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6, 2000 April, 2000

Highlights—May 4, 2013

  • Bloomberg: IBM Assures Shareholders of Profit Goals After Earnings Stumble. By Sarah Frier. Excerpts: International Business Machines Corp. (IBM) Chief Executive Officer Ginni Rometty, facing more skeptical investors after the company missed quarterly earnings estimates for the first time in eight years, said she remains confident about reaching long-term profit goals.

    Speaking at IBM’s annual meeting in Huntsville, Alabama, yesterday, Rometty said she was “not satisfied” with the first-quarter results. To shape up, IBM is divesting businesses and focusing on more profitable and faster-growing areas, such as data analysis and cloud computing. The company is still on track to meet its five-year plan for profit growth, put in place under her predecessor Sam Palmisano in 2010, Rometty said.

    “It is important to understand IBM’s long-term model,” said Rometty, who became CEO of the computer-services giant in January 2012. “We are an innovation company. This means that we pursue continuous transformation.” ...

    In a bid to get back on course, IBM will spend $1 billion eliminating jobs in the second quarter and will divest businesses later this year, Loughridge said at the time. Gains in the second half will make up for those expenses, he said, a tipoff that a transaction may be in the works. ...

    Rometty said yesterday that the company is relying heavily on incentives to motivate employees. As much as 90 percent of some workers’ pay is dependent on performance, she said.

  • Bloomberg: IBM Says Justice Department Probing Bribery Allegations. By Sarah Frier. Excerpts: International Business Machines Corp. (IBM) is being probed by the U.S. Justice Department over corruption allegations in Poland, Argentina, Bangladesh and Ukraine, adding to bribery charges from the Securities and Exchange Commission.

    The Justice Department is investigating whether IBM violated the Foreign Corrupt Practices Act, the company said in an April 30 filing. In Poland, the department is focusing on a transaction that the Polish Central Anti-Corruption Bureau already was studying, the company said. It involves allegations of a former IBM employee selling to the Polish government.

    The Justice Department probe adds scrutiny in new territory as IBM tries to settle with the SEC over activity in China and South Korea. The global reach of the investigation indicates that this isn’t an isolated matter, said Charles Elson, corporate-governance professor at the University of Delaware.

    “If it happens in one country, you can say it’s an individual,” Elson said. “If it happens in multiple, you have to ask, is it systemic? And how well was the compliance program put in place to prevent it?” ...

    In March 2011, the company said it had agreed to pay $10 million to settle with the SEC over allegations that it bribed officials to win at least $54 million in government contracts. U.S. District Judge Richard Leon, who has had the case under review, said he won’t accept the deal without a requirement that IBM report any future law enforcement or administrative probes to the court.

    “This is a company that has a history of violating the books and records provision of the FCPA,” the judge said in February.

  • IT News (Australia): QLD Health payroll will never be automated: IBM. By Charis Palmer. Excerpts: Queensland Health's move to a new payroll system was compounded by a poorly defined scope and major differences of opinion over implementation, the inquiry investigating the bungled project has heard.

    The inquiry is currently investigating the contractual arrangements between the State of Queensland and IBM, and why the cost of the system blew out over time.

    The bungled project is expected to ultimately cost taxpayers $1.25 billion.

    Senior IBM executive Bill Doak told the inquiry on Friday he stood by IBM's work on the project, and was proud of what the tech giant had achieved.

  • CNN Money: Lenovo-IBM talks over server business break down. By Miguel Helft. Excerpts: Negotiations between Lenovo and IBM over a multi-billion dollar deal under which Lenovo would acquire parts of IBM's server business have broken down, according to people familiar with the situation. While the discussions could resume, they were halted over valuation concerns, according to a person familiar with the talks.

    News of the negotiations surfaced last month in various publications and were confirmed by Fortune. Bloomberg put the value of the potential deal, which would cover IBM's sale of its so-called x86 server business, at between $2.5 billion and $4.5 billion. Others suggested IBM was seeking as much as $6 billion. Lenovo is said to have balked at the price tag for the business, which generates close to $5 billion in sales, or about a third of IBM's overall server revenue, according to estimates.

  • Yahoo! IBM Employee Issues message board: "Re: IBM - Lenovo talks break down" by Paul Sutera. Full excerpt: For a company that gleefully flushes billions of dollars a year down the drain doing stock buybacks, IBM can be so persnickety when it comes to a billion dollars this way or that way. It's been this way for over 20 years now. Micro-focus on the incidental expenses of employees - keeping wages in India so low that brain-drain was the inevitable consequence - yet wasting billions to plump up their future stock options.

    We always hear how we need to pay CEOs a very-high salary to attract the best/brightest. Here's an idea. If you find a CEO willing to work for less, they might also be less greedy. And you might have for yourself a leader that can see past the next quarter and their own stock options. A CEO that makes 70 million dollars is more likely to be greedy and run your company into the ground for short-term gain.

  • CRN: IBM 'Superlab' Staff Still Bracing For Transfer To Lenovo. By Kevin McLaughlin. Excerpts: Contractors and employees at IBM's "Superlab," a Research Triangle Park, N.C., facility that handles development of firmware and other utilities for IBM servers, are still preparing to be transferred to Lenovo next month, despite reports that IBM's talks to sell parts of its x86 business to the Chinese vendor have broken down.

    Sources told CRN that Superlab employees have not received any indication from IBM that plans have changed since reports that its talks with Lenovo had stalled surfaced on Wednesday.

    Many Superlab developers and engineers were told by IBM management in mid-April they'd be transitioning to become Lenovo employees on June 1, several sources with knowledge of the matter told CRN. ...

    IBM's previous track record of laying off contractors with short notice is contributing to a pervasive uneasiness in the Superlab employee ranks, one source with knowledge of the situation told CRN. "There is almost a riot of worry in the Superlab," the source said. "People don't know what they're going to be doing, and I'd say 80 percent of them think they're done for."

    In IBM's first-quarter earnings call last month, CFO Mark Loughridge referred to coming "divestitures" and "workforce re-balancing" in the current quarter. In a video after the call, CEO Ginni Rometty urged IBM employees to "step up" and move more quickly to new computing models.

  • Forbes Digital, courtesy of MSN Money: The public spanking of IBM's sales people. Was CEO Rometty right to publicly critique the company's sales organization for moving too slowly? By Robert Sher. Excerpts: IBM'ers were under that lash last Wednesday as CEO Ginni Rometty publicly criticized her sales organization for moving too slowly, effectively pinning the blame on them for IBM's first quarterly results miss in eight years. Is a public spanking a helpful approach to getting better performance from IBM or any other company?

    Disappointing performance happens at all companies, and is an issue that CEOs often face. The underlying question is how CEOs should react when their organization falls short. In IBM's case, its hardware division's sales fell 17% below prior year results, and that amounted to a key cause for the earnings miss. Rometty also reassigned the top executive leading that division, presumably because of the poor results. ...

    Consistent high performance comes when CEOs actively manage the performance environment. That requires the CEO to be much more than a cheerleader and morale booster. It requires them to make underperformers feel uncomfortable. To Rometty's credit, she did just that last Wednesday. By shining a light on the sub-par performance of the sales team, she exposed them to their peers and in fact, to the world at large. By reassigning the top executive, she showed that she won't tolerate low performance. You can be sure that every executive at IBM took notice, especially the ones with below average performance. She is increasing the performance pressure, and all investors in IBM should be glad.

    The truth is, increasing the pressure correlates well with increasing performance -- so long as the top performers don't head for the exits. Big rewards for success are just as important as consequences for failure, and both increase pressure. Having clear, accepted measures of performance are critical too, because without measures, increasing the pressure will create chaos (since people won't be sure what to do to relieve the pressure). Meaning, there is another way to offset pressure. In IBM's case, Rometty made it clear that one measure -- responding to client needs within 24 hours -- is now a priority.

  • Bloomberg: IBM Cuts Hours of Contract Employees as Company Retrenches. By Sarah Frier. International Business Machines Corp. (IBM), cutting costs in the wake of its first quarterly earnings shortfall in eight years, ordered some U.S. contract workers to reduce their hours, according to a memo obtained by Bloomberg.

    CDI Corp., a provider of staffing and outsourcing services, told employees working on IBM jobs that they should bill for no more than 36 hours a week in the second quarter, according to the memo. CDI, based in Philadelphia, cited “challenging economic conditions” in explaining the move.

    “You should understand that this action is being taken by IBM to retain as many CDI resources as possible for future work,” Eric Gonzalez, a delivery executive, said in the memo. “This action is not a reflection of any dissatisfaction over the services provided by you or CDI but rather an IBM business decision.” ...

    IBM told CDI that the change in hours would only be in effect during the second quarter, according to the memo. The employees aren’t allowed to work beyond 36 hours unless approved in writing by IBM management.

  • New York Times: Amazon’s Boom in Cloud Partners. By Quentin Hardy. Excerpts: Amazon Web Services is growing fast. It has over 1,600 job openings on its Web site and accounted for the vast majority of the $798 million in “other” revenue Amazon reported in the quarter that ended March 31. Still, it wants those other companies to be really active on its behalf so it can remain the leader in so-called “public clouds,” or cloud computing services for rent. ...

    Mr. Mickos, who sold MySQL, a relational database management system, to Sun Microsystems for $1 billion in 2008, sees the completion as a three-way competition. “There are the old guys, like IBM, Hewlett-Packard, Intel and Cisco, who are trying to get into new stuff,” he says. “There are the server virtualization companies, like VMware and Citrix, who say the cloud is just more virtualization of your existing equipment. Then there are the pure plays, like A.W.S. and Google.”

  • ZD-Net: IBM warns it may have to cut 1,200 jobs in France within two years. By Valéry Marchive. Excerpts: IBM is poised to cut over 1,000 jobs from its French workforce in the coming years.

    On Wednesday, IBM France presented its 'bi-annual business estimates' during a meeting of the central business committee. ZDNet managed to get a look figures included in the estimates, which forecast a total of 1,226 job cuts within two years.

    According to the figures, two areas of the business will be hit the hardest: IBM France expects to have to bring down its services workforce to 1192 jobs from 1696, and its local support functions to 929 from 1233 today. The company had a headcount of just over 8,500 in the country at the end of 2012, the estimates said.

  • Yahoo! IBM Employee Issues message board: "Re: Globalization" by Paul Sutera. Full excerpt: I sometimes realize that the executives don't realize that it was always about the package deal - it was always first of all, the people of IBM, and then the stellar hardware and software. It was about a workforce that became excellent and got better, and remained at IBM for 30 or more years, always improving. It was about tribal wisdom and people learning from others. And managers having respect for the fact that they didn't and couldn't understand what their technical folks did but they could respect it. Project managers didn't get more respect than techies. And there were fewer of them.

    Now in the 3rd world there are still plenty of jobs. IBM becomes a company that, once it sheds its hardware business for "higher-margin" business, becomes just some fungible service provider... something that small companies can often do better with fewer (high-paid) managers.

  • Yahoo! IBM Employee Issues message board: "Re: Globalization" by "cookewj". Full excerpt: This thread began with the comment that the grand lie of the "multi nationals" that there is no properly trained labor force in the US for today's jobs. We all know the facts behind the lie, as many IBMers were fired simply because a cheaper cog was available somewhere else. You probably trained your replacement, and know better than most how much less they knew of the job they were taking on than they should have.

    The lie infuriates because the IBMer knew the facts; the less informed saw only the data points used to sell the lie to the population at large.

    I mention another lie because I've heard it passed on by the same IBMers, even on this board. This this is not simply another corporate lie, but is one used to disenfranchise the American employee, including IBMers. This is the lie that large corporations cannot afford continued pension and medical benefits to the masses because we are living longer. Think about it just a little. You know the facts of the former lie, better than the average person. You choose to believe the second lie, from the same source. Consider the source.

    Think of the logic behind the story, as you know of more and more people dying early of cancers and the various degenerative diseases associated with obesity. Then do the research to understand the facts. We should know that the Indian did not take away the job, nor did the fat guy with CAD. Having several lies keeps the underclass fighting among themselves, each "group" complaining about the lie they understand, and not supporting the one they don't, even when it affects them as well. Conspiracy theorists may be crazy, but...

  • The Register (United Kingdom): CFO warns IBM's 'underperforming' storage crew: We'll take 'substantial action'. Legacy mid-range and entry arrays look unsafe. By Chris Mellor. Excerpts: IBM's first quarter 2013 results were disappointing, and if you're in storage and servers at Big Blue, it appears the numbers guys are focusing on some of your product lines. In the earnings call, CFO Mark Loughridge said: "There are parts of our business that are in transition or have been under-performing like elements of our Power x and storage product lines that showed disappointing performance in the first quarter. Here we’re going to take substantial actions."
  • Glassdoor IBM reviews. Selected reviews follow:
    • IBM is going on almost 2 years of flat/falling sales; the reaction is to invest less and push harder” Current Business Development Manager in San Jose, CA. Pros: smart people, many of whom do care about relationships and doing the right thing for the client.

      Cons: It's a financially driven organization and we are absolutely feeling the pain of not growing the top line; They compensate by squeezing more costs out (our salaries) to grow the bottom line; many of my peers have had salary roll backs in the last many years as sales objectives are nearly impossible to make.

      Advice to Senior Management: Wake up and smell the social/digital/mobile/ cloud...it wasn't until 2013 you started to even use this terminology in your communications; face it, your business strategy is a fail, and after 7 straight quarters of falling sales, its time to make some admissions...blaming this last quarter on poor sales execution is insulting...you've squeezed so much investment and compensation out of the operating model that we've become transactional focused (surprise!)

    • Started out great...then went off a cliff” Former Senior Software Engineer and Architect in Austin, TX. Pros: When I first started working at IBM I worked with amazingly smart people who mentored and helped me grow professionally and academically. I was allowed a flexible schedule to be able to continue going to school and finish my MSEE and start on my PhD. However, IBM began to pigeon hole me and would not allow me to do new work and I was stuck on a project that I wasn't able to get out of or attempt to correct some problems since it could slow down the rate at which new features were being added.

      Cons: -Messing with benefits constantly; -Salaries are low; -Raises are non-existent; -Ability to move jobs within IBM is meager at best despite what they tell you.

      Advice to Senior Management: Be honest and trust your employees, no one trusts you because you've had a history of very bad decisions that are seemingly at odds with IBM's supposed values and traits.

    • Growth is not in the US, so the US is not a great place to be in IBM” Former Sales in New York, NY. Pros: - Bright people trying to do their best for their products, services and customers; - Honest and hardworking employees; - Some thoughts of the positive IBM heritage still there, even though that part of the company is long, long gone.

      Cons:

      • IBM is in a significant cost reduction mode, which makes being there very bad; in the US, the brand is being milked while the company hangs on to whatever customers it has and does anything and everything possible to cut costs
      • Management decisions are based one one thing only, which is stock price/options—so OK place to invest, but not to be/work
      • Very difficult processes to get things done to serve/support customers
      • Products not competitive/high cost
      • Work is increasingly delivered by subs, which means value add is smaller than ever—hard to win deals with high margin/overhead on a sub when you're competing against that same firm (or others) bidding
      • Difficult (as always) to integrate solutions across service lines, which is one of the only ways IBM is competitive
      • Seems that there are now more people not competent than competent, which makes it an uphill battle
      • No desire at all on management part to have satisfied customers—simply not important, so if it's important to you, that's a conflict
      • US morale, especially in sales, is terrible (also true in delivery)—many looking to leave
      • Management under severe pressure every day, which drives low morale—not a single thought past the end of the current week/quarter, so directionality isn't there

      Advice to Senior Management: Nonego to eastern Europe or AP if you want growth or a good experience with the IBM brand.

    • Good company to work for” Current Server Administrator - Security Specialist in Poughkeepsie, NY. Pros: Good benefits, flexible work schedule, up to date on-line learning, pleasant work atmosphere. Cons: Pay is below market; - difficulty moving forward in career; - management puts you where it is most beneficial to them and makes it difficult to approval any career moves. Layoffs tend to occur on a yearly basis. Work week is 40+ hours—if you’re hourly you tend to receive no OT but are told to balance hours—take time off. Advice to Senior Management: Allow for career movement. Keep staff levels at a reasonable number. Provide for OT.
    • Good Work Environment, Bad Growth Opps” Current Rational Solution Architect in Miami, FL. Pros: Good environment to work in. People are helpful. Lots of smart resources to tap into. Most employees can work from home. Cons: Growth opportunities are very limited. Management concerned about the bottom line and not so much in career development. Lots of cookie cutter approaches within the various service lines.
    • IT Specialist” Current IT Specialist in Raleigh, NC. Pros: Parts of the company are great to work. Avoid GBS and GTS. Cons: Little to no career growth. Especially in GBS. Advice to Senior Management: Reduce layers of management. Customers are not willing to pay for your 15 levels of management.
    • Underwhelming.” Current Software Engineer. Pros: IBM is a good place to pick up general experience, especially if you're a graduate. The company name is recognizable and great asset to have on your CV. Employees are very down-to-earth and are generally not arrogant or snobby, as you may find in other large technical organizations. Cons: I have not met an employee that is openly proud about working at IBM. I don't feel proud to work here, there aren't any IBM products I can talk about and say "My company did that, isn't it just the best?" The bureaucracy is ridiculous. There are no employee perks like free gadgets or free food. Having to use Lotus Notes is terrible. Advice to Senior Management: Treat your employees better and you'll attract more talent, and make better products. Cutting back on costs is not always the best way to increase profits.
    • I was very underpaid and treated like a child” Former Applications Programming Specialist in East Lansing, MI. Pros: Management doesn't track you unless you talk to them. You're left to do your job to the best of your ability without interference from those above you. Cons: Management doesn't help you with problems at all. Even when approaching my manager, I was told they couldn't and wouldn't help me with medical problems I was having interfering with my work.
    • Don't stay too long. Good first job.” Current Managing Consultant in San Francisco, CA. Pros: Opportunity to do anything. Mostly a 9-5 type place. Consultants can get stuck traveling 100% of the time. Cons: Difficult to get raises that keep up with inflation
    • IBM Global Financing- Long term supplemental” Current Employee in Armonk, NY. Pros: Work home Friday. Opportunity to work with employees worldwide. Good for your resume. Cons: No salary raise for fixed term. No formal training in place. Lack of communication. You'll have to work with ppl 60+ in age—they have been working for IBM for so long they have their own ways of doing it but do not know how to train new hires. Most employees work from home and the office is literally empty. You have NOBODY to ask questions in person. Advice to Senior Management: Have proper training in place for new hires otherwise they will leave in a short period of time with frustration and feeling worthlessness.
    • Too bad, Too much dead wood at the top, Leaders are not innovators, they just play politics and to the numbers.” Current Team Leader in Sydney (Australia). Pros: Some sincere people left. Good R&D. Cons: Marketing community has excessive amounts of politics and unnecessary layers management, Marketing Managers demonstrate poor leadership skills by lording it over staff rather than encouraging collaboration. Over emphasis on hierarchy and lack of innovation from the so called "leaders" is creating a drag on the culture in what would otherwise could be a more collaborative and productive company. Advice to Senior Management: Sack the Marketing Managers that aren't getting their hands dirty and developing briefs and effective strategies. Why? because leaders in small to mid tier firms competitors are capturing market share because THEIR leaders ARE PRODUCT INNOVATORS, as are their Marketers! That's why you're losing market share.
    • Being thrown in to the deep end of pool without a life jacket. IBM really stands for I'm By Myself” Current Managing Consultant. Pros: Worked with some very bright people who were mature beyond their young age. IBM had lots of resources available to their employees. Plenty of opportunities to interact with other IBMers. Cons: Too many know it all clones. Don't always have a say in what you want to do or where you can work. Very high pressure assignments—not a lot of fun being on client site. Advice to Senior Management: Management doesn't want to hear your advice
    • Flexible hours but often work over time” Current Employee. Pros: You can have flexible hours so that you can come in late and leave later or come in early and leave earlier. You can work from home as long as it doesn't impact your schedule. Cons: When we are nearing the end of a product cycle, you are expected to work lots of hours and there is no OT pay. Advice to Senior Management: Compensate the employees better with the amount of efforts they put in.
    • Continue to be asked to work more hours especially weekend, cut off 401k contribution” Current Architect. Pros: It offers you a challenge environment; if you are self motivated and love the challenge to figure things out yourselves, this is a good fit for you. Cons: The morale is at all time low with the delay 401k contribution to 12/15 every year. It is a increasing competitive at the top so they find way to ask you work more and more hours ON THE WEEK END under different initiative like Innovation Summit, Talk40. I guess this is find if you don't already put in 50 or even 60 hours a week like I do. Advice to Senior Management: Put back the 401k bimonthly contribution and actively promoting work and life balance. You will see a motive work force and move the company up a notch.
    • Meh” Current Senior Consultant. Pros: - Good career opportunities. - Interesting projects. -Travel. Cons: - The business will say you need to do xyz to make sure you keep a client happy. You have no choice in it, even if it is unbillable. Then when performance is measured, you are left with a low result because you were not billable. - There is a fundamental flaw when the business is more interested in hiring new graduates than keeping existing employees happy. - The promotion process is convoluted. - Zero control over career direction. Advice to Senior Management: Need to stop seeing people as resources, and start seeing them...as people.
    • Accounting company that happens to sell technology.” Former Software Sales Representative in Houston, TX. Pros: Good people. Generally good management. Ethical and fair. Good technology. Cons: As an accounting company, expenses are managed maniacally Being so big, things move and change very slowly. Advice to Senior Management: Keep hiring new folks to add more agility to the organization. Don't obsess over expenses (including comp plans) which degrade morale.
  • Alliance for Retired Americans: Friday Alert. This week's articles include:
    • President Obama Issues Proclamation Honoring Older Americans Month
    • Republicans Less Open about Support for Benefit Cuts to Social Security, Medicare
    • Leadership Council of Aging Organizations Expresses Concern over Obama Budget
    • Cancer Physicians Campaign to Make Lifesaving Medications More Affordable
    • Seniors - Especially Men - are at Higher Risk as Pedestrians!
    • AFL-CIO, Union Plus Offer “Dreams of Jobs and Freedom Scholarship” Program
    • Help the Post Office with Their Financial Problems While Saving Saturday Delivery!
  • New York Times: Loans Borrowed Against Pensions Squeeze Retirees. By Jessica Silver-Greenberg. Excerpts: To retirees, the offers can sound like the answer to every money worry: convert tomorrow’s pension checks into today’s hard cash.

    But these offers, known as pension advances, are having devastating financial consequences for a growing number of older Americans, threatening their retirement savings and plunging them further into debt. The advances, federal and state authorities say, are not advances at all, but carefully disguised loans that require borrowers to sign over all or part of their monthly pension checks. They carry interest rates that are often many times higher than those on credit cards. ...

    A review by The New York Times of more than two dozen contracts for pension-based loans found that after factoring in various fees, the effective interest rates ranged from 27 percent to 106 percent — information not disclosed in the ads or in the contracts themselves. Furthermore, to qualify for one of the loans, borrowers are sometimes required to take out a life insurance policy that names the lender as the sole beneficiary.

  • New York Times opinion: Preying on Pensioners. Excerpts: During the run-up to the mortgage crisis, elderly people were often duped into taking out subprime loans that earned a fortune for the lenders while leaving the borrowers with little or no home equity and headed for foreclosure. A similar brand of wealth stripping is alive and well in a new crop of companies that specialize in separating retirees from their pensions. Unless state and federal regulators get a handle on this problem, ever larger numbers of elderly people who are already battered by the recession will end up even worse off.

    As Jessica Silver-Greenberg reported recently in The Times, “pension advance” companies profit by convincing retirees to sign over all or part of their monthly pension checks in exchange for an upfront payment. These “advances” are disguised loans (though not described as such in the contracts) that can carry interest charges that can reach 100 percent or more. To qualify, borrowers are sometimes required to pay for life insurance policies that name the lender as sole beneficiary. ...

    The companies are especially aggressive in their pursuit of military veterans — even though federal law forbids transactions that require enlisted retirees to turn over their pensions to third parties. To get around that rule, the firms encourage veterans to establish separate bank accounts where pension payments are first deposited and then sent to lenders.

  • US News & World Report: Improving Your Odds in the 'Retirement Gamble'. By Roger Wohlner. Excerpts: PBS’ "Frontline" recently aired "The Retirement Gamble," an excellent documentary on some of the problems with the retirement savings system in the U.S. While the show brought out some excellent points, it seemed to have a pre-conceived agenda and a reflexive bias against the financial services industry.

    Specifically, it failed to highlight that there actually are good 401(k) plans out there, and they can be used to accumulate a significant nest egg.

    Regardless of your take on the show, here are some tips to “improve your odds” of a successful retirement.

  • The Atlantic: The Myth of America's Tech-Talent Shortage. And what it should mean for immigration reform. By Jordan Weissmann. Excerpts: So it turns out the United States is not, in fact, the educational wasteland tech industry lobbyists would have you think.

    Companies like Microsoft often claim that America is suffering from an economically hobbling shortage of science, math, and computer talent. The solution, they argue, is to let employers fill their hiring gaps by importing tens of thousands of educated guest workers beyond what the law currently allows. Much as farmers want to bring in field workers from Mexico on short-term visas, software developers desperately want to bring in more coders from India.

    The Senate's current immigration bill would grant their wish. As written, it vastly increases the annual limit on H1-B visas, which allow corporations to bring employees with a bachelor's degree to the U.S. from overseas for up to six years. Roughly half the guest workers who currently arrive through the program come for computer-related jobs. When Facebook CEO Mark Zuckerberg announced earlier this month that he was forming a political action group to back the reform effort, it was in part seen as a move to ensure that the H1-B provision would make it to President Obama's desk intact.

    There's just one problem. That whole skills shortage? It's a myth, as was amply illustrated (yet again) in a report written by researchers from Rutgers, Georgetown, and American University, and issued by the Economic Policy Institute. It still might be the case that tech companies are having trouble finding specific skill sets in certain niches (think cloud software development, or Android programming), but there simply aren't any signs pointing to a broad dearth of talent.

    Colleges, for instance, are already minting far more programmers and engineers than the job market is absorbing. Roughly twice as many American undergraduates earn degrees in science, technology, engineering, and math disciplines than go on to work in those fields. As shown in the EPI graph below, in 2009 less than two thirds of employed computer science grads were working in the IT sector a year after graduation. ...

    In industries where talent is scarce, economists generally expect wages to rise, as desperate companies go chasing after what few qualified souls they think can do the job. That's exactly what's happened to oil and gas engineers over the last decade during the energy boom, for instance. But while there have certainly been anecdotal accounts of Silicon Valley firms tossing outrageous sums at elite college students, in the big picture, programmer salaries have been stagnant ever since the dotcom bubble went bust more than a decade ago. The pattern holds whether you look at the national data, or just at traditional tech centers such as Silicon Valley, the Route 128 corridor outside Boston, Dallas, or Austin, where you'd expect competition for talent to be hottest. ...

    Often, it comes down to a matter of age: Companies frequently save money by hiring a young, less experienced immigrant instead of an older American who would command a higher salary. And because the bureaucratic hurdles make it difficult for H1-B holders to switch jobs -- particularly if they're stuck in line waiting for a green card -- guest workers have notorious difficulty bargaining for promotions or raises. They also can't go off and start their own businesses, as they'd lose their visa. Unlike green card holders, they're professionally chained in place.

    The program has also fed the pernicious growth of IT outsourcing firms. These companies use H1-B visas to import low cost tech workers by the thousands, who they hire out to American corporations as substitutes for better-paid, in-house staff. The Boston Globe reports that just 4 of these companies -- New Jersey-based Cognizant Technology Solutions along with India-based Tata Consultancy Services, Wipro, and Infosys -- claimed 20 percent of the 134,780 H1-B visas that were approved in 2012.

  • TLNL: Hiring Wisdom: Top 10 Ways to Guarantee Your Best People Will Quit. By Mel Kleiman. (Editor's note: This article appears to be straight out the IBM H.R. manual).
New on the Alliance@IBM Site
  • Job Cut Reports
    • Comment 04/27/13: IBM Dubuque has jobs posted and tons and tons of empty seats that are not getting filled. FLM's are overworking current staff at the moment. Things are going to break soon enough and I can imagine many customer contracts will not be renewed with IBM and/or cancelled outright. On average I would say 9 out of 10 people in Dubuque are looking for work outside of IBM. They have shown NO loyalty to their staff and in return most the staff could care less about missed SLA's at this point. Contractors cannot work more than 36 hrs a week so all the FT IBM suckers (who make about a 1/3 of what a contractor pulls in) are expected to pick up the slack. lol MY God, who are they kidding. I have stopped worrying about the current deadlines on my team and will not work any evening or weekends anymore. Fire me if you want, I just don't care anymore. I am making an entry level help desk salary as a Jazz sys admin. It's not going to be too hard to find something else in that salary range. And I just cancelled my cell contract, so good luck trying to reach me OPs. lol (IBM does not pay for my cell phone) No raise, no phone. 2 can play at this game. -JohnnyRuq-
    • Comment 04/28/13: I am an ex IBMer but I know how things are in the company. There are hardly any path breaking innovations or great leadership. It is a sinking ship. With comments and childish admonishments to staff like we saw last week it is only getting worse obviously. Now clients will expect IBM to deliver many things within 24 hours thanks to the great announcement and there are NO processes or motivated employees to do that in IBM. So clients IMHO are going to be MORE upset than before. And they all talk on social media now, so there goes top line growth again. A mature CEO would first FIX the EXECS and Management and internal blocks in processes before making grandiose announcements. The scapegoating of Rod is also proof that accountability does not exist at the top. Its just a blame game and I fear for the clients, employees and investors on the direction IBM is headed. -Anon-
    • Comment 04/28/13: @JohnnyRuq - agree with you. When they stopped paying for my cell phone, I took it out of blue pages. I just returned from an overseas trip and people over there kept asking for my cell phone. All I could say was, sorry, IBM doesn't pay for it and I'm too cheap to pay for international calls. There is constant pressure to work 16 hour days, and no compensation for travel time (a trip to Asia Pacific is about 30 hours door to door, and they expect you to do that on weekends so that you don't miss any work). -IndiaBusinessMachines-
    • Comment 04/29/13: @glad i am gone, that's funny, although sadly the truth. Isn't it ironic that Gini-Mini is realizing the "Short" comings of customer service even "BEFORE" a huge layoff? This lady is smart setting the new corporate mission prior to the big dump of employees. -True-Blue-sinkin-too-
    • Comment 04/29/13: To the person wondering about the BTV cuts, as of this past weekend LTS are still working, even some hired just a month ago, so no action taken yet. Cadigan is coming up to BTV this week for a chat. -Diagon Ally-
    • Comment 04/29/13: My first job out of college was working for IBM. I had deadlines less than a month after started, but I jumped into the fire and met two deadlines that were all but designed to not be met. Then the only other guy that did the job I was being trained to do left. That left me all alone just 6 months out of school. And guess what? My deliverables got better! Customers were happy, things were working, and deadlines were being met. I had found many different ways to make things faster and more efficient. And then the earnings report came out: record profits! I thought I had set myself up to do really well.

      And then reality set in. You see, I was originally hired to do one job, but then last minute that was changed. That meant that all of the goals and such that had been set up for me were for a different job, and they didn't get updated. This meant my review was poor and I got a 1% raise. At first I was really disappointed in myself, but then I realized I hadn't failed. IBM had failed. The joke was on them though.

      I had been pursued by my former colleague and had already interviewed with another company. Upon learning that I was neither respected nor desired by IBM I happily gave my notice. They had to stop developing the product I was working on because it was too big of a burden for anybody else to do properly, and there was no chance of hiring more people to help. Sadly, the only ones punished were the ones that had to take on all of the extra work. This stuff has been happening for far too long, and I recently turned down another opportunity to join IBM in favor of a small company with a shaky future. Best decision ever. -FormerIBMer-

    • Comment 04/29/13: IBM stock is punished after a poor showing for the quarter, but after saying "don't worry, we're going to fire a whole bunch of our employees", the stock is on the rise again. -Plunger-
    • Comment 04/30/13: Talked with a friend still working in IBM Rochester manufacturing. 3 bus loads from Mexico came for job training. All contract (Manpower) employees were told not to discuss wages or they would be let go. These Manpower employees were making much more than any of the people from Mexico. Typical IBM actions. Moving up the resource actions because of 1 big stock drop looks like IBM execs
    • Comment 04/30/13: Sam walked away with 170 million, while thousands of employees are languishing without any raises for years! We don't even get wages that compensate for inflation. Sam cannot live without the 170 million! I am sure Ginny's salary must have doubled or quadrupled and now to make up for that, contractors have to take furloughs. There is so much work out there that it is impossible for the regular FT employees to pick up the slack and Ginny expects response in 24 hours.. In general, the lower end workers never sit on stuff. They are prompt and professional. In my more than a decade at IBM, I have NOT seen any that were slackers. -Concerned_at_IBM-
    • Comment 04/30/13: To be clear: I *want* to like IBM. I *used* to love IBM. So I'm not yet another disgruntled, misinformed engineer just itching to whine. The comments here are, unfortunately, quite accurate. IBM is faced with tough market conditions - the expectations of IBM on Wall Street are staggering; maybe insurmountable. So instead of resetting the market's expectations, we're striving to meet or exceed them - and that will likely put IBM in jeopardy again. (Mr. Gerstner -- you ready for another round??) For now it has literally become an unhealthy place to work - the stress and sadness of being ~disabled~ from being proud of one's work have become overwhelming. I can no longer talk to a customer and say, as I used to do, "don't worry - we're IBM. We WILL get it done for you!" Because I no longer believe that. ~ Wish It Was Different~
    • Comment 04/30/13: It's "pump and dump" now for IBM. Get the stock and EPS up, stagger to 2015 with an enhanced Roadkill strategy with the EPS forecast achieved and then fall off the face of the planet. -nostradamus-
    • Comment 05/01/13: If IBM is not telling how many USA employees it has (which is crass on their part) this information might help determine the number of folks caught in RAs or who left IBM on their own: From page 1 of the "Annual Funding Notice for The IBM Personal Pension Plan": Total number of participants in the plan: 312,090 (those screwed by the plan, active or not). Of this number 69,903 were active participants (active eligible employees). 160,651 were retired or separated from service and receiving benefits (retiree and received lump sum or monthly annuity). 81,536 were retired or separated from service and entitled to future benefits (haven't taken lump sum or annuity yet). I believe the Alliance's headcount number of no more than 91,000 is about right. -Bluebodycount-
    • Comment 05/01/13: To those of you who think contractors are getting more than you -- THINK again. I know a number of people who are present and former (recent -- not years ago) contractors at the IBM site in Austin and the pay is well below the salary of even band 6 and band 7 software engineers. On the jobs cut front, IBM/Austin is being wound down. The original main site was turned into a giant shopping complex and there are plenty of empty office in the buildings that were built 20 years ago. On the plus side, there is life after IBM. -julie78787-
    • Comment 05/01/13: -Name-: First to be going and gone is now contractors and long term supplementals. They can be out the door in less than 24 hours. Then it looks like an RA will definitely happen for the employees. How many? It's anyone's guess. When? at this point the main RA(s) will be in the 2ndQTR so I would say by June 1st the latest. -da_facts-
    • Comment 05/01/13: -Concerned-: What you don't understand it is that IBM considers executives human beings and allows them a graceful exit and a golden or platinum parachute with rip cord and reserve chutes. Your just a work widget, a resource, an FTE on an expense spreadsheet somewhere. You just don't count. -AllianceAssociateMember-
    • Comment 05/01/13: In regards to contractor pay, the individual is not getting $55/hr (or whatever the figure is). That's what, for example, Artech is getting. The individual gets a fraction of that. -Glad-I-Left-
    • Comment 05/01/13: Just got the word that 8 contractors were cut yesterday from GTS SO Delivery. This is just within my 2LM organisation, and I was told that cuts were taking place all over. So far, no permanent employee cuts. This was described as a "once and done" cut. Any new resources will have to come from global delivery centres outside the US. -Anonymous-
    • Comment 05/01/13: Heard from a couple of Managers today that they received their RA planning packages. Guess June/July exit time frame -RA update-
    • Comment 05/01/13: I am hearing in meetings today that they are literally walking the contractors out the door. The RA is going to happen, at least 15% of the US work force, it is rumored. Just what I am hearing, thought I would pass it on. It does not affect any other GEOs, just US. -Hearing it all now-
    • OK. The commentators here have basically spelled out what is happening--which was not hard because Ginni made it clear. So how many of you will wait until you GET the RA, before you come here and complain about it?

      I've been a voting member of Alliance for 13 years. IBM sold me in 2002, but I continued to keep my membership active with the Alliance. I've watched this comment board since it was created. And just like clock-work; the "Big Blue-dogged" workers come here and comment in droves about what happened to their co-workers at RA time. Before that, it's quiet and only the few stragglers will occasionally comment how they "hope the IBM execs can sleep at night after what they just did a few months before"... That makes no sense to me. While I spend my money and time trying to organize US IBMers where I am; even though I'm no longer an active employee, the "Big Blue-dogged" workers keep dreaming that an RA won't happen to them.... WAKE UP, will you??! Join the Alliance and get busy fighting for your job...or get busy losing your job. Simple as that. -Ready_Yet?-

    • Comment 05/01/13: Been told today that my last day with this company is 5/30. I am in ISSW. Looks like some of my other colleagues got the same notification. Thank you IBM!!! -IBMer- Alliance reply: Sorry to see that you have been let go. We need the section of the resource action package that lists the number of employees selected for the RA in order validate and tally numbers. Send to ibmunionalliance@gmail.com
    • Comment 05/01/13: i have a relative who is a manager...he was told he would be laying off 25% of his department. He is taking a class tomorrow on how to handle the layoff. He thinks it's going to be like 1993; employees come to work get there paperwork and out the door. -jj in fishkill-
    • Comment 05/01/13: After reading on here Cadigne was going to BTV this week, I heard of there being a manager meeting tonight as soon as the night shift started. Any word on layoffs in BTV? -UH O-
    • Comment 05/01/13: Anyone else hearing 15% workforce reduction in the US in 2013?? Wouldn't be surprised... just curious if that's accurate -Dafu*?-
    • Comment 05/02/13: Had a conversation with a team lead who was in the process of 're-balancing' the work for the account. The contractors are either being cut or reducing their hours and IBMers will be required to work 20% OT mandatory. Isn't any non-paid mandatory OT illegal?! -not_happy- Alliance reply: Unless you are an exempt employee.
    • Comment 05/02/13: Work at home over 50 miles from an IBM office. Got the RA kick in the pants. IBM ESC has no laptop return policy for exiting employees. They say just ship it back to your manager. IBM doesn't even offer the courtesy to pay the return postage. Cheap a$$ company. Apparently they need to save every last $.001 for the EPS. -laptopped-
    • Comment 05/02/13: 20% contractors cut. 10% cut on hours. IBM lost accounts big time. did not hear anything on IBMers so far. -Anony-
    • Comment 05/02/13: Hear from a manager that 700 contractors were cut this week in Div 07/IGS (under Diane Diggleman). Remaining contractors are restricted to 36 hrs/week as previously reported. -CJ-Roc-
    • Comment 05/02/13: As far as the Lenovo talks breaking down, it's no surprise. IBM is trying to sell assets at way overpriced numbers. I am an ex IBM employee, ex GLOBALFOUNDRIES employee and heard from former GF colleagues that IBM met with GF in Abu Dahbi to negotiate a potential sale of the East Fishkill site and GF basically walked out of the meeting when the IBM losers asked for 5 billion. Seems like desperation to me. Besides that, the fact they want to sell EFK speaks volumes. BTW, GF pulled out of EFK as part of the alliance because they were tired of all the BS IBM was dishing out. Get this, IBM sold IP to one of GF's main competitors. IP that GF helped develop. That's why I had to leave GF, otherwise I would have had to relocate to Malta, NY. The alliance contract was supposed to go into 2015 but as usual, IBM pissed off their partner. -waygone-
    • Comment 05/02/13: Don't believe the recently planted "news" that selling off system x won't happen. A lot of Developers have been told they will be reporting to Lenovo starting June 1st. It appears like IBM just doesn't want to lose current x sales so is leaking some lies and confusion to buy it a few extra weeks. It's another sleazy sham, much like the supposed dreadful quarter they trumped up to justify the big job cuts to come soon. -Long-Live-Building205-
    • Comment 05/03/13: CTG contractors either all or mostly gone as of this past week in Essex Junction and Williston. I had ten days notice, others only one day. Excuse was 'cost cutting'. -dead-eye don-
    • Comment 05/03/13: -laptopped- your FLM should be sending you a label for UPS or FedEx with the IBM account number to cover the cost of shipping of your laptop. If you have been RA'd, read the package carefully, everything you need to do and return is clearly spelled out. Receiving your final severance check depends on your returning everything your package tells you to return. -ExIBMer-
    • Comment 05/03/13: Senior Executive Changes: MacDonald to retire, Gherson named SVP. Randy MacDonald, senior vice president, Human Resources, announced today his intention to retire from IBM, effective June 1. He will remain an advisor to IBM senior leadership for the rest of this year.

      "Randy has been a treasured asset for three IBM CEOs. I personally have deeply valued his creativity, perspective and judgment," said Ginni Rometty, chairman, president and chief executive officer. "He has continuously pushed us to anticipate major shifts – in the process, stepping up to some of the most important workforce challenges of our time. It is no accident that IBM is now recognized as the gold standard in leadership development – nor that many companies are following our lead in workplace flexibility, employee wellness and the global deployment of talent."

      Diane Gherson, vice president, Talent, will succeed Randy and become senior vice president, Human Resources, reporting to Ginni. "Diane is a recognized leader in progressive workforce practices. She is deeply experienced and richly qualified for this important leadership position," Ginni said. -anonymous-

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
Minimize
  • Washington Post: Will Obamacare end medical bankruptcies? Probably not. By Sarah Kliff. Excerpts: “The Affordable Care Act will reduce the number of uninsured by a little more than half, which is a good thing,” says Stephanie Woolhandler, a professor at the CUNY School of Public Health. “But it’s going to increase the problem of underinsurance: People who have insurance but still can’t afford care.”

    The whole point of buying health insurance coverage is to make care affordable. Millions of Americans pay monthly premiums with the expectation that, should a horrible illness or accident occur, the insurance company will cover the majority of some pretty expensive hospital bills.

    Some experts and health advocates have begun to question whether the health-care law can deliver on that promise. Woolhandler wrote an editorial earlier this week, in the Journal of General Internal Medicine, contending that “the new private coverage offered to the near-poor and middle income individuals through insurance exchanges will also leave many underinsured.” ...

    Woolhandler, who is the co-founder of Physicians for a National Health Program, has previously conducted research on rates of medical bankruptcy in Massachusetts, before and after the state expanded health insurance access. She found that in 2009, two years after the insurance expansion took effect, just about half the debtors (52 percent) attributed their bankruptcy at least in part to medical bills. In 2007, before the expansion, the number stood at 59 percent.

  • Yahoo! News: Laying bare your finances to apply for health care. By Ricardo Alonso-Zaldivar. Excerpts: The ease or difficulty of applying for benefits takes on added importance because Americans remain confused about what the health care law will mean for them. A Kaiser Family Foundation poll released Tuesday found that 4 in 10 are unaware it's the law of the land. Some think it's been repealed by Congress. In fact, it's still on track. ...

    At his news conference Tuesday, President Barack Obama hailed the simplified forms as an example of how his team listened to criticism from consumer groups and made a fix. The law's full benefits will be available to all next year, he emphasized, even if Republicans in Congress still insist on repeal and many GOP governors won't help put it into place. ...

    Filling out the application is just the first part of the process, which lets you know if you qualify for financial help. The government asks to see what you're making because Obama's Affordable Care Act is means-tested, with lower-income people getting the most generous help to pay premiums. Consumers who aren't applying for financial help still have to fill out a five-page form. ...

    Administration officials expect most people to apply online. The process will route consumers to either private plans or Medicaid. Identification, citizenship and immigration status, as well as income details, are supposed to be verified in close to real time through a federal "data hub" pinging Social Security, the Homeland Security department and the Internal Revenue Service.

    Under Obama's overhaul, insurers will no longer be able to turn away the sick or charge them more. The pitfalls of giving the wrong answer to a health care question will be gone, but consumers who underestimate their incomes could be in for an unwelcome surprise later on in the form of smaller tax refunds.

  • New York Times editorial: Exorbitant Prices for Leukemia Drugs. Excerpts: In a commentary published online by Blood, the journal of the American Society of Hematology, the experts questioned the morality 0f charging “astronomical” prices that may deprive some needy patients of access to drugs and could undermine the financial sustainability of the American health care system.

    Of the 12 drugs approved by the Food and Drug Administration for various cancer conditions last year, the experts said, 11 were priced above $100,000 a year. They suggested that charging high prices for drugs that are needed to save lives or improve health is a form of profiteering like jacking up the price of necessities after a natural disaster. ...

    The experts focused primarily on the cancer they know best, chronic myeloid leukemia, and the drugs used to treat it, whose costs, they said, can rise to $138,000 a year. By all accounts, these drugs, known as tyrosine kinase inhibitors, have been a rousing success in turning a death sentence into a chronic disease whose victims often live close to normal life spans. That does not mean the high prices are justifiable; the companies could settle for lower-but-still-substantial profits. An even stronger case can be made that extremely high prices of other cancer drugs providing minuscule benefits should be lowered.

    The cancer experts plan to organize meetings with drug companies, patient groups, insurers and others to discuss why cancer drug prices are so high and what might be done to lower them. Let us hope their effort proves as effective as the Sloan-Kettering revolt, which forced the drugmaker to effectively cut its prices in half.

  • Washington Post: Republicans to sick people: Tough luck. By Matt Miller. Excerpts: There was a striking Republican stumble on health care the other day that deserves to be parsed because it reveals so much about the party’s current dilemma. I’m talking about the tea party revolt that embarrassed House Majority Leader Eric Cantor (R-Va.) and forced him to withdraw a modest bill to bolster the high-risk insurance pool meant to help sick Americans until Obamacare’s insurance exchanges are up and running next year.

    A word of warning, however: what follows contains political attitudes so petty and out of touch they may disturb younger readers.

    Cantor, you’ll recall, has been trying to get his party to embrace some ideas that would show Republicans are not just austerity monomaniacs blind to middle class anxieties. In a speech on “Making Life Work” not long ago, Cantor laid out a handful of initiatives in this vein, like boosting flex time and retraining. One idea was to strengthen the high-risk pool that covers Americans with pre-existing conditions. Obamacare established this program as an interim patch for vulnerable Americans until the law’s community rating kicks in, at which point everyone can buy coverage regardless of health status. But this national high-risk pool is so poorly funded (as has been the case with similar state pools for years) that only a few of the country’s uninsurables have availed themselves of the protection.

    Now, to put what happened next in context, you need to understand that Republicans who resist universal coverage but who resent being labeled “heartless” have always been quick to say that they’re as concerned as the next guy about people with predictably high health expenses. The answer, they say, rather than some broad “socialist” risk pooling, is to set up publicly subsidized high risk insurance programs. That way these unlucky souls get help while leaving private health plans to cover the rest of us in ways that don’t force higher premiums on everyone. ...

    That was the idea. Then — boom! — conservatives revolted. L. Brent Bozell III cried “Cantorcare.” The Club for Growth warned that a vote for the measure would be tantamount to supporting Obamacare on their coveted conservative score card. “We often say we don’t need this Democrat big-government program [but then say] we need this Republican big-government program,” harrumphed Rep. Trey Radel of Florida. Rep. Tim Huelskamp of Kansas urged the party to skip this sideshow and get back to the real issues: the debt ceiling and spending cuts.

    Wow. It almost makes you feel sorry for Cantor. ...

    No, in asking his colleagues to do this small thing for the sickest of the sick, Cantor was taking a parody of a baby step. Cantor’s overall agenda was already minimalist. And within this minimalism, to use a painterly analogy, Cantor was pushing something positively pointillist — a few tiny dots meant symbolically to suggest that the GOP “cared” and could “solve a problem.”

    But this little spec of an idea proved to be too much for today’s House Republican caucus and the political ecosystem that sustains it. And if that’s the case, how can Republicans ever get remotely serious about big time woes in education, health costs, retirement security, college access and other pressing concerns of the middle class?

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: CEO Pay 1,795-to-1 Multiple of Wages Skirts U.S. Law. By Elliot Blair Smith & Phil Kuntz. Excerpts: Former fashion jewelry saleswoman Rebecca Gonzales and former Chief Executive Officer Ron Johnson have one thing in common: J.C. Penney Co. (JCP) no longer employs either.

    The similarity ends there. Johnson, 54, got a compensation package worth 1,795 times the average wage and benefits of a U.S. department store worker when he was hired in November 2011, according to data compiled by Bloomberg. Gonzales’s hourly wage was $8.30 that year.

    Across the Standard & Poor’s 500 Index of companies, the average multiple of CEO compensation to that of rank-and-file workers is 204, up 20 percent since 2009, the data show. The numbers are based on industry-specific estimates for worker compensation.

    Almost three years after Congress ordered public companies to reveal actual CEO-to-worker pay ratios under the Dodd-Frank law, the numbers remain unknown. As the Occupy Wall Street movement and 2012 election made income inequality a social flashpoint, mandatory disclosure of the ratios remained bottled up at the Securities and Exchange Commission, which hasn’t yet drawn up the rules to implement it. Some of America’s biggest companies are lobbying against the requirement.

    “It’s a simple piece of information shareholders ought to have,” said Phil Angelides, who led the Financial Crisis Inquiry Commission, which investigated the economic collapse of 2008. “The fact that corporate executives wouldn’t want to display the number speaks volumes.” The lobbying is part of “a street-by-street, block-by-block fight waged by large corporations and their Wall Street colleagues” to obstruct the Dodd-Frank law, he said.

    The leading opponent of mandatory pay-ratio disclosure is a Washington-based non-profit called the HR Policy Association, which represents top human resources executives at about 335 large corporations. ...

    James Cotton, a retired securities attorney for International Business Machines Corp. (IBM), may have been the first to propose mandatory disclosure of the CEO pay ratio. He said it would have “a significant impact by either lowering the excessive executives’ compensation or raising the average compensation of employees and managers” in a 1997 article in the Northern Illinois University Law Review. He got the idea shortly after joining IBM in 1970, Cotton said in an interview.

    The young attorney, an Army captain during the Vietnam War, said he was listening to managers discuss how to handle the company’s cash when he proposed giving out raises.

    “They looked at me like there was something wrong with me,” Cotton recounted. “They said, ‘We can’t do that.’” For years after that, he said, he kept an eye on the CEO’s pay and IBM’s cash holdings, both of which increased.

  • Washington Post opinion: The economic whodunit. By E.J. Dionne Jr. Excerpts: The policy mystery of our time is why politicians in the United States and across much of the democratic world are so obsessed with deficits, when their primary mission ought to be bringing down high and debilitating rates of unemployment.

    And since last week saw a cross-party celebration of the opening of George W. Bush’s presidential library, I’d add a second mystery: Why is it that conservative Republicans who freely cut taxes while backing two wars in the Bush years began preaching fire on deficits only after a Democrat entered the White House?

    Here is a clue that helps unravel this whodunit: Many of the same conservatives who now say we have to cut Social Security to deal with the deficit supported Bush’s plan to privatize Social Security — even though the transition would have added $1 trillion to the deficit. The one thing the two positions have in common is that Bush’s proposal also would have reduced guaranteed Social Security benefits.

    In other words, deficits don’t really matter to many of the ideological conservatives shouting so loudly about them now. Their central goal is to hack away at government. ...

    It’s outrageous that Congress and the administration are moving quickly to reduce the inconvenience to travelers — people fortunate enough to be able to buy plane tickets — by easing cuts in air traffic control while leaving the rest of the sequester in place. What about the harm being done to the economy as a whole? What about the sequester’s injuries to those who face lower unemployment benefits, who need Meals on Wheels or who attend Head Start programs?

    Instead, we should be using this period of low interest rates to invest in our infrastructure. This would help relieve unemployment while laying a foundation for long-term growth. But anti-government slogans trump smart-government policies. For reasons rooted in both ideology and the system’s bias against the less privileged, we hear nothing but “deficits, deficits, deficits” and “cuts, cuts, cuts.”

    To paraphrase a French statesman from long ago, this is worse than a crime. This is a mistake. Its costs are being borne by good people who ask only for the chance to do productive work.

  • New York Times opinion: No Rich Child Left Behind. By Sean F. Reardon. Excerpts: Here’s a fact that may not surprise you: the children of the rich perform better in school, on average, than children from middle-class or poor families. Students growing up in richer families have better grades and higher standardized test scores, on average, than poorer students; they also have higher rates of participation in extracurricular activities and school leadership positions, higher graduation rates and higher rates of college enrollment and completion.

    Whether you think it deeply unjust, lamentable but inevitable, or obvious and unproblematic, this is hardly news. It is true in most societies and has been true in the United States for at least as long as we have thought to ask the question and had sufficient data to verify the answer.

    What is news is that in the United States over the last few decades these differences in educational success between high- and lower-income students have grown substantially.

    One way to see this is to look at the scores of rich and poor students on standardized math and reading tests over the last 50 years. When I did this using information from a dozen large national studies conducted between 1960 and 2010, I found that the rich-poor gap in test scores is about 40 percent larger now than it was 30 years ago.

  • New York Times op-ed: The 1 Percent’s Solution. By Paul Krugman. Excerpts: Economic debates rarely end with a T.K.O. But the great policy debate of recent years between Keynesians, who advocate sustaining and, indeed, increasing government spending in a depression, and austerians, who demand immediate spending cuts, comes close — at least in the world of ideas. At this point, the austerian position has imploded; not only have its predictions about the real world failed completely, but the academic research invoked to support that position has turned out to be riddled with errors, omissions and dubious statistics.

    Yet two big questions remain. First, how did austerity doctrine become so influential in the first place? Second, will policy change at all now that crucial austerian claims have become fodder for late-night comics? ...

    Yet austerity maintained and even strengthened its grip on elite opinion. Why?

    Part of the answer surely lies in the widespread desire to see economics as a morality play, to make it a tale of excess and its consequences. We lived beyond our means, the story goes, and now we’re paying the inevitable price. Economists can explain ad nauseam that this is wrong, that the reason we have mass unemployment isn’t that we spent too much in the past but that we’re spending too little now, and that this problem can and should be solved. No matter; many people have a visceral sense that we sinned and must seek redemption through suffering — and neither economic argument nor the observation that the people now suffering aren’t at all the same people who sinned during the bubble years makes much of a dent.

    But it’s not just a matter of emotion versus logic. You can’t understand the influence of austerity doctrine without talking about class and inequality.

    What, after all, do people want from economic policy? The answer, it turns out, is that it depends on which people you ask — a point documented in a recent research paper by the political scientists Benjamin Page, Larry Bartels and Jason Seawright. The paper compares the policy preferences of ordinary Americans with those of the very wealthy, and the results are eye-opening.

    Thus, the average American is somewhat worried about budget deficits, which is no surprise given the constant barrage of deficit scare stories in the news media, but the wealthy, by a large majority, regard deficits as the most important problem we face. And how should the budget deficit be brought down? The wealthy favor cutting federal spending on health care and Social Security — that is, “entitlements” — while the public at large actually wants to see spending on those programs rise.

    You get the idea: The austerity agenda looks a lot like a simple expression of upper-class preferences, wrapped in a facade of academic rigor. What the top 1 percent wants becomes what economic science says we must do.

    Does a continuing depression actually serve the interests of the wealthy? That’s doubtful, since a booming economy is generally good for almost everyone. What is true, however, is that the years since we turned to austerity have been dismal for workers but not at all bad for the wealthy, who have benefited from surging profits and stock prices even as long-term unemployment festers. The 1 percent may not actually want a weak economy, but they’re doing well enough to indulge their prejudices.

    And this makes one wonder how much difference the intellectual collapse of the austerian position will actually make. To the extent that we have policy of the 1 percent, by the 1 percent, for the 1 percent, won’t we just see new justifications for the same old policies?

  • Smirking Chimp: Should A CEO Make 1700 Times A Worker’s Salary? By Thom Hartmann. Excerpts: Most of us are still feeling the effects of a struggling economy, but the corporate elite and the Wall Street banksters are doing better than ever. Many corporations have seen record profits in recent years, which have fueled buying sprees on Wall Street, pushing the DOW Jones to it’s all-time high. But, the income gap between workers and CEOs, which has gone up almost 20% since 2009, shows that all that profit is going straight to the top. This is exactly why many people don’t feel the effects of the modest economic recovery – because this recovery is not our recovery – all the gains are going directly to the top 1%. And this is why corporations are actively fighting the part of the Dodd-Frank act, that directs corporations to report the income differential between workers and CEOs. In 1960, the average CEO was paid about 40 times as much as the average worker. By 1990, CEOs were raking in over 100 times the amount that workers received. And by 2011, some corporate executives – like the one who works for JC Penny’s – were making more than 1700 times the salary of an average worker. ...

    Dodd-Frank is forcing the oligarchs to disclose the income disparity, now let’s start working to correct it. Let’s implement a Wall Street transaction tax, set limits on executive pay, and start taxing those who are obsessed with hoarding money.

  • Senator Bernie Sanders (I-VT): Rich are Getting Richer. Excerpt: “We’re looking at a situation,” Sanders said, “where Wall Street and large corporations are in many ways experiencing record-breaking profits while tens and tens and tens of millions of families are trying to figure out how they’re going to fill up their gas tank to get to work , how they’re going to pay for their kid to go to the dentist, how they are going to afford to send their kids to college and in some cases how they’re going to pay the rent or the mortgage or feed their families.”
  • New York Times op-ed: Not Enough Inflation. By Paul Krugman. Excerpts: Ever since the financial crisis struck, and the Federal Reserve began “printing money” in an attempt to contain the damage, there have been dire warnings about inflation — and not just from the Ron Paul/Glenn Beck types.

    Thus, in 2009, the influential conservative monetary economist Allan Meltzer warned that we would soon become “inflation nation.” In 2010, the Paris-based Organization for Economic Cooperation and Development urged the Fed to raise interest rates to head off inflation risks (even though its own models showed no such risk). In 2011, Representative Paul Ryan, then the newly installed chairman of the House Budget Committee, raked Ben Bernanke, the Fed chairman, over the coals, warning of looming inflation and intoning solemnly that it was a terrible thing to “debase” the dollar.

    And now, sure enough, the Fed really is worried about inflation. You see, it’s getting too low.

    Before I get to the trouble with low inflation, however, let’s talk about what we should have learned so far. ...

    So why is inflation falling? The answer is the economy’s persistent weakness, which keeps workers from bargaining for higher wages and forces many businesses to cut prices. And if you think about it for a minute, you realize that this is a vicious circle, in which a weak economy leads to too-low inflation, which perpetuates the economy’s weakness.

    And this brings us to a broader point: the utter folly of not acting to boost the economy, now.

    Whenever anyone talks about the need for more stimulus, monetary and fiscal, to reduce unemployment, the response from people who imagine themselves wise is always that we should focus on the long run, not on short-run fixes. The truth, however, is that by failing to deal with our short-run mess, we’re turning it into a long-run, chronic economic malaise.

    I wrote recently about how, by allowing long-term unemployment to persist, we’re creating a permanent class of unemployed Americans. The problem of too-low inflation is very different in detail, but similar in its implications: here, too, by letting short-run economic problems fester we’re setting ourselves up for a long-run, perhaps permanent, pattern of economic failure.

    The point is that we are failing miserably in responding to our economic challenge — and we will be paying for that failure for many years to come.

  • Rolling Stone: Everything Is Rigged: The Biggest Price-Fixing Scandal Ever. The Illuminati were amateurs. The second huge financial scandal of the year reveals the real international conspiracy: There's no price the big banks can't fix. By Matt Taibbi. Excerpts: Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything.

    You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."

    That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.

    Interest-rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It's about a $379 trillion market, meaning that any manipulation would affect a pile of assets about 100 times the size of the United States federal budget. ...

    But the biggest shock came out of a federal courtroom at the end of March – though if you follow these matters closely, it may not have been so shocking at all – when a landmark class-action civil lawsuit against the banks for Libor-related offenses was dismissed. In that case, a federal judge accepted the banker-defendants' incredible argument: If cities and towns and other investors lost money because of Libor manipulation, that was their own fault for ever thinking the banks were competing in the first place. "A farce," was one antitrust lawyer's response to the eyebrow-raising dismissal. "Incredible," says Sylvia Sokol, an attorney for Constantine Cannon, a firm that specializes in antitrust cases.

  • New York Times opinion: House of Un-Representatives. By Timothy Egan. Excerpts: Much has been said about how the great gerrymander of the people’s House — part of a brilliant, $30 million Republican action plan at the state level — has now produced a clot of retrograde politicians who are comically out of step with a majority of Americans. It’s not just that they oppose things like immigration reform and simple gun background checks for violent felons, while huge majorities support them.

    Or that, in the aggregate, Democrats got 1.4 million more votes for all House positions in 2012 but Republicans still won control with a cushion of 33 seats. ...

    But just look at how different this Republican House is from the country they are supposed to represent. It’s almost like a parallel government, sitting in for some fantasy nation created in talk-radio land.

    As a whole, Congress has never been more diverse, except the House majority. There are 41 black members of the House, but all of them are Democrats. There are 10 Asian-Americans, but all of them are Democrats. There are 34 Latinos, a record — and all but 7 are Democrats. There are 7 openly gay, lesbian or bisexual members, all of them Democrats.

    Only 63 percent of the United States population is white. But in the House Republican majority, it’s 96 percent white. Women are 51 percent of the nation, but among the ruling members of the House, they make up just 8 percent. (It’s 30 percent on the Democratic side.) ...

    It’s a stretch, by any means, to call the current House an example of representative democracy. Now let’s look at how the members govern:

    To date, seven bills have been enacted. Let’s see, there was the Responsible Helium Administration and Stewardship act — “ensuring the stability of the helium market.” The Violence Against Women Act was renewed, but only after a majority of Republicans voted against it, a rare instance of letting the full House decide on something that the public favors. Just recently, they rushed through a change to help frequent air travelers — i.e., themselves — by fixing a small part of the blunt budget cuts that are the result of their inability to compromise. Meal assistance to the elderly, Head Start for kids and other programs will continue to fall under the knife of sequestration. ...

    The Beltway chorus of the moment blames President Obama for his inability to move his proposals through a dunderheaded Congress. They wonder how Republicans would be treating a silken-tongued charmer like Bill Clinton if he were still in the White House. We already know: not a single Republican voted for Clinton’s tax-raising budget, the one that led to our last federal surplus. Plus, they impeached him; his presidency was saved only in the Senate.

    Obama may be doomed to be a reactive president in his second term, with even the most common-sense proposals swatted down because, well — if he’s for it, Republicans will have to be against it. What could be a signature achievement, immigration reform, faces quicksand in the House. But a gerrymander is good for only a decade or so. Eventually, demography and destiny will catch up with a Congress that refuses to do the people’s bidding.

  • AlterNet: The Rich Have Gained $5.6 Trillion in the 'Recovery,' While the Rest of Us Have Lost $669 Billion. It's no accident. By Les Leopold. Excerpts: Oh, are we getting ripped off. And now we've got the data to prove it. From 2009 to 2011, the richest 8 million families (the top 7%) on average saw their wealth rise from $1.7 million to $2.5 million each. Meanwhile the rest of us -- the bottom 93% (that's 111 million families) -- suffered on average a decline of $6,000 each. ...

    It's as if the entire economic recovery is going into the pockets of the rich. And that's no accident. Here's why.

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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