 401(k)s early and ongoing battles over how long the government can continue to fund entitlement programs such as Social Security and Medicare. But some may be shocked to find out how the United States stacks up against other nations when it comes to the quality of its citizens' retirement.

    The United States came in 19th place for retirement quality in a new study released today by Natixis, a global investment management company. The study looked at a number of publicly available data points for 150 countries, including health (e.g. physicians per 1,000 people), material well-being (e.g. unemployment and income equality), finances (e.g. inflation index) and quality of life (e.g. pollution rates and recorded happiness). Norway, Switzerland and Luxembourg took the top three spots. ...

    Health care is one area the United States didn't perform so well in, ranking lower on available hospital beds and physicians per 1,000. While the U.S. is just getting started on having policy discussions on how to reduce the cost of healthcare, the countries who bested the U.S. are much further along.

    Health care expenses can cripple one's retirement savings. According to a Senate report, there is a $6.6 trillion gap between what people need for retirement and what they have saved. "The reason why people have underfunded retirement is because health care needs get incrementally more expensive as you get into your retirement years.

  • Huffington Post: 9 Tips To Jumpstart Your Retirement. By Alexis Abramson, Ph.D. Excerpts: Who hasn't fantasized about retirement? No more time clocks to punch, early-morning alarm clocks to set, rush hour traffic to fight, or uncomfortable heels or cranky early morning kids to deal with. Nothing but leisurely days to travel, enjoy your family or do whatever you wish.

    For many Americans, unfortunately, reality doesn't match fantasy, and a life of retirement isn't necessarily a life of bliss. Particularly for men, retirement can lead to feelings of isolation, depression or low-esteem as their identity as provider for the family changes. A lack of funds can make frequent travel difficult or off limits. Couples who have stuck together through decades of work and child-rearing may find their marriages suffer too when one spouse is suddenly around ALL THE TIME!

  • Mother Jones: How H-1B Visas Are Screwing Tech Workers. A program meant to boost innovation instead fuels outsourcing. By Josh Harkinson. Excerpts: A few years ago, the pharmaceutical giant Pfizer informed hundreds of tech workers at its Connecticut R&D facilities that they'd soon be laid off. Before getting their final paychecks, however, they'd need to train their replacements: guest workers from India who'd come to the United States on H-1B visas. "It's a very, very stressful work environment," one soon-to-be-axed worker told Connecticut's The Day newspaper. "I haven't been able to sleep in weeks."

    Established in 1990, the federal H-1B visa program allows employers to import up to 65,000 foreign workers each year to fill jobs that require "highly specialized knowledge." The Senate's bipartisan Immigration Innovation Act of 2013, or "I-Squared Act," would increase that cap to as many as 300,000 foreign workers. "The smartest, hardest-working, most talented people on this planet, we should want them to come here," Sen. Marco Rubio, (R-Fla.) said upon introducing the bill last month. "I, for one, have no fear that this country is going to be overrun by PhDs." ...

    But in reality, most of today's H-1B workers don't stick around to become the next Albert Einstein or Sergey Brin. ComputerWorld revealed last week that the top 10 users of H-1B visas last year were all offshore outsourcing firms such as Tata and Infosys. Together these firms hired nearly half of all H-1B workers, and less than 3 percent of them applied to become permanent residents. "The H-1B worker learns the job and then rotates back to the home country and takes the work with him," explains Ron Hira, an immigration expert who teaches at the Rochester Institute of Technology. None other than India's former commerce secretary once dubbed the H-1B the "outsourcing visa."

    Of course, the big tech companies claim H-1B workers are their last resort, and that they can't find qualified Americans to fill jobs. Pressing to raise the visa cap last year, Microsoft pointed to 6,000 job openings at the company.

    Yet if tech workers are in such short supply, why are so many of them unemployed or underpaid? According to the Economic Policy Institute (EPI), tech employment rates still haven't rebounded to pre-recession levels. And from 2001 to 2011, the mean hourly wage for computer programmers didn't even increase enough to beat inflation.

    The ease of hiring H-1B workers certainly hasn't helped. More than 80 percent of H-1B visa holders are approved to be hired at wages below those paid to American-born workers for comparable positions, according to EPI. Experts who track labor conditions in the technology sector say that older, more expensive workers are particularly vulnerable to being undercut by their foreign counterparts. "You can be an exact match and never even get a phone call because you are too expensive," says Norman Matloff, a computer science professor at the University of California-Davis. "The minute that they see you've got 10 or 15 years of experience, they don't want you."

    A 2007 study by the Urban Institute concluded that America was producing plenty of students with majors in science, technology, engineering, and math (the "STEM" professions)—many more than necessary to fill entry-level jobs. Yet Matloff sees this changing as H-1B workers cause Americans to major in more-lucrative fields such as law and business. "In terms of the number of people with graduate degrees in STEM," he says, "H-1B is the problem, not the solution."

New on the Alliance@IBM Site
  • Job Cut Reports
    • Comment 03/02/13: "Maybe we're all wrong and there will be no big RA this year?" That should not give any IBMer any comfort whatsoever! RAs will continue: small ones, big one. RAs will continue till little USA employees remain. An RA comes like a thief. You don't know when though. If it is not an official RA it is a "Stealth" or "Sniper" layoff/firings that affect a single person to a few (like a department) happen regularly now. Trying to find a date trend with RAs would be too predictable; IBM management is not predictable. IBM can't make their Roadmap 2015 without RAs since IBM management DOES NOT KNOW AND CANNOT GROW REVENUE. You want to stop an RA? Join the Alliance. Join now. -Roadkill2013-
    • Comment 03/02/13: Interesting. No comments yet on the GBS announcement that all employees must work a 44 hour week... -anonymous-
    • Comment 03/03/13: I doubt that IBM will do an RA in November knowing how it would look. Remember they are concerned with how this will look to the business world who are waiting to adopt this policy. I would think they would do their last RA around Aug/Sept and not risk the "appearance" of screwing the employee's just before 12/15. Just look at all of the IBM press stuff it is done to "keep" a stellar image. -benthere-
    • Comment 03/03/13: I heard from a reliable source that a huge RA was called off for this quarter. If you knew who I really was you would know I don't use the word "reliable" very often. -Anonymous-
    • Comment 03/03/13: It looks like they will mix up the RA schedule to keep us guessing this year. They will probably still go with the 30-day prior to quarter end but maybe 2Q or 3Q. So, maybe end of May or end of August this year? -Anonymous-
    • Comment 03/03/13: To Anonymous: Why was the huge RA called off? Did your reliable source say? Was it simply just postponed and until when? -Anonymous2-
    • Comment 03/04/13: "I doubt that ibm will do an RA in November knowing how it would look." I doubted IBM would legally steal about 1/2 of my pension back in 1999. IBM didn't care they got called to Congress to try to explain themselves. They did it anyway to us now so-called non-choicers. IBM has managed out or caught in an RA employees just short of qualifying for the bridge to retirement when these folks were solid PBC 1 and PBC 2+ performers. IBM doesn't care how any of their actions look in the public forum. IBM does what is best for IBM, period. The almighty $ and greed rule IBM. Cut the worry and doubt when an RA *might* happen. Join the Alliance and do something to try to prevent an RA! -Mr.Doubtfire-
    • Comment 03/04/13: Mix up the RA schedule to keep us guessing? That's rich. Does the shooter really worry about what the fish in the barrel are guessing? At the time and the place of their choosing, IBM will end your career for you if its you they choose. Never ask for whom the bell tolls. It tolls for you. -Exodus2007-
    • Comment 03/04/13: anonymous - on GBS 44 hr weeks. That has been in place for the last 8+ years. -GBS 44 hrs-
    • Comment 03/05/13: Watch your W2 and paycheck; mine has been messed up. The Philippines is out of control and clueless. All of your personal information is at risk. -BigBlew Worker-
    • Comment 03/05/13: I hear there is a "take time" program in play for US employees. I don't see any info on w3. Described as: take personal time, for whatever reason, for one-third pay. -Anonymous-
    • Comment 03/05/13: Interesting that an RA was cancelled this quarter as well. I'd heard directly from someone in HR there was a huge RA scheduled in November, but that never materialized either. I wonder what's up with that? -Out & Glad-
    • Comment 03/05/13: The RA was probably called off since the DOW stock market is almost at all time high. IBM doesn't want to rock the boat in any way to disturb it's rising stock price which might reach a record high soon. IBM is all about greed now. Their timing and financial engineering with fuzzy non-GAAP accounting and math is impeccable (but I'm not saying that as a compliment)! -maybe_maybe-v
    • Comment 03/05/13: GDP was yet again a joke. Told to be happy for any scraps at all. Think executives will go without bonuses? I doubt it. Greed rules the day at Big Blue. Seeking alternate employment while praying to be RAd. My work will reflect my unjustified change in rating and poor pay until I go or they boot me. Why continue to put in the effort if they won't recognize it? -Anonymous14yr-
    • Comment 03/06/13: Interesting... was just ordered by my manager to sign up for the Client Experience Jam and participate. The interesting part is that it has been made very clear that my opinion is not wanted or welcome by any of my leadership... so I guess I will throw in a couple of "I love IBM's" somewhere along the way. -IndiaBusinessMachines-
    • Comment 03/06/13: I know nothing is guaranteed without a contract, but I've heard from two different sources (both managers) that there will be no more severance with an RA. In one case, several band 10s were called to a hotel, and were given the boot with nothing. Just fired (not for any violation of BCG). On another note, people are resigning left and right, but a lot of folks are getting hired too. Constant ebb and flow in and out. This is in crappy GBS. What a horribly managed division. The execs ought to be ashamed of themselves (looking at you George Metz) -F IBM-
    • Comment 03/07/13: "Comment 03/02/13: Interesting. No comments yet on the GBS announcement that all employees must work a 44 hour week... -anonymous-" Wow, GBS must have cut back on the hours expected. When I worked there, the expectation was more like 60 or more, not including another 12 hours a week of traveling to your gig. -FormerIBMer-
    • Comment 03/08/13: All, please see the letter that both Vermont senators sent to Ginny Rometty directly, asking her to reconsider the 401K match change to a once yearly IBM contribution. Both senators clearly state how unfair this is of IBM, noting its 40 straight quarters of profit increases. To the Alliance team, please change your petition to be directed to Ginny, not Randy MacDonald. Ginny needs to be called to task for this change, as it went into effect under her leadership. Also, if North Carolina IBMers forward the VT senators letters to our senators, asking for them to petition Ginny, we can start a "wave of shame"! -Trying to help-
    • Comment 03/08/13: I was part of the March 2009 RA list. You should never feel safe. You should never sit still. In 2008 and 2009 I was making $X per year. Now, after being let go from IBM, in 2013 I am making $2X per year. Do not let down your guard. Executives are planning the next action and you have no say in the matter without working together. -Clam-
    • Comment 03/08/13: Several contractors got the boot today. -ginny pooh-
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
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  • Politico: To contain health care costs, pay doctors differently. By Bill Frist and Steven Shroeder. Excerpts: Lawmakers have spent decades dancing around how to stop health care costs from eating up greater and greater portions of our overall budget. Even now, the proposals on the table look at cuts in services, asking seniors covered under Medicare to pick up a higher proportion of out-of-pocket costs or assessing whether to eliminate the sustainable growth rate formula aimed at controlling Medicare spending on physicians. These proposals, at best, address the problem of health spending at the margins.

    The real culprit here is fee-for-service payment to doctors.

    We cannot control runaway medical spending without changing how physicians in this country are paid — currently the single most significant driver of health care costs. We pay physicians according to the number of services they provide. The skewed financial incentives inherent in a fee-for-service model promote fragmented care and encourage doctors to provide more — and more costly — care, regardless as to whether those services improve the health of patients. ...

    The current system places an emphasis on high-technology care and interventions, such as imaging and surgery. Services provided by surgeons, radiologists and other procedural specialists are reimbursed at a much higher rate than critical wellness visits with a primary care physician or office visits to discuss diabetes care. This reimbursement model discourages doctors from spending time with patients, particularly those with complex chronic illness, and has fueled the widening pay gap between specialties and the nation’s primary care shortage. ...

    his same pay structure is influencing the number and type of services that physicians recommend and even where those services are done. Under Medicare, medical services performed in outpatient facilities are reimbursed at a lower rate than the same services provided in hospitals. For example, Medicare pays $450 for an echocardiogram done in a hospital and $180 for the same procedure in a physician’s office. That makes no sense. ...

    Bill Frist, a physician, is a former Republican senator from Tennessee and Senate majority leader, and Steven Schroeder is a professor of health and health care in the department of medicine at the University of California, San Francisco. The two men co-chair the National Commission on Physician Payment Reform, which has issued a report providing recommendations aimed at controlling health spending by changing the way doctors are paid.

  • Washington Post: An average ER visit costs more than an average month’s rent. Posted by Sarah Kliff. Excerpts: Steve Brill’s recent Time cover story, for me, drove home one key point: Prices in our health-care system are absurd. They range dramatically depending on where you seek treatment and what type of health insurance coverage you have.

    Brill examined seven medical bills in his story to make this point. A new, NIH-funded study takes the idea even further: A team of four researchers looked at medical expenditure bills that represented more than 8,303 emergency room visits.

    They found, essentially, two things. First, huge variation in prices: Bills sent out for sprained ankles ranged from $4 to $24,110. Second, overall, really high prices: The average emergency room visit now costs 40 percent more than a month’s rent. ...

    A headache could cost $15 — or $17,797. There was a difference of more than $70,000 between the most and least costly treatments for a urinary tract infection.

  • Forbes: Health Costs Slow To Lowest Rate In 15 Years As Employer Commitment To Benefits Wanes. By Bruce Japsen. Excerpts: Employer health care costs slowed this year to a five percent increase, the slowest growth in 15 years, but just one in four companies say they are “very confident” they will offer medical benefits 10 years from now even as more costs are shifted to their workers, a new analysis shows. ...

    The slowing of the rate of health care cost increases comes amid a sluggish economy and a period of high unemployment that has made it easier for companies to reduce benefits of their workers. And like other surveys, the Towers Watson report shows employers are continuing to shift the cost of the total premium onto their workers with the employee share of the costs rising to 37 percent this year from 34 percent in 2011. ...

    In the meantime, employers will continue to deal with health care costs by raising the share of total costs on workers. More than 80 percent of the survey’s respondents said they will continue to increase the share of company-paid premiums onto their workers.

  • GoodRx: Compare drug prices at over 70,000 pharmacies, and discover free coupons and savings tips. Even if you have insurance or Medicare, GoodRx can often find you a better price!
  • Consumer Reports: Can a phone app help you find cheaper drugs? We compared four and found only one that worked well.
  • New York Times: Workers’ Share of Health Costs Is Likely to Continue Rising. By Ann Carrns. Excerpts: Workers are paying a greater share of their health care costs, and that trend is likely to continue over the next several years, a new report on employer-based health plans finds.

    Employers still bear most of the cost of workplace health plans. But employees contribute 42 percent more for heath plan coverage than they did five years ago, as against a 32 percent increase for employers, according to the study from the benefits consultant Towers Watson and the National Business Group on Health, a nonprofit industry group whose members are large employers concerned rising about health care costs. (This change is shown in the graphic above.)

    Meanwhile, though, the share of the total cost of health care borne by employees, including both premiums and costs paid out-of-pocket, climbed to 37 percent in 2013, from 34 percent in 2011, the report found.

    Annual salary increases, meanwhile, have averaged less than 2 percent percent over the last three years, so workers are losing ground. “From a total rewards perspective, ” the report concludes, “rising health care contributions are taking their toll on employee take-home pay.” ...

    Employees paid, on average, about 23 percent of total premium costs last year, and are expected to pay nearly a quarter in 2013, as companies take steps to control their costs. In terms of paycheck deductions, this translates into an average employee contribution of $2,658 to premiums in 2012. That is expected to rise to $2,888 in 2013 — an increase of nearly 9 percent in one year.

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.

  • Wall Street Journal: More U.S. Profits Parked Abroad, Saving on Taxes. Excerpts: U.S. companies are making record profits. And more of the money is staying offshore, and lightly taxed.

    A Wall Street Journal analysis of 60 big U.S. companies found that, together, they parked a total of $166 billion offshore last year. That shielded more than 40% of their annual profits from U.S. taxes, though it left the money off-limits for paying dividends, buying back shares or making investments in the U.S. The 60 companies were chosen for the analysis because each of them had held at least $5 billion offshore in 2011.

    The practice is a result of U.S. tax rules that create incentives for companies to maximize the earnings, and holdings, of foreign subsidiaries. The law generally allows companies to not record or pay taxes on profits earned by overseas subsidiaries if the money isn't brought back to the U.S.

    Big American companies are booking more of their sales in faster-growing foreign markets. But companies also are moving more of their earnings overseas by assigning valuable patents and licenses to foreign units. ...

    The amount of money at stake is significant, particularly when the U.S. budget deficit is high on the political agenda. Just 19 of the 60 companies in the Journal's survey disclose the tax hit they could face if they brought the money back to their U.S. parent. Those companies say they might have to pay $98 billion in additional tax—more than the $85 billion in automatic-spending cuts triggered this month after the White House and Congress couldn't agree on an alternative. ...

    The Joint Committee on Taxation estimates that changing the law to fully tax overseas earnings would generate an additional $42 billion for the Treasury this year alone. Congress enacted a temporary tax holiday in 2004, prompting companies to repatriate $312 billion in foreign earnings. The law was intended to stimulate the U.S. economy, but studies found that few jobs were created and most of the money was used to repurchase shares and pay dividends. Another such holiday is considered unlikely in the next few years. ...

    A Senate committee last year found that many tech and health-care companies have shifted intellectual property—such as patent and marketing rights—to subsidiaries in low-tax countries. The companies then record sales and profits from these lower-tax countries, which reduces their tax payments. "There are opportunities to basically wipe away your tax on your intellectual property," says Ms. Blouin, the Wharton professor.

  • Huffington Post: General Electric Avoids Taxes By Keeping $108 Billion Overseas. By Bonnie Kavoussi. Excerpts: It has become increasingly common for companies to move or keep their profits overseas. The biggest U.S. companies boosted their offshore cash hoards by 14 percent last year, according to a separate Bloomberg report. Apple, Microsoft and Google together have more than doubled their overseas holdings over the past two years. The drugmakers Merck and Johnson & Johnson each saved about $2 billion last year by shifting profits overseas, according to Bloomberg.

    Bloomberg reported that some congressmen, including Sen. Charles Grassley (R-Iowa), want to crack down on corporate tax avoidance.

    "GE did not get a tax refund in 2010, and in fact paid U.S. federal income tax and more than $1 billion in other federal, state and local taxes in the U.S. for 2010," Martin wrote in an email to HuffPost. "GE’s overall tax rate for 2010 was low because we lost $32 billion in our financial business during the global financial crisis."

    But GE has come under fire for its light tax burden. Though it has been earning billions in profits, it paid an average tax rate of just 1.8 percent between 2002 and 2011, according to Citizens for Tax Justice. GE CEO Jeff Immelt has said that the U.S. tax system is "old, complex and uncompetitive" and has had a "hugely negative impact" on the economy.

  • New York Times: A Stealth Tax Subsidy for Business Faces New Scrutiny. By Mary Williams Walsh and Louise Story. Excerpts: The last time the nation’s tax code was overhauled, in 1986, Congress tried to end a big corporate giveaway. But this valuable perk — the ability to finance a variety of business projects cheaply with bonds that are exempt from federal taxes — has not only endured, it has grown, in what amounts to a stealth subsidy for private enterprise.

    A winery in North Carolina, a golf resort in Puerto Rico and a Corvette museum in Kentucky, as well as the Barclays Center in Brooklyn and the offices of the Goldman Sachs Group and the Bank of America Tower in New York — all of these projects, and many more, have been built using the tax-exempt bonds that are more conventionally used by cities and states to pay for roads, bridges and schools.

    In all, more than $65 billion of these bonds have been issued by state and local governments on behalf of corporations since 2003, according to an analysis of Bloomberg bond data by The New York Times. During that period, the single biggest beneficiary of such securities was the Chevron Corporation, which issued bonds with a total face value of $2.6 billion, the analysis showed. Last year it reported a profit of $26 billion.

    At a time when Washington is rent by the politics of taxes and deficits, select companies are enjoying a tax break normally reserved for public works. This style of financing, called “qualified private activity bonds,” saves businesses money, because they can borrow at relatively low interest rates. But those savings come at the expense of American taxpayers, because the interest paid to bondholders is exempt from taxes.

    What is more, the projects are often structured so companies can avoid paying state sales taxes on new equipment and, at times, avoid local property taxes. While some deals might encourage businesses to invest where they might otherwise not have invested, there are few guarantees that job creation or other economic benefits actually occur.

    Budget analysts say these bonds amount to a government subsidy, in the form of forgone tax revenue. While it is difficult to calculate the precise dollar amount of the subsidy, given the number and variety of these bonds, experts say the annual cost to federal taxpayers could run into the billions.

  • New York Times opinion: The Republican Party’s “Donorism” Problem. By Ross Douthat. Excerpts: Politico’s Jonathan Martin has a good piece today about the divide between conservative policy writers and Republican politicians, and the absence (which I’ve touched on recently) of any actual G.O.P. elected officials willing to champion the various reformist ideas that have been floating around right-of-center journals and magazines and blogs recently (and really for years now). I agree with most of the people quoted in the piece — and particularly Bill Kristol and Ramesh Ponnuru, who both bemoan the absence of domestic policy entrepreneurism among the party’s backbenchers. But Martin’s conversation the American Enterprise Institute’s Jim Pethokoukis seemed particularly worth highlighting:
    … Pethokoukis has been particularly outspoken about the need for Republicans to detach themselves from the banks … In an interview, the think tanker said, “The banks need to be downsized, broken up or at least restructured in some fashion. But that view has made little penetration with the politicians.”

    And Pethokoukis says part of the reason for that is something that inhibits other policy reforms: donorism.

    “The campaign money may be playing a role,” he acknowledged.

    With ambitious politicians trekking to Wall Street to raise cash and frequently sending their former staffers to lobby for the banks on K Street, the ardor elected Republicans may have for cracking down on financial institutions is diminished.

    Every battle within the G.O.P. tends to be explained in moderate-vs.-conservative terms, and when the subject of policy innovation comes up it’s usually framed as a matter of sensible centrists trying to push their ideas against an intransigent right-wing base. But financial reform is just one of the many areas where the divide might be aptly described as a “donorist” (to borrow Martin’s phrase) versus “populist,” and where the party’s rank-and-file and their tribunes might actually be more receptive to new policy ideas than the self-described moderates who often write the party’s biggest checks.

  • New York Times opinion: The War On Entitlements. Thomas B. Edsall. Excerpts: The debate over reform of Social Security and Medicare is taking place in a vacuum, without adequate consideration of fundamental facts.

    These facts include the following: Two-thirds of Americans who are over the age of 65 depend on an average annual Social Security benefit of $15,168.36 for at least half of their income.

    Currently, earned income in excess of $113,700 is entirely exempt from the 6.2 percent payroll tax that funds Social Security benefits (employers pay a matching 6.2 percent). 5.2 percent of working Americans make more than $113,700 a year. Simply by eliminating the payroll tax earnings cap — and thus ending this regressive exemption for the top 5.2 percent of earners — would, according to the Congressional Budget Office, solve the financial crisis facing the Social Security system.

    So why don’t we talk about raising or eliminating the cap – a measure that has strong popular, though not elite, support?

    When asked by the National Academy of Social Insurance whether Social Security taxes for better-off Americans should be increased, 71 percent of Republicans and 97 percent of Democrats agreed. In a 2012 Gallup Poll, 62 percent of respondents thought upper-income Americans paid too little in taxes. ...

    Cutting benefits is frequently discussed in the halls of Congress, in research institutes and by analysts and columnists. The idea of subjecting earned income over $113,700 to the Social Security payroll tax and making the Medicare tax more progressive – steps that would affect only the relatively affluent — is largely missing from the policy conversation. ...

    Theda Skocpol, a professor of government and sociology at Harvard and an authority on the history of the American welfare state, contended in a phone interview that policy elites avoid addressing the sharply regressive nature of social welfare taxes because, “at one level, it’s very, very privileged people wanting to make sure they cut spending on everybody else” while “holding down their own taxes.” ...

    Gary Burtless, a senior fellow in economic studies at the Brookings Institution, agrees that elite proponents of cutting benefits for the elderly have a narrow view based on their own high incomes and comfortable lives: “The median voter has a much more well-rounded sense of the risks associated through everyday life than the elite,” he said in an interview. ...

    Contrary to the claims Heritage is making, current levels of federal taxation are at historically low levels, and the increases needed to finance restoration of the Social Security trust fund will not break the bank.

    Federal tax revenues in 2009, 2010 and 2011 have been 15.1 percent, 15.1 percent and 15.4 percent of Gross Domestic Product, lower than any level since 1950.

    The Congressional Budget Office estimates that the amount of new revenue required to bring the Social Security trust fund into balance over the next 75 years would amount to 0.6 percent of G.D.P.

    The same C.B.O. document presents a series of alternative ways to achieve such a goal, including the elimination of the current $113,700 cap on income subject to the Social Security payroll tax. If the cap or ceiling were lifted, the amount of money raised would be 0.6 percent of G.D.P., the exact amount of income needed to get Social Security out of the red — a striking coincidence. ...

    Elite anxiety over entitlement-driven budget deficits and accumulating national debt has created a powerful class in the nation’s capital. The agenda of this class is in many respects on a collision course with mounting demands for action by those lower down the ladder to address the threat to government social insurance programs. Intransigent opposition by the better off and their representatives to raising the necessary revenue means that not only Social Security and Medicare face a budgetary ax. ...

    In this kind of conflict over limited goods, one of the most valuable resources that can get lost in the fray is the wisdom of the electorate at large. In this case, the electorate is pointing toward progressive tax increases for those closer to the top far more readily than members of the political class, for whom high-earners are a crucial source of campaign contributions. The very nature of the basic security Americans are entitled to is at stake.

  • The Smirking Chimp: Whiny Billionaires in Need of Sequestration. By Robert Scheer. Excerpts: The suddenly increased national debt is primarily the result of a deep recession caused by the top bankers and hedge fund hustlers of Wall Street, saved from their folly by massive and costly federal intervention. The result has been a season of obscene profit for them, while the rest of the nation has floundered. But instead of making the rich pay, ordinary citizens will be visited with job furloughs and a savaging of public services that often are lifesaving.

    Consider two stories this week that make Karl Marx look prescient: one, in The Wall Street Journal, concerns the payout of $1 billion in bonuses to nine private equity executives; the other, under a New York Times headline, states that the jobless recovery has been a boondoggle for corporate profits. “Recovery in U.S. Is Lifting Profits, but Not Adding Jobs,” the headline reads, by way of explaining why the stock market is nearing its unprecedented high while the unemployment picture remains so dismally bleak.

    But whenever a politician dares to hold those “fat cats” accountable, as Barack Obama once did, he or she is branded by apologists for the super rich as a socialist engaging in class warfare. The outrage of the entitled as opposed to the despair of the dispossessed is the cultural norm, as evidenced by Stephen Schwarzman, one of the more egregious of those private equity billionaires.

    What is truly outrageous about Schwarzman is not the $213.3 million he got last year from Blackstone, the private equity company where he has long been the CEO. Heck, he “earned” that much the previous year and has been raking it in since he co-founded the company back in 1985. What is startling, and it goes to the hubris of America’s most wealthy at the heart of the current sequester impasse, is that he thinks the more than $1 billion he and eight other private equity executives got in compensation last year should continue to be taxed at the “carried interest” rate of 15 percent, rather than the 35 percent reserved for ordinary income.

  • Huffington Post: Jim Himes, Former Goldman Sachs Executive, Introduces Bill To Roll Back Key Element Of Dodd-Frank. By Chelsea Kiene. Excerpts: Rep. Jim Himes (D-Conn.), a former Wall Street executive, is joining Rep. Randy Hultgren (R-Ill.) to introduce legislation that would undercut one of the most meaningful elements of the 2010 Dodd-Frank Wall Street Reform Act.

    The bill would "allow banks to keep commodity and equity derivatives in federally insured units," Politico reported on Wednesday, meaning that banks would no longer be forced to spin off their trading desks. It would weaken Dodd-Frank's "push out" provision, otherwise known as the Prohibition Against Federal Government Bailouts of Swaps Entities, which bars federal assistance from being provided to any swaps entity.

    Derivatives -- which Warren Buffett has referred to as “financial weapons of mass destruction” -- are viewed as a key trigger of the 2008 economic crisis.

  • Huffington Post: Costco CEO: Raise The Minimum Wage To More Than $10 Per Hour. By Bonnie Kavoussi. Excerpts: On Tuesday, Costco CEO and President Craig Jelinek came out in support of the Fair Minimum Wage Act of 2013, which aims to raise the federal minimum wage to $10.10 per hour, then adjust it after that for inflation.

    "At Costco, we know that paying employees good wages makes good sense for business," Jelinek said in a statement. "We pay a starting hourly wage of $11.50 in all states where we do business, and we are still able to keep our overhead costs low."

    "An important reason for the success of Costco’s business model is the attraction and retention of great employees," Jelinek added. "Instead of minimizing wages, we know it's a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty. We support efforts to increase the federal minimum wage."

    Costco has a reputation for paying its employees above market rate, with the typical worker earning around $45,000 in 2011, according to Fortune. Walmart-owned Sam's Club, in contrast, pays its sales associates an average of $17,486 per year, according to salary information website Glassdoor.com.

    Costco also provides health insurance to a significantly larger percentage of its workers than does Walmart, the Harvard Business Review reported in 2006.

  • Reuters: Health insurers launch TV war over Medicare Advantage cuts. Excerpts: The health insurance industry is escalating its lobbying battle against a proposed Medicare Advantage pay cut to insurers by launching a television and online advertising campaign to garner public support among the program's 14 million beneficiaries.

    America's Health Insurance Plans (AHIP), a leading Washington-based trade group, said a 30-second commercial titled "Too Much" would be shown in a dozen states and the Washington, D.C., area in hopes of dissuading the Obama administration from imposing a 2.3 percent cut in government payments next year.

    The commercial, presented by an industry-sponsored group called the Coalition for Medicare Choices, fails to mention that the payment cuts are aimed at insurers, not beneficiaries.

  • Huffington Post: Getting the Record Straight on Health Care Reform. By Steve Westly and Jeffrey Pfeffer. Excerpts: Many people criticize the Affordable Care Act (sometimes called Obamacare) with misleading and factually incorrect implications. But distortions, repeated often enough, too often come to be taken as truth. It is important, therefore, to be clear on the many virtues of ACA and its effects on employees....

    The second fallacy is often called "the perfect is the enemy of the good." There is no question that employers will try to game the Obamacare rules. Employers currently try to game overtime rules and regulations defining who is and is not an employee to avoid paying payroll taxes; there have been numerous high-profile settlements (think Microsoft among others) penalizing companies for incorrectly classifying employees as independent contractors. While Obamacare is not perfect, providing health coverage to more people is desirable, both from the moral standpoint of stopping the 50,000 needless deaths that occur each year because people do not have access to health care, and from an economic standpoint of increasing workplace productivity and job mobility. Waiting for a law that ensures employers won't engage in any attempts to game the system will paralyze us from ever achieving any progress. ...

    The most pernicious fallacy about ACA pertains to "costs." As OECD and World Health Organization data amply demonstrate, health care costs too much in the U.S. and delivers health outcomes below those of many other developed nations. The problem is partly one of getting care too late--in the emergency room rather than when disease is less advanced and more easily treated. That's why initial evaluations of Healthy San Francisco show a reduction in emergency room visits when people are able to see primary care doctors. But Obamacare also puts in place several paths to improve quality, efficiency, and outcomes -- reducing hospital re-admissions, health care associated infections, and fraud and waste, among others. And, by expanding health care coverage, Obamacare will eliminate the billions of dollars of lost productivity from an unhealthy workforce who cannot access quality care. That just makes economic sense to us.

    The current system of delayed care, sporadic follow-up, and cost shifting not only harms people's well-being, it is economically inefficient as well.

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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