"It appears that IBM took the state of Queensland for a ride," Newman said in a statement.
The premier said that he expects IBM to discipline the employees named in the report looking into the ill-fated Queensland Health payroll system.
The report (PDF) from commissioner Richard Chesterman came from the AU$5 million inquiry that commenced in February looking at why IBM won the contract to build the new payroll system for Queensland Health in 2007.
The bungled payroll system, which was delivered later than expected in 2010, resulted in thousands of staff being underpaid, overpaid, or not paid at all. The Queensland government has estimated that the total cost for the system for taxpayers will be AU$1.2 billion. ...
In the course of the tender, IBM also managed to get hold of the confidential bid information, including the 'not-to-exceed' price from Accenture that IBM employees had discovered on a public drive on the network of CorpTech, the Queensland government's shared services organisation.
The documents were supposed to be stored on secured servers but the proposals and scoring matrices were made public for a period of time to anyone with a CorpTech login, which the IBM contractors had at the time.
Chesterman said that this alone should have been enough to disqualify IBM from tendering for the contract.
"The result is that conduct by some of IBM’s employees provided substantial grounds for excluding it from the tender process and the response of those employees in denying wrong-doing, and misdescribing their conduct, provides no basis for not acting on those concerns," he said.
IBM also says it accepts its share of the blame – but strongly hints that its rightful share is not very much.
“As the prime contractor on a complex project, IBM must accept some responsibility for the issues experienced when the system went live in 2010,” the statement says.
“However, as acknowledged by the commission’s report, the successful delivery of the project was rendered near impossible by the state failing to properly articulate its requirements or commit to a fixed scope.” ...
It is not an impressive response from a public relations point of view. It may be technically true that IBM only bears “some responsibility”, but no one likes a qualified apology. ...
IBM’s statements come after the report from the Queensland Health Payroll System Commission of Inquiry was made public earlier this week. In his report, QC Richard Chesterman describes the software failure as the biggest failure in public administration in recent history, and says IBM had an “unnatural advantage” and should never have won the tender.
An inquiry into IBM's role in the project yesterday concluded Big Blue staffers did not follow its ethical guidelines in bidding for the work. The report also found Queensland's government didn't help matters by offering a poor brief, poor governance and being a weak negotiator.
The State's Premier (a title equivalent to a US State's Governor) Campbell Newman today issued a statement in which he said “it appears that IBM took the state of Queensland for a ride.” ...
Not being considered for public sector work in Queensand is bad news for Big Blue, as the State grows quickly thanks to an attractive climate, enviable lifestyle and low taxes. While the government recently implemented austerity measures, missing out a chance to help meet the State's IT needs will hurt. There's also the wider stain to consider: bureaucrats around Australia now know they probably can be fired for buying IBM.
U.S. hardware workers, including those involved in development and procurement, will take a furlough week with one-third pay starting either Aug. 24 or 31, said Jay Cadmus, a spokesman for the Systems and Technology Group. Executives in the division will take no pay during the week.
The world’s biggest computer-services company is trimming expenses to preserve profit margins as hardware revenue continues to decline. Sales in the unit, which also includes storage devices and microelectronics, slid 12 percent in the second quarter from a year earlier to $3.76 billion. ...
IBM slipped 2.3 percent to $190.99 at the close in New York, the biggest one-day drop in more than a month. The decline wiped out the stock’s gains for the year.
Credit Suisse Group AG downgraded the company today to the equivalent of a sell rating. IBM has fewer ways to manage its portfolio to reach its earnings goals and has seen “gradual decline in the company’s competitive position across its industries,” Kulbinder Garcha, a Credit Suisse analyst, said today in a research note. ...
In the second quarter, Armonk, New York-based IBM spent $1 billion to restructure its workforce, cutting more than 3,300 employees in the U.S. and Canada, according to Alliance@IBM, an employee group. IBM doesn’t disclose the number of employees by country or by division. The company’s total workforce was 434,246 as of Dec. 31. Hardware accounted for 16 percent of IBM’s $104.5 billion in 2012 revenue.
“IBM continues to punish workers with job cuts, furloughs and pay cuts while the company spends billions to buy back stock and inflate the price,” said Lee Conrad, coordinator of Alliance@IBM. “There appears to be no sacrifice at the top.”
IBM spent $3.6 billion on share repurchases last quarter. The company raised its forecast last month for 2013 profits to at least $16.90 a share, up from $16.70, excluding the $1 billion restructuring charge.
Selected reader comments follow:
Question: Will the CEO take a pay cut and reduce the usage of the corporate jet and all the concomitant social benefits? In the mean time, investors are waiting for signs that this company will pull out of a declining revenue growth pattern, with the realization that financial engineering of the numbers to keep up EPS growth is not sustainable (an argument that applies to quite a few large cap companies that are not growing top line and cutting the bottom line or financial engineering to make profitability look better than it really is).
So why not the hardware too? Of course at some point the chickens HAVE to come home to roost. Not that the executives care as long as they goose the stock price long enough to cash in their many stock options.
This isn’t IBM’s first round of belt-tightening this summer. In June, Big Blue reportedly began cutting thousands of jobs across multiple divisions, including research, marketing, hardware and software—the result of a billion-dollar restructuring charge it took in the second quarter.
Most IBM workers in the Systems and Technology Group, known as STG, and some in the Integrated Supply Chain, or ISC, were told Monday they would have to take a week off with one-third of pay. ...
Company spokesman Jay Cadmus said, “In lieu of other options considered, this approach best balances the interests of employees and the competitiveness of the STG business. ...
Lee Conrad, national coordinator for Alliance@IBM, said the company was spending billions to buy back its own stock on the open market while cutting workers’ pay.
Selected reader comments follow:
“Organically we believe IBM is effectively in decline,” Garcha wrote, citing among the challenges the company faces the shift to cloud that “continues to present risks given IBM’s technology positioning.”
“Traditionally most CIOs would normally have gone for IBM because you didn’t get fired for hiring IBM,” said Yousuf Khan, CIO of Hult International Business School, which doesn’t use IBM technology. “It was solid, it had enough recognition, credibility and gravitas. You stuck with IBM because like other established players in the services space it was considered a safe bet.”
CIOs don’t regard IBM as they once did, according to Mr. Khan. “When the negative news is happening at multiple levels … it will no doubt catch the attention of the CFO, the CEO, and the industry peers in general,” Mr. Khan said. Is that enough to compel CIOs to pause and think twice before they sign a deal with IBM? “Absolutely,” he says.
There has been plenty of unsettling news about IBM as of late. On August 7, the premier of the state of Queensland in Australia, Campbell Newman, said he had banned IBM from entering into new contracts with the state until it improved its governance and contracting practices. The company has also been at loggerheads with state officials in Pennsylvania, Indiana and Texas. ...
DC analyst Crawford Del Prete said that IBM’s “Smarter Planet” initiative to improve municipal operations with hardware and software comprises mostly small projects rather than large, revenue-driving deals. He said that while IBM focuses on this work Salesforce.com Inc. and other cloud vendors are “disrupting them from a bunch of different angles.” He said IBM should buy into more market areas that are growing faster, such as cloud software and analytics. “Growth that really moves the needle is becoming very, very elusive,” Mr. Del Prete said.
IBM spokesperson Edward Barbini declined to comment for this article. ...
CIO sentiment about IBM ranges from frustrated to indifferent. Daniel Petlon, CIO of Enterasys Networks, a Siemens Enterprise Communications GmbH & Co.-owned company, said he uses IBM applications for configuration management, supply chain and expense reporting. But he’s switching to supply chain software from SPS Commerce this year because he said IBM increased the licensing fees on his data integration software after it acquired its maker, Sterling Commerce. “Typically when they acquire a company, they crank the license fees up at the first opportunity they get to do it,” Mr. Petlon said. He said this has made “me cautious about working with them.”
Selected reader comments follow:
As a CIO my view of IBM has changed from “high priced but I know that IBM will deliver” to “high priced and not differentiated”, so in the managed service market IBM has lost its selling point. In the cloud market IBM is getting hammered: Office 365 is eating IBM’s lunch; AWS is 100x better than IBM’s smart cloud (with the additional bonus that you do not need to deal with an IBM PE).
If IBM will want to keep their promises to the street all they can do is squeeze their existing customer and employees, they have been very good at doing this for the last 4 years, however this is not something you can do forever.
The IBM computer system, known as the Unemployment Compensation Modernization System (UCMS), was designed to calculate and provide unemployment compensation benefit payments.
However, a study commissioned by the Department of Labor and Industry and carried out by Carnegie Mellon University's Software Engineering Institute found "The Contractor [IBM] track record of ineffective project management led to weaknesses in process and practice discipline."
"The bottom line is that the problems we've identified cannot be solved and we will not renew our contract with IBM," Department Secretary Julia Hearthway said in the department's statement. "The level of risk, combined with the critical nature of the system, demands that the Department of Labor & Industry has a system that produces timely decisions reliably and accurately." ...
IBM spokesman Scott Cook said in an emailed response to a request for comment that the company was "surprised by yesterday's announcement. The decision is based on a third-party report that we had not seen at the time of the Commonwealth's announcement, despite repeated requests to the Department of Labor and Industry to review it together in the normal course of a working relationship ... [W]e stand ready to work with the State to resolve this matter."
"After some design documents were finished in 2008, IBM took a large number of business analysts that had become the 'memory' of the state's business requirements, off of the project: 'This decision created a significant knowledge gap as the program entered the critical application design and development phases'."
"Staffing changes weren't confined to the business analysts. In fact, since the project's start 638 IBM contractors have worked on it, 'with the majority of the workforce having less than one year on the project and 75% having less than two years,' the report states."
Editor's note: The source of the above quotes is from ComputerWorld: State dumps IBM after IT project runs 42 months late, $60M over budget.
So it is not a stable USA IBM workforce. There is not enough of continuity of intellectual capital now to effectively do day-to-day business. LIFE IS NOT GOOD at IBM right now because of it.
No wonder IBM doesn't release employment numbers anymore. They themselves know how unstable their workforce is and don't want the customers or the government even to know. No wonder IBM is losing contracts, customers, and whatever scant revenue they have. Better, new leadership is needed as well as a growing union to try to get a stable workforce ASAP!
These are acts of desperation and I can only conclude that IBM can no longer make the decisions necessary to save itself. It is so fixated on its goals and so sure its process is the only right way of doing things, it cannot see alternatives
The Australian IT project debacle is a classic example of IBM’s unique way of managing projects. The core of project management is “documented deniability.” They will do exactly what you tell them. They will document it. They will work against the documented requirements. When done, you have to pay them because they did exactly what you told them. The key problem to this approach is “does it work?”
The ultimate goal of every project is to build something that produces value or income. A factory makes products. A bridge assists transportation. In IBM’s project management IBM does not care about the ultimate goal. That is their customers concern, not IBM’s. This is very important for IBM’s customers to understand. It is the reason so many big IBM projects are failing. ...
When a highway department wants to build a bridge, there are both stated and unstated requirements. The project manager and engineers start with the stated requirements and find and analyze all the unstated requirements. A highway department will have a general idea where the bridge should be built. In the analysis the bridge building firm may discover important reasons to build the bridge in a different location. The firm will look at traffic patterns and recommend and optimal design to meet the highway departments ultimate requirement — to make long term improvements in transportation.
If IBM built that bridge, they’d build it exactly where the highway department suggested and how they suggested. If the foundation was weak the the bridge started to tilt, it’s not IBM’s fault. You told them where to build the bridge. They did what you told them. They also never analyzed every aspect of your requirements. They did no testing. They did no prototyping. They just do what you tell them to. ...
Fixated solely on its 2015 earnings target, IBM is making decisions based solely on their balance sheet. They are ignoring and damaging the overall operation of their business. They have the time and the money to save the company. Yet they are doing more and more things that are ultimately destructive to the very survival of IBM.
Selected reader comments follow:
Typically their rounds of Resource Actions (or whatever positively spun phrase they have coined for layoffs) hit the low end staff, those that consistently fall to the bottom of the pile at PBC time etc.
Interestingly with the above 3 measurements the employees being hurt the most are the ones IBM should be desperately trying to retain. Of all the former co-workers I’ve talked to this week, they are either impartial or modestly happy with the furloughs. The top performers however are increasingly frustrated and even those I never thought would talk about leaving are doing just that.
Considering a huge number of STG employees impacted are in the Research Triangle area of NC where there is a heavy tech presence I wouldn’t be surprised to see only those employees IBM really doesn’t want to lose jumping ship, leaving an already dwindling and suffering US workforce to contend without the people that could always be counted on to do the work. I don’t doubt IBM will make it to 2015 as a company, but I wonder what the caliber of their US workforce will be.
Oh well, at least there’ll be plenty of new hires from the “emerging markets” to do the work. Because that’s been working out so well…
It is almost painful to read some of IBM’s claims the other day about their cloud experience “rears”—fact, IBM’s commercial offering is only 4 years to Amazons. IBM’s largest customer is itself as part of internal cost cutting. IBM has been playing catch up to Amazon (AWS) for years.
IBM’s claim “40 years experience with virtualized environments”; how does main frame MVS/VM operating systems count the same as VMware? That’s stretching the truth. IBM sales adage “I never tell a lie, but, I never tell the truth”?
A very inciteful comment on the unique aspects of customer solution engineering and project management in IBM. The old saying from Bob Howe (as endorsed by the CEO) was “if it’s not in the contract in writing it's charity to be charged to you” if you even think of doing something extra for the customer/client! As an engineering, architect, manager and executive, I found this unsettling for one who wanted to get things done right (even ethically) but how you describe it has been the case as long as the finance people run the asylum. As long as finance and legal run the circus!
The elephant has gotten hit with a bullet hole between the eyes years ago and is dead, but it just keeps moving primarily on the inertia of the brand blinded customers impressed by the ghosts of IBMers who really cared to get the job done right at any cost decades ago, now long gone and fired. It’s just going to take a few more years for all of us and the leaches riding it to realize it’s dead.
Good Luck, Kieran. Ask Greg Ball what the IBM employment number is. IBM didn’t tell him. Better yet ask Governor Andrew Cuomo to see if he has a clue about how many employed by IBM in NY State where PILOT and generous property tax breaks are given to appease IBM. Supposedly IBM has to ensure a number of employment (i.e. jobs) to qualify for these State programs.
Bob—my congratulations. I can share that your e-mails are still getting through the corporate e-mail system (at least in my part of the world)—so they’re not blocked as such, but then again you used the word ‘flags’. That concerns me (nah, not really—I’m past caring) that the corporate thought police will be on to me and like minded IBMers—how dare we follow you, how dare we want to know what the hell is happening to our once great company—we should be happy being kept in the dark and fed BS. After all that is the IBM way.
What with the furloughs, Credit Suisse analysis around free cash flow, sinking stock price and regular news of yet more failed IBM projects (and don’t forget the RA’s which have happened already this year and the more yet to come over the coming months) I’d suggest IBM is rapidly approaching a critical point in its once proud history.
At current course and speed things will implode soon – either that or we’ll have a regime change – though I’m not sure the board has the guts to get rid of Rometty.
Keep the articles coming – it’s good that between your posts and the Alliance website us IBMers have at least some voice and mechanism to share our thoughts with the wider community.
Folks like Amazon, Google, and other became wildly successful because they were open to new ideas and were willing to challenge the validity of traditional forms of computing. IBM has a stunningly poor corporate culture — new ideas are rejected, communication is guarded, management doesn’t listen.
Worse, the condescending way they viewed and interacted with the technical ‘help’ was beyond indignant. The culture began to resemble a quasi ‘caste’ system for lack of a better analogy. The execs were the landlords, the techs the low-level serfs. If a tech sent an email to an exec, nary a response would, or should, be expected.
The most glaring example I witnessed was when a senior project manager once said to me ‘the success of a project must be viewed as 5% technical and 95% customer perception.’ I quickly reminded this non-technical PM that if the technical aspects of the solution do not function properly, no amount of perception will make up for a failed computing implementation. But this PM was adamant about the stated premise. I knew then, more than ever, how leadership viewed these projects and being a long-time (and rather talented, I might add) I/T technician, this flew in the face of what I had witnessed and learned over the course of 40 years pressing the keys. My gut feel was ‘these people do not have a clue.’
I knew then, particularly with the ramping up of offshoring and endless layoffs of talent in the name of EPS, It would only get worse going forward. Therefore I left and found an opportunity where they appreciate solid technical talent. From what I hear from former co-workers, the talented are jumping the big blue sinking ship in droves especially as the economy has improved. Even more so, as companies are drifting back to the insourced model, opportunities for those who can are sprouting every day. Never before has it been more true – buyer beware!
Since then customer satisfaction has suffered, business retention is poor, every contact is challenging. IBM is so desperate for new business they will do anything to get it, then do their best to lose it.
Philip Crosby made the point in his book “Quality is Free.” When you have imperfect quality you spend a lot to fix it, deal with it, manage it. You should see how many people IBM has today “managing” the mountains of problems on its accounts. You should see how many hours their DPE’s and SDM’s work and the stress they’re under. IBM is now paying dearly for their poor quality. IBM’s quality problems have now become a cancer to the organization and its long term viability. This is not something they can continue to “manage through.” Until you fix the source of the problem, the massive problems will continue.
Now, the point I want to pass on, and have great knowledge of in conjunction with Bob’s treatise is the following. IBM has always had a robust business partner channel. Business Partners contribute a significant revenue stream to IBM allowing IBM to focus on enterprise accounts. Benefits to partners included discounts on HW and SW via their “mall”, technical support, sales leads, and a strong annual conference.
Most of these benefits have eroded over the last few years where now partners have to “earn” these benefits. IBM expects them to optimize on the latest technologies without much in terms of support. Many partners are questioning the value of the IBM partnership. In fact, IBM now expects them to produce revenue period. This channel is getting upset. Developer Relations, who run a lot of these programs have cut back resources and manpower significantly.
For years IBM has been notorious for going to and selling to the execs of a company. They bypass the technical folks, middle managers, and schmooze their bosses. Senior managers in most companies are not “technical.” That is not a criticism, they have special talents for what they do, it just does not involve designing computer applications. Yet IBM targets them and finds ways to keep ‘those in the know’ out of the meetings.
Somehow when IBM fails they are always forgiven. That is another of IBM’s interesting talents. If I was selling parts to a factory, didn’t deliver, and disrupted their production — it would be a very cold day in you-know-where before that factory would consider doing business with me. In most lines of work you never, ever mess up your customers business. But IBM is doing that every day — and getting away with it.
If people familiar with application development, or system management, or, were involved in the decision making process, IBM would get a lot less business. When IBM would make a sale the expectations would be clearly defined, the results would be monitored, and there would very little wiggle room. Like everyone else IBM would be expected to deliver what it promised.
IBM’s use of generalist project managers is yet another indication of how IBM views its business and its customers.
IBM does have some very good project managers. However, this too is a skill IBM believes it can ship offshore and do remotely. When you are building that bridge, there is no substitute to watching the crew pour the concrete. It is easy to see if the concrete supplier brought you good product. It is easy to see if the crew knows what they are doing. Doing things remotely over a phone using a second language is a very poor way to manage a project. But as we can conclude from these columns, IBM does not care. Their selling to our exec’s not us.
Yes, IBM has some very good PMs, but the majority of these certified PMs are non-technical people who got an IBM certificate, stating they are IBM Certified PMs and IBM Certified Executive PMs and act as though they have the ability to walk on water and better. These certificates have ZERO value in my opinion, if said PM does not know what he/she are talking about ! I would never hire an IBM Certified PM without a rigorous grilling, because it would be a total waste of money to do otherwise.
Please enjoy some Beatles songs spoofs inspired by too many hours of scratching my head over the ongoing insanity that I experienced while attempting to develop software in that psychotic environment. Some of the lyrics were inside jokes for coworkers at the time, but many will ring true to anyone who had what they imagined to be a career there. http://jethrick.com/gdbeatles/
That said, I thought their separation package was generous. But even so, I kind of miss my identity being heavily defined by my deluded sense of working for the best company, a company that I believed respected individuals, and was with me in being committed to every client’s success.
On another note, ran into some HP consultants lately who want to wrap a whole layer of technical complexity on a project (all these dependencies and cost laid on my door-step) because it made it easier for them. Needless to say my response was a emphatic NO, come back with a better solution.
"IBM also needs to explain whether they have tried to issue furloughs at their overseas facilities before they began furloughs at domestic plants. IBM has received hundreds of millions in tax benefits from New York. Those benefits should come with more transparency from the company. We need facts and figures on the jobs those subsidies supposedly create or retain. We need to know their long-term plans."
He said "a number" of IBM employees working in this unit had been offered jobs doing this work as Jabil employees. ...
The shift comes as 697 IBMers at the Poughkeepsie and East Fishkill plant face the end of their jobs in September as part of a large "resource action" the company rolled out in June.
She also has to contend with staffers begging her for the ability to share information using third-party sync 'n' share apps like DropBox. Sound familiar?
OK, she's with tech behemoth IBM, so the scale is much bigger: Horan has shifted nearly half a million PCs off Microsoft's legacy OS and reckons up to three-quarters of the apps built by and for IBM - as opposed to product software - will be developed and tested on the cloud by the middle of next year. ...
There's also pressure from customers and IBM's product people, both eager to see you use the latest IBM hardware and software. And then there's pressure from management, as IBM is the kind of business that sees technology as an integral part of strategy rather than some supporting character.
The latter means Horan’s on the front line of the battle to get IBM to hit management’s target of $20 earnings per share by 2015 under its latest five-year plan issued in 2010. In 2010, its EPS was $13.44.
As if more pressure were needed, the revenue-generation side of IBM that would normally help it hit that EPS number is sliding. There have also been job cuts - up to 3,000. In its second quarter, IBM recorded its second revenue drop of the year - down 3.3 per cent to $24.82bn. Net income was muddied by the job cuts - down 16.9 per cent to $3.23bn to include the layoff charge. ...
Dropbox, along with Microsoft’s Office 365 and Google Docs, is officially not allowed. This is because they’d break IBM’s guidelines on the use of secure computing and social media, which staff are expected to know as part of IBM’s annual business conduct certification process.
The rules prohibit storing client-confidential information on a service. IBM offers it’s own alternative: IBM Connections, which has file-sharing and the ability to create private spaces within spaces.
Selected reader comments follow:
Smarter Planet? Not really.
As for Dropbox, we're also not allowed to use non-IBM USB sticks to share documents with a customer. And of course, there's no funding to buy the IBM ones. So everyone just breaks the rules, rather than saying to the customer "No you can't have a copy of the presentation because doing so would violate corporate standards".
There are worse places to work though.
Do you like Notes and Symphony? Do you like a badly siloed, poorly designed support intranet. Mandatory software installed that cannot be removed on penalty of job loss that DOES NOT play nice with the OS and may be a duplicate of a different brand of mandatory installed software?
Yeah, it's like. Exactly like that. Anon for obvious reasons.
The fundamental issue with IBM is not that it doesn't have the knowledge and capability to have the world's greatest IT infrastructure - it does - but that there are so many career-obsessed middle managers all falling over themselves to knife each other in the back that by the time stuff is rolled out the workforce it has been obfuscated beyond the point of usability in the interests of someone's 'internal brand'
If you really want to understand IBM these days; When the last edict about cost cutting came out, ITS management instructed that we sales specialists should be charging customers our travel costs when we went to see them on a sales call. "Yes, this XYZ will transform your business Mr Customer... now give me £30 for the train fare home".
It never ceased to amaze me how many apparently intelligent people would buy a sub-par service at three to nine times market rate just because it was IBM.
The RAM was twice as expensive as normal RAM as it was +ve polarity instead of of -ve - but if we bought it internally it cost $500 a stick, but $85 at nearest computer shop and a manager was sacked for buying externally even though his project was the only one running on-time/budget in the state.
Here are the employee numbers from IBM's Annual reports. I have these in a spreadsheet along with most IBM data from its annual reports dating back to the CTR Corporation days in 1914. I have the total IBM employee headcount reaching back to 1914 with only a few gaps. Breaking out the World Trade, U.S. and supplemental data is a bit of work and taking time and some data will never be available. The data does have gaps but getting more complete as I gather information for my next book, "A View from Beneath the Dancing Elephant; IBM and The Changing Face of American Corporate Culture."
Anyone that wants to help fill in the gaps, feel free to contact me and convince me that you are in a position to have access to "real" IBM U.S. employee data, not hypothetical or wishful thinking. Since IBM doesn't release the data any longer, I will make some assumptions in my book (i.e. it is still decreasing at a rate equivalent from when IBM quit providing numbers. If they don't like it they can always publish the numbers in their annual report again.)
U.S. Headcount: (peak U.S. employment was 1985 when IBM and John Akers finally realized IBM wasn't going to be a 100 billion dollar corporation by 1990 as John Opel forecast in the press in 1980.)
1978 - 180,924
1979 - 190,319
1980 - 194,306
1981 - 205,142
1982 - 214,352
1983 - 218,601
1984 - 238,888
1985 - 242,241
1986 - 237,274
1987 - 227,949
1988 - 223,208
1989 - 206,000
1990 - 205,500
1991 - 186,569
1992 - 2004 - a gap in U.S employee numbers but 50K (25% of the US workforce) cut between 1991 and 2005 while revenue grew after 1993 at rates of 2.13%, 12.31%, 5.57%, 3.37%, 4.02% and 7.2%.
2005 - 133,789
2006 - 127,000
2007 - 121,000
2008 - 115,000
2009 - 105,000
2010 - will be extrapolated (average of approximately 6K per year)
2011 - will be extrapolated (average of approximately 6K per year)
2012 - will be extrapolated (average of approximately 6K per year)
2013 - will be extrapolated (average of approximately 6K per year) 2014 - will be extrapolated (average of approximately 6K per year)
Complementary Employees as defined in the IBM Annual report is the following, "an approximation of equivalent full-time employees hired under temporary, part-time and limited term employment arrangements to meet specific business needs in a flexible and cost-effective manner." This is an interesting number that started being broken out in 1992 and peaked in 1997.
1992 - 35,468
1993 - 45,989
1994 - 58,200
1995 - 64,868
1996 - 65,033
1997 - 63,751
1998 - 58,604
1999 - 46,976
2000 - 47,386
2001 - 46,703
2002 - 39,532
2003 - 35,884
2004 - 40,276
2005 - 36,972
2006 - 38,783
2007 - 40,411
2008 - 39,625
2009 - 38,367
2010 - 37,118
2011 - 33,023
2012 - 32,749
These are the real numbers not hypothetical or wishful thinking.
The earliest numbers I have been able to find so far that break out World Trade and U.S. are in 1949 Annual Stockholder's meeting for fiscal year 1948 when Tom Watson Sr. stated, "19,045 in the U.S/Canada and approximately 6,000 outside the U.S for a total of 25,045 and from the 1962 IBM Annual Report when it was 81,493 in the U.S. and 45,975 outside the U.S./Canada for a total of 127,468).
I post this, not to start an "us vs. them" discussion. IBM India and the emerging markets will start to see some tremendous cuts in the coming years to make the 2015 earnings per share numbers. To gain the bottom line impact of releasing one US / European IBMer, the company will have to release 3 to 5 IBMers in the emerging markets. This will not be a good picture for any country.
And if you still think of an IBMer as an IBMer whether they are in India, Russia, US, UK, Poland, Malaysia, Japan, China or elsewhere, their families will be impacted just like us in the U.S. Those will be sad days with 3 to 5 times the number of people and families affected as in the last 15 years. Pete.
IBM may also have a cash flow problem. The Credit Suisse analyst said investors should focus on IBM's 59 percent free cash flow conversion rate which has deteriorated every year since 2009 and now is the lowest in big-cap technology excluding Intel. ...
Moreover, Garcha writes that IBM will have less flexibility to buy back its shares which "on average have accounted for 40 percent of EPS growth."
Selected reader comments follow:
The new CEO alone has sold over $72M in stock and options in just 15 months. In the last two years IBM insiders have done the same to the tune of $1.9B according to reported insider sales data. Maybe it would be more efficient to just cut them a check!
In April IBM said they would add $5B more to the stock repurchase plan and that they expected to authorize more stock repurchase in October.
They get to mismanage the business and fleece the company.
According to Indian business news site LiveMint, Airtel is looking to split the engagement, which covers network, desktop and application management, into smaller deals when the current contract runs out.
The site claims that meeting Airtel's chairman Sunil Bharti Mittal was top of IBM CEO Ginni Rometty's agenda during a visit to India in July. ...
It is IBM's biggest outsourcing contract in India, and the model for a number similar deals with telecommunications operators.
Now, though, according to LiveMint's source, "the relationship is jaded". It is unlikely that IBM will be dropped altogether, but Airtel is keen to diversify its supplier list, the site claims.
The computer services mammoth, thought to be the biggest employer at Research Triangle Park, is being dropped by the state of Pennsylvania after a 42-month project over-run.
Pennsylvania was trying to modernize its unemployment compensation system, and had contracted with IBM in 2006 for an upgrade. The contract was initially set to cost $106.9 million, but funds dedicated are approaching $170 million. That contract isn’t being renewed. ...
Pennsylvania commissioned a review of the project by Carnegie Mellon’s Software Engineering Institute, which identified a few issues. Among them? Turnover.
SEI found that 638 different IBM employees have worked on the project, but most spent less than one year on the contract.
“The churn of the workforce has likely impacted efficient project planning and execution,” the report reads, adding that both IBM’s project manager and executive left the project in early 2009 “during a critical time.”
Credit Suisse already had a cautious Neutral rating on IBM, but now its research department downgraded the stock rating to a very unattractive Underperform rating. The prior $200 price target was taken down to $175 in the call. To make matters worse, this IBM downgrade was not just a traditional analyst downgrade due to valuation. Credit Suisse had this as part of an Ideas Engine Series feature. The downgrade shows that future organic growth will be challenging. Kulbinder Garcha, the Credit Suisse analyst who made this downgrade, said:
We are also concerned by deteriorating free cash flow and a less effective mix up to software revenue. We see relative and absolute downside to $175, even if the company achieves the 2015 $20 earnings per share roadmap target. ...
IBM may screen out as a cheap stock to value investors on the surface, but that is just not the case after you dig through the numbers and consider the internal metrics hurting Big Blue’s business. This $20 earnings per share goal by 2015 will give IBM’s current price a value of less than 10 times forward earnings estimates, but that earnings growth is due to share buybacks and endless cost cutting. Analysts see a drop of 2% in sales for Big Blue in 2013, followed by only 2% sales growth expected in 2014.
Prior to the short seller screen, we showed that IBM’s earnings cheer was overlooking that it simply has no real growth. In fact, its latest round of layoffs made us think that Milton from “Office Space” was running the show there. We even are disappointed with IBM’s dividend rate, and that was after it was raised.
Selected reader comments follow:
Given the size of IBM, it's to be expected that as product lines die out, employees will be let go. Obviously this causes a degree of fear and uncertainty. It's compounded by IBM cutting benefits & perks. It doesn't help that executives are so highly compensated amidst all of this.
But even with well paid employees, and there are many, IBM doesn't make it a complete experience. There needs to be a culture, a sense of inspirational identity. IBM needs to spend money on off-site team building activities, free meals & coffee, movies, etc. It need not cost a lot, but would go a long way in making innovative and top employees feel as if they have a mission. In conjunction with this, IBM needs to facilitate bottom up product innovation, cutting out middle management largesse...letting these employees have an impact...taking a cue from many Silicon Valley companies.
One can argue that complaining about these extras is moot when one is paid well. Well, it matters when rivals can provide the whole package. IBM will keep losing talented software engineers to them, especially young ones who can best round out the look & feel of features.
I absolutely believe IBM top management knows about this. They would have to be monumentally foolish to ignore the serious dissatisfaction of many employees. Mastery of finance and operations can only go so far. Even world class R&D won't save IBM in the long term if top software engineering & sales talent cannot be retained.
Honestly, market factors don't bother me about IBM. For example, no company is more qualified to capitalize on the cloud than IBM. Again, the R&D is simply the best on the planet. IBM will produce seminal computer science. No, it's the employee cultural issues that looms as a threat to the future.
That being said, I'm betting on IBM. I at least am looking for a good entry point. I believe management will get things right. My faith is rooted in 100 years of IBM history. I expect short term setbacks & volatility...but I also expect IBM to prosper another 100 years. As I said, management would have to be stupid to not solve morale issues...and I just don't think they are stupid.
Beata Schmid, who previously alleged she discovered severe discrepancies in IBM’s sales records and has been dismissed pending appeal, was prepared to go to jail because she “quite simply” cannot pay the €1,000 fine imposed on her by the court last month, her counsel Rory Traynor told Mr Justice George Birmingham.
Multiple sources close to the immigration debate have told Breitbart News that the provision is a key reason the corporate titans helped build support for passage of the immigration bill in the Senate. They fought hard to pass the law in the Senate and have been strategizing to get final passage in the House.
At issue is an overlooked change to the H1B visa system, used primarily by technology companies seeking foreign scientific talent. Companies like Cognizant Solutions, based in New Jersey and Tata Consultancy, based in India, bring foreign engineers into the country on H1B visas and then contract out their services to small and medium sized businesses that need help with specific projects.
Companies like these act almost like third-party human resources departments for businesses not big enough to recruit H1B talent from overseas in specific Science Technology Engineering and Mathematics (STEM) fields. As such, these companies are big competitors to IBM and Accenture, who also provide technology services, but with a different business model. Because some of these companies operating in the US are headquartered in India, the business press refers to them as "Indian IT Industry."
The Senate passed amnesty bill, however, would change the law to prohibit an H1B visa being issued to an employee of a company that contracts out technology services to other businesses. Companies like Congnizant and Tata would have their entire business model prohibited by federal law. IBM and Accenture, who ironically do a significant amount of their services work overseas, would gain valuable business as a result. ...
The Senate bill rips the current system apart to favor companies that use foreign labor to perform those same services for U.S. companies. For instance, IBM has a large workforce inside India that does most of these same services without bringing high-skilled immigrants to the United States to do those jobs here. So does Accenture, which has a headquarters in Ireland and a small U.S. presence. ...
A July 23 study from J.P. Morgan’s Asia Pacific Equity Research arm concludes the same. “The immigration bill (passed by the Senate) puts IBM & Accenture (and perhaps other US firms) at disproportionate advantage vis-à-vis the Indian IT industry,” J.P. Morgan’s analysts wrote. “But these firms’ track-record of job creation in the US over a reasonable time-frame does not seem to square up with one of the bill’s noble intents.”
A tech industry lobbyist told Breitbart News that IBM’s chief lobbyist Chris Padilla orchestrated this provision, and argued that the entire bill and immigration debate is built around this H1B language. Because it is such a boon for IBM, the lobbyist said, Padilla pushed the whole bill across the finish line in the Senate. The lobbyist who spoke with Breitbart News on condition of anonymity said Accenture, another tech company that would benefit from the legislation, helped IBM’s Padilla. ...
As more evidence of IBM’s and Accenture’s critical involvement in getting the legislation passed, the lobbyist lays out those who win if the bill ever becomes law. “You got to look at the big winners of this bill,” the lobbyist said. “There are four huge winners. IBM, number one. Accenture, number two. Hewlett-Packard, number three. And the AFL-CIO, number four.”
For this sentiment, and others like it, Mathisen was soon rewarded with an on-air position at financial news network CNBC, where he remains to this day. As for the rest of us? We were had.
The United States is on the verge of a retirement crisis. For the first time in living memory, it seems likely that living standards for those over the age of 65 will begin to decline as compared to those who came before them—and that’s without taking into account the possibility that Social Security benefits will be cut at some point in the future.
The culprit? That same thing Mathisen celebrated: the 401(k), along with the other instruments of do-it-yourself retirement. Not only did they not make us millionaires as self-appointed pundits like Mathisen promised, they left very many of us with very little at all.
You might be tempted to ask “what went wrong,” but a better question might be “why did we ever expect this to work at all?” It’s not, after all, like we weren’t warned. As early as 1986, only a few years after the widespread debut of the 401(k) and the idea that American workers should self-fund their own retirement accounts based on savings and stock market gains, Karen Ferguson who was then, as she is now, the head of the Pension Rights Center, warned in an op-ed published in the New York Times, “Rank-and-file workers have nothing to spare from their paychecks to put into a voluntary plan.”
But her voice, and that of other critics like economist Teresa Ghilarducci, who is now at the New School and described our upcoming retirement crisis as “an abyss” in 1994 congressional hearings, were drowned out by the money and power of the financial services industry, combined with their enablers in the personal finance media who proclaim even today that if we don’t have enough money set aside for retirement, it is all our own fault. ...
Yet whether the stock market goes up, down or sideways, the financial services sector makes out when it comes to your retirement accounts. How much do they earn? Astonishingly, we don’t know the answer. In 2008, Bloomberg magazine polled a group of pension consultants and came to the conclusion that 401(k) fees alone totaled $89.1 billion annually. Ghilarducci, who recently took a more all-encompassing look at American retirement assets, and included IRAs and pensions in her total, pegged the number at $500 billion.
This voluntary-savings arrangement has exhibited a remarkable resiliency in Congress. Scheduled for elimination in last fall's Treasury proposal for tax revision, the plans survived in the House tax reform bill with a proposed cap on employee contributions of $7,000. Then the Senate Finance Committee voted earlier this month to raise that limit to $12,000, ignoring the acid observation of its chairman, Bob Packwood, Republican of Oregon, that the ''tax code is not designed to let the elegant live very exquisitely when they retire.'' ...
Thus far, 401(k)'s have escaped criticism, primarily because they fit in perfectly with traditional notions of self-reliance and rugged individualism. But these notions are likely to be very rugged for most lower-paid and moderate-income workers.
This is because the shift toward do-it-yourself retirement arrangements is a shift away from company-paid pension plans. Employers are using 401(k)'s as a convenient substitute for pension plan improvements.
Money that would have gone into pension plans a few years ago, to make plan rules fairer or to increase benefits, is now going into 401(k)'s. Some smaller companies have found 401(k)'s to be such an appealing escape route that they have jettisoned their pension plans entirely. The appeal, simply, is that the companies put money in only if the employee contributes. Under a pension plan, the company contributes whether the employee contributes or not.
"Upon closer examination, in fact, IBM was not the born-again growth machine trumpeted by the mob of Wall Street momo traders. It was actually a stock buyback contraption on steroids. During the five years ending in fiscal 2011, the company spent a staggering $67 billion repurchasing its own shares, a figure that was equal to 100 percent of its net income."
The author points out that the gain in IBM stock price is mainly due to stock buybacks, acquisitions, and the decline of the dollar. You'll be happy to note that some of the share buybacks have (of course) been plowed into executive option programs. So, in case there was any doubt, the execs will do fine even though the company really isn't. -Anonymous-
"The one unifying principle in the Republican Party at the moment is making sure that 30 million people don't have health care," Obama said, referring to the number of people who will have health insurance as a direct result of the law. "Why is it that my friends in the other party have made the idea of preventing these people from getting health care their holy grail? Their number one priority?"
The president chuckled as he said Republicans at least used to say they would replace the law with a better health care proposal. Not anymore, he said.
"There's not even a pretense now that they're going to replace it with something better," Obama said. "The notion is simply that those 30 million people, or the 150 million who are benefiting from other aspects of affordable care, will be better off without it. That's their assertion. Not backed by fact. Not backed by any evidence. It's just become an ideological fixation."
Most people who George Loewenstein, the health-care economist, studied could get one or so questions right – and thought they had pretty decent comprehension of how health coverage works. But only 14 percent could identify what each of the four terms mean (answers, if you’re curious, are at the very bottom). ...
And when Loewenstein gave his study participants a hypothetical insurance plan, and asked them to figure out what a four-day hospital visit would cost, 11 percent were able to figure out the price. Just 14 percent were within $1,000 of the right answer.
Only 14 percent answered four multiple choice question about the four most basic insurance features. The respondents to the survey were a representative sample of people who had an insurance policy and were the primary or secondary stakeholders. Involved in making decisions about the insurance plan.
“I have a PhD in economics and I’ve spent a bunch of time giving insurance companies feedback about policies, and I still find them difficult to understand,” Loewenstein said. “I assumed that extrapolating from myself that the average American individual would have an even lower understanding.”
Selected reader comments follow:
And as hard as it is for people who have grown up with our system to understand, it's even worse for people unfamiliar with it. My wife, despite being incredibly bright, couldn't make heads or tails of her company's policy when she first moved here.
One well-known result in economics theory is that the more confusing a product or service is, the more profit a company can make. Not-for-profit insurance providers have to incentive for complexity, but for-profit ones do.
The most skilled are the companies that can pull off the creation of confusion and sell the confusing mix of details to you as the prospect of choice and customization so it sounds like a good thing.
Health insurance policies are designed for one thing: To maximize profit and minimize the treatment provided. Even the "non-profits" follow this model. Remember the testimony in Congress a few years ago, where the lady's coverage of cancer treatments was stopped because she hadn't mentioned her acne on the application? It's not that uncommon.
California fined Anthem Blue Cross and Health Net $14M each, for dropping people when they needed expensive treatment. Their policies were full of fine print that would allow them to drop the insured for no logical (medical) reason--a technicality.
Employer group policies do guarantee coverage for older applicants. For individual applicants outside the employer group market, however, the story has been much different. In most states, insurers have been allowed to reject applicants with pre-existing medical conditions. Even if they did agree to write a policy for an older applicant, they have had the freedom to charge rates many times higher than the premiums for comparable coverage charged to younger and healthier applicants.
But under health care reform, conditions in the non-group market for individual and family policies are set to change next year. No applicant can be turned down for health insurance due to a pre-existing condition or for any other reason. Insurers can still charge higher rates to older individual policyholders, but the ratios, or "bands," by which age-based rates can differ have been reduced to 3:1 (charging an adult age 64 years or older more than three times the premium they charge a 21-year-old for the same policy) from 5:1 under existing practices. ...
Under Obamacare, it will be the younger generations' participation that helps make coverage affordable for everyone else. Younger people tend to have very low insurance claims, which explains why so many of them forgo insurance entirely. If too many of them continue to avoid buying insurance, then the rates charged to individual older Americans will need to rise in 2015 and perhaps beyond.
Mr. Shopenn, 67, an architectural photographer and avid snowboarder, had been in such pain from arthritis that he could not stand long enough to make coffee, let alone work. He had health insurance, but it would not cover a joint replacement because his degenerative disease was related to an old sports injury, thus considered a pre-existing condition.
Desperate to find an affordable solution, he reached out to a sailing buddy with friends at a medical device manufacturer, which arranged to provide his local hospital with an implant at what was described as the “list price” of $13,000, with no markup. But when the hospital’s finance office estimated that the hospital charges would run another $65,000, not including the surgeon’s fee, he knew he had to think outside the box, and outside the country.
“That was a third of my savings at the time,” Mr. Shopenn said recently from the living room of his condo in Boulder, Colo. “It wasn’t happening.”
“Very leery” of going to a developing country like India or Thailand, which both draw so-called medical tourists, he ultimately chose to have his hip replaced in 2007 at a private hospital outside Brussels for $13,660. That price included not only a hip joint, made by Warsaw-based Zimmer Holdings, but also all doctors’ fees, operating room charges, crutches, medicine, a hospital room for five days, a week in rehab and a round-trip ticket from America.
“We have the most expensive health care in the world, but it doesn’t necessarily mean it’s the best,” Mr. Shopenn said. “I’m kind of the poster child for that.”
As the United States struggles to rein in its growing $2.7 trillion health care bill, the cost of medical devices like joint implants, pacemakers and artificial urinary valves offers a cautionary tale. Like many medical products or procedures, they cost far more in the United States than in many other developed countries. ...
An artificial hip, however, costs only about $350 to manufacture in the United States, according to Dr. Blair Rhode, an orthopedist and entrepreneur whose company is developing generic implants. In Asia, it costs about $150, though some quality control issues could arise there, he said.
So why are implant list prices so high, and rising by more than 5 percent a year? In the United States, nearly all hip and knee implants — sterilized pieces of tooled metal, plastic or ceramics — are made by five companies, which some economists describe as a cartel. Manufacturers tweak old models and patent the changes as new products, with ever-bigger price tags.
Generic or foreign-made joint implants have been kept out of the United States by trade policy, patents and an expensive Food and Drug Administration approval process that deters start-ups from entering the market. The “companies defend this turf ferociously,” said Dr. Peter M. Cram, a physician at the University of Iowa medical school who studies the costs of health care. ...
The basic design of artificial joints has not changed for decades. But increased volume — about one million knee and hip replacements are performed in the United States annually — and competition have not lowered prices, as would typically happen with products like clothes or cars. “There are a bunch of implants that are reasonably similar,” said James C. Robinson, a health economist at the University of California, Berkeley. “That should be great for the consumer, but it isn’t.” ...
Like many other countries, Belgium oversees major medical purchases, approving dozens of different types of implants from a selection of manufacturers, and determining the allowed wholesale price for each of them, for example. That price, which is published, currently averages about $3,000, depending on the model, and can be marked up by about $180 per implant. (The Belgian hospital paid about $4,000 for Mr. Shopenn’s high-end Zimmer implant at a time when American hospitals were paying an average of over $8,000 for the same model.)
“The manufacturers do not have the right to sell an implant at a higher rate,” said Philip Boussauw, director of human resources and administration at St. Rembert’s, the hospital where Mr. Shopenn had his surgery. Nonetheless, he said, there was “a lot of competition” among American joint manufacturers to work with Belgian hospitals. “I’m sure they are making money,” he added. ...
“Imagine you’re the C.E.O. of Zimmer,” he said. “Why charge $1,000 for the implant in the U.S. when you can charge $14,000? How would you answer to your shareholders?” Expecting device makers “to do otherwise is like asking, ‘Couldn’t Apple just charge $50 for an iPhone?’ because that’s what it costs to make them.”
In Virginia, it’s a different story. People can seek assistance from about two dozen special guides. Or they can go to their state legislators, who might refer them to phone numbers and Web sites operated by the federal government.
The two states have taken vastly different paths although they have comparable numbers of uninsured: at least 844,000 in Virginia and an estimated 800,000 in Maryland. ...
In states such as Maryland, which embraced the law and is building its own marketplace, health officials are getting access to millions of federal dollars to identify the uninsured, bombard them with information and then provide human helpers to guide them through their options. But in places such as Virginia, which rejected the law and even mounted an unsuccessful lawsuit challenging it, the enthusiasm to spread the word and the resources to do so will be much more limited.
In a news conference Friday, Obama noted that Republicans have made it their “holy grail” to prevent people from getting health care under the law. He also acknowledged that “there are going to be some glitches” implementing the Affordable Care Act. ...
Adding to confusion in the Washington region: Virginia is not implementing a key provision of the law that allows more people with low-to-moderate incomes to be covered under Medicaid. Both Maryland and the District are doing so. That means a greater share of Virginia’s uninsured will need help figuring out what to do. ...
Signing up people for coverage is even more challenging in Northern Virginia. Residents there will be hearing the same TV and radio messages about expanded Medicaid options as those in Maryland and the District.
But Virginians won’t have that option because the state is not broadening Medicaid. Community groups estimate that about 441,000 uninsured Virginians would have qualified. In states that refuse to expand Medicaid, residents whose incomes are above the poverty line (about $11,500 for an individual) will still have access to tax credits for purchasing private insurance in the marketplace. But those below the poverty level will not receive help obtaining coverage.
These may seem to be reasonable positions. But they are incompatible. That’s been shown by historical events, and it’s now being strikingly confirmed by recent experience in the emerging Obamacare insurance exchanges.
The crux of the matter is what economists call the adverse-selection problem. Uninsured people with pre-existing conditions often face tens or even hundreds of thousands of dollars in out-of-pocket medical costs annually. If insurers charged everyone the same rate, buying coverage would be far more attractive financially for people with chronic illnesses than for healthy people. And as healthy policyholders began dropping out of the insured pool, it would become increasingly composed of sick people, forcing insurers to raise their rates.
But higher rates make insurance even less attractive for healthy people, causing even more of them to drop out. Before long, coverage would become too expensive for almost everyone.
The adverse-selection problem explains why almost no countries leave health care provision to unregulated private insurance markets. It also predicts that requiring private insurance companies to charge the same rates to everyone will make it prohibitively expensive for most people to buy individual health insurance. ...
What alternatives are there? One way of avoiding the adverse-selection problem would be to re-emphasize traditional employer-provided health plans. Adverse selection is less serious under such plans, because the favorable tax treatment they receive requires insurers to cover all employees irrespective of pre-existing conditions. (Insurers can meet the requirement because most people employed in any company are reasonably healthy.)
But Obamacare was enacted precisely because employer plans fell short in many other ways. Millions of people, for example, are ineligible for such plans because they don’t have jobs. And millions of others with chronic health problems are trapped in their current jobs, because leaving them would mean losing coverage.
Employer plans arose in the first place only because of a loophole created by wage controls during World War II. In an effort to curb the costs of the war effort, the government prohibited wage increases but, perhaps by oversight, did not prevent employers from offering additional fringe benefits as a way to combat labor shortages. Employer health plans proved an especially effective recruiting tool and had the additional advantage of not being taxed as implicit income.
BUT if universal access to health care is the goal, employer plans are not the solution. Because global competition has increased pressure to cut costs, the number of workers with such plans has been steadily declining for more than 40 years. ...
We must ask those who would repeal Obamacare how they propose to solve the adverse-selection problem. That problem is not an abstraction invented by economists to justify trampling individual liberties. As experience in most countries around the world has confirmed, it is a profound source of market failure that renders unregulated insurance markets a catastrophically ineffective way of providing access to health care.
But the study, which was commissioned under the terms of the federal Patient Protection and Affordable Care Act, found that differences in traditional, fee-for-service health care spending exist in spite of age, sex and health status. ...
Newhouse said that while researchers didn’t detail the reasons for variation in specific communities, cost breakdowns indicate that the services received after leaving the hospital — home health care, skilled nursing, rehabilitation, long-term care and hospice — account for much of Louisiana’s above-average spending.
That some of these same services have been identified as major areas of fraud may also explain the higher costs, the data suggest. ...
Jonathan Skinner, a professor of economics at Dartmouth College, who has studied variations in health care spending for years, said that Louisiana has several strikes against it, even when studies like this one control for poverty, race and health status. Besides having an incredibly unhealthy population, he said, individual patient care between hospitals and community clinicians is often fragmented, leading to high percentages of hospital readmissions soon after discharge. Louisiana also has a robust market for what he called “entrepreneurial home health providers” that clearly plays a role. ...
States where researchers found spending to be lowest, Gee said, are those with more developed, long-standing managed-care systems: New York and California, for example. Among the nation’s 10 lowest-cost communities were Rochester, Buffalo and the Bronx in New York and Stockton, Sacramento, Santa Cruz, Santa Rosa and San Francisco in California. ...
The report does suggest that post-acute services like home health appear to play such a hefty role in driving up costs and could be an indication of Medicare fraud. And Louisiana is among six states, including Texas and Florida, that the U.S. Office of Inspector General last year deemed to be at high-risk for Medicare fraud.
Mr. Romney, who described himself as a “severe conservative” during the 2012 campaign, appeared to side with the pragmatic wing of his party with most of his remarks, made at a political fundraiser for the New Hampshire Republican Party. In particular, he warned against shutting down the government in an attempt to strip funds from the Affordable Care Act, known informally as “Obamacare."
“I badly want Obamacare to go away, and stripping it of funds has appeal. But we need to exercise great care about any talk of shutting down government,” Romney said. “What would come next when soldiers aren’t paid, when seniors fear for their Medicare and Social Security, and when the FBI is off duty?”
"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.
And now the latest myth bites the dust: No, “economic policy uncertainty” — created, it goes without saying, by That Man in the White House — isn’t holding back the recovery. ...
But, as I said, we live in a golden age of economic debunkery. The doctrine of expansionary austerity collapsed as evidence on the actual effects of austerity came in, with officials at the International Monetary Fund even admitting that they had severely underestimated the harm austerity does. The debt-scare doctrine collapsed once independent economists reviewed the data. And now the policy-uncertainty claim has gone the same way. ...
The truth is that we understand perfectly well why recovery has been slow, and confidence has nothing to do with it. What we’re looking at, instead, is the normal aftermath of a debt-fueled asset bubble; the sluggish U.S. recovery since 2009 is more or less in line with many historical examples, running all the way back to the Panic of 1893. Furthermore, the recovery has been hobbled by spending cuts — cuts that were motivated by what we now know was completely wrongheaded deficit panic.
And the policy moral is clear: We need to stop talking about spending cuts and start talking about job-creating spending increases instead. Yes, I know that the politics of doing the right thing will be very hard. But, as far as the economics goes, the only thing we have to fear is fear-mongering itself.
But while the new cases are significant and likely to go on for some time, they don’t answer the question of whether anybody on Wall Street will ever end up in court, or face the possibility of prison time, on criminal charges arising from the mortgage mess. My take: there is no need for anyone on Wall Street to lose much sleep, and that includes Brian Moynihan, the chief executive of Bank of America, and Jamie Dimon, the head of J. P. Morgan. About the worst that is likely to happen is that the two big banks will be forced to pay some hefty fines, which, with both making billions of dollars of profit in the latest quarter, they can easily afford.
The two New England Democrats proposed the bill, the Stop Subsidizing Multimillion Dollar Corporate Bonus Act, last week, just before Congress broke for its summer recess.
It aims to close massive loopholes in a 1993 bill that limited deductibility on certain executives’ pay up to $1 million, with exceptions for so-called performance-based compensation. The bill, which President Bill Clinton championed on the campaign trail in the 1992 election, was well-intentioned, but has been a near-complete flop because of corporations’ successful efforts to find work-arounds.
As Reed and Blumenthal pointed out in announcing the bill, Congress’ Joint Committee on Taxation estimates the legislation would add more than $50 billion to federal coffers over 10 years by capping the amount of deductible salary at $1 million per employee and eliminating the exception for compensation such as non-equity incentive plans, stock options and stock-appreciation rights. ...
Corporations are moving more and more executive compensation into tax shelters at exactly the time that the Treasury is starved for revenue and Congress has struggled to come up with meaningful deficit-reduction measures. They’re also doing so at a time when the disparity in pay between top executives and their employees is at a record high. ...
“What are America’s CEOs doing to deserve their latest bountiful rewards? We have no evidence that CEOs are fashioning, with their executive leadership, more effective and efficient enterprises. On the other hand, ample evidence suggests that CEOs and their corporations are expending considerably more energy on avoiding taxes than perhaps ever before — at a time when the federal government desperately needs more revenue to maintain basic services for the American people.”
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