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Highlights—May 11, 2013

ZD-Net: IBM wins $123 million HR contract for U.S. gov't . The U.S. Department of Veterans Affairs wants to replace its 50-year-old human resources application with a sleeker software-as-a-service model. By Andrew Nusca. Excerpts: This morning, the U.S. Department of Veterans Affairs awarded IBM with a 10-year, $123 million contract to replace its 50-year-old (!) human resources application with an updated, software-as-a-service version.
The deal will require IBM to build, operate and maintain the new HR system, which will be deployed across the enterprise, to some 300,000 employees, by the end of 2015. The system will incorporate Oracle PeopleSoft, Monster Government Solutions and IBM's Rational, InfoSphere and Tivoli products.
Yahoo! IBM Employee Issues message board: "Re: Job cuts imminent" by "lastdino1". Full excerpt: My sources told me today the 30% of Rochester employees were told yesterday they will be fired. Life is Great.
Yahoo! IBM Employee Issues message board: "Re: Job cuts imminent" by "ibmoptioneer". Full excerpt: Ginny and Sam appear to be running late on the plan of 2005. Rochester was supposed to be totally shut down by 2015. It looks like they won't make that financial target.
Yahoo! IBM Employee Issues message board: "Re: Job cuts imminent" by "thirtyyearibmer". Full excerpt: This was from Mark Loughridge - SVP and CFO, Finance and Enterprise Transformation earnings call:
"Now, let me describe how this impacts the year. . . . we now expect to take the bulk of our workforce rebalancing actions for the year in the second quarter as opposed to last year when it was distributed across the quarters. Though we currently don't have a specific approved action, this will result in a charge that will additionally impact the operating EPS we report. Like all years, we have a number of action plans to improve the business for the long term, acquiring and divesting businesses and rebalancing our resources. This will result in charges in the second quarter and gains in the second half, which we expect will roughly offset for the year."
Glassdoor IBM reviews. Selected reviews follow:
- “The experience was a good one. I enjoyed working at the company” Former IT Specialist in Denver, CO. Pros: The flexibility of working from home was invaluable. Cons: Work never ended. You are always on. Advice to Senior Management: Work life balance.
- “All About Costing Down” Current Staff Engineer. Pros: - Good medical benefits; - Brand name. Cons: - Strong political tussle among teams; - A lot of pressure on costing down, cut head counts, freeze hiring, achieving financial targets at all cost, freeze training, freeze travel, freeze budget for general purchases, string corporate focus to keep selling its hardware business. Advice to Senior Management: Focus on strengthening revenue, identifying new revenue streams instead of focusing on costing down. There's a finite amount that the company can cut.
- “Witness the decline - IBM Dubuque” Former SQL Database Administrator in Dubuque, IA. Pros: Elevators, good chairs, good lighting, nice view from upper floors, nice lobby, a little coffee nook to ponder ones escape. It is in the nice little city of Dubuque.
  Cons: More dysfunctional than most large companies I have worked at. Leadership provided by "professional managers" with no IT sense. If you enjoy changing & tracking your passwords you'll like it here, not 5 or 6, like 40 constantly expiring. The 10 accounts you'll be supporting all have different configurations, login procedures, rules. India coworkers are 12 hours away, many that are difficult to understand. Prepare to give up all of your personal digits to anonymous requests from the many clients across the globe to secure your personal access to their data systems. Remember you will be fired if you share an id or password, understandable. High turnover, depressing to see hope fade in the newbies.
  
  Advice to Senior Management: Grab as much money as you can, while you can. Oh...you're already doing that? Get rid of useless 1st line managers and listen to your team leads.
- “As it is such a large company, you really must manage your own career.” Current Consultant in Washington, DC. Pros: Big network of new hires; get to move around to different projects; teleworking, and lots of resources and free education opportunities. Cons: Consulting for the government; working at a computer for 9 hours a day; and being at the client site. Advice to Senior Management: IBM's upper management doesn't exactly care for people who have been with IBM for less than 3 years.
- “Worked at IBM for many years” Current Employee. Pros: You can do nearly anything at IBM...if you work hard and keep your skills current, you can work there for a long time, and change careers in house. Cons: Over the years, the company has been whittling away benefits, and driving growth through expense cutting. They are also continuing to cut the US workforce.
- “There has never before been a collection of such” Former Technical Support Engineer in Longmont, CO. Pros: It's easy to get a job there. They start you out answering phones and reading out of a support database. It's slightly easier to get a job at a real company with potential to grow out of your role once you have about a year under your belt from a place like this.
  Cons: They absolutely do not reward you for doing an excellent job. There is no motivation to try to work any harder once they put you on 10 desks for 10 different companies at the same time. At $10.50 an hour, you will be unable to afford anything at all that you might want to do. If you're a nonsmoker, you will strongly consider starting the slow process of killing yourself with lung cancer once you start working at IBM. It's about the only way to get out of the carpeted warehouse that is the call center.
  
  IBM is very cognizant that the job market is overflowing with underqualified job seekers. This is their way of exploiting that and capitalizing on it at the expense of the quality of life of Coloradans. They pay a slightly better wage than flipping burgers for a job at which you might be absolutely amazing, but they will put you on Tier 2, 3, and 4 desks and still pay you like a Tier 1.
  
  They reserve the right to change whatever desk they put you on and exploit the living hell out of your computer expertise to the nth degree. You will be asked to do 16 hour shifts. My longest was 18. You basically have to do it to get the overtime pay in order to afford to live. IBM would buy slaves outright if they could.
  
  Advice to Senior Management: You shouldn't have cut call-center employee pay from $20/hr to $10.50/hr in 2009. That was terrible for the Colorado economy. And to make it even worse, even though the market was arguably what justified the cuts to begin with, those wages have not even started to move back upwards to what they were for the same jobs in 2008. I know this because I still see your little contractor agencies looking for contractors on Craigslist - they dredge the bottom of the barrel on purpose because there's always someone there at that price level who will practically beg for a job. Well guys, you get what you pay for.
  
  That means the Tier 4 desk I left in 2010 was left with exactly one guy who knew what he was doing in Linux to support 10 different accounts. When he left shortly after I did, there was nobody left who had the skillset to do the job. How many Tier 4 caliber agents do you think are going to line up at your doorstep to work for $10.50 an hour? You'll be overloaded with resumes from inexperienced and disadvantaged people though. And if you get lucky, you can find a few more actual computer technicians you can exploit who will tolerate the inhumane, patronizing atmosphere just long enough to realize you've been screwing them since they started the job.
- “Positive, but occasionally frustrating” Former Sales Engineer. Pros: IBM's solid benefits, a stable career path, and a reliable customer base make for a comfortable long-term work environment. Cons: Difficulty competing with more innovative startups, extensive bureaucracy, and in-fighting between internal brands and products can sometimes make for a frustrating experience. Advice to Senior Management: Listen to your teams in the field and try to think outside the box occasionally. Stop building shareholder return by minimizing profit sharing bonuses.
- “Great place to work, but changing...” Current Technical Manager in Dallas, TX. Pros: Lots of flexibility to work in a variety of capacities with a variety of technologies. I could imagine staying at IBM forever and not getting bored. Cons: Nearly exclusive focus on shareholder value at the expense of employee morale. Advice to Senior Management: Focus more on the longevity of this 100+ year old company, than on short term stock performance.
- “Strategic Consultant Intern” Former Consulting Intern in Brussels (Belgium). Pros: Good reputation of the company. Adequate salary for interns (for foreigners only). Positive learning experience. Availability of endless resources. Very flexible daily working hours, you never exceed the 7,5 hours a day that you guarantee in the contract!
  Cons: From the first day you arrive, you realize that IBM doesn't care of making you feel part of the whole team. There is no integration for interns, there is no program built around you and, moreover, there is no chance you will be hired at the end of your contract. Interns are merely a cheap labour resource for the company with an extremely high turnover.
  
  Interns don't receive any help from HR in terms of support for job finding at the end of the contract or relocation to other IBM offices. The only way of communication with the HR is through another HR intern, who is basically useless.
  
  The only way of being hired is through a Young Graduate Program but you must have strong recommendations in order to be hired. Meritocracy is sometimes an unknown concept.
- “Connections are more important than talent” Current Employee in Budapest (Hungary). Pros: - well-paid; - good job roles as R&D employee. Cons: - extensive administration; - some unskilled, jealous managers; - unpaid overtime as accountant; - conservative attitude to inventions ("historical reasons"); - high amount of outsourcing; - extensive bureaucracy to get things done.
- “The company I worked for (Clarity Systems) was acquired by IBM in 2010, and it only took them 1year to turn it in the mo” Former Software Engineer in Bucharest (Romania). Pros: - being part of a very big company, with offices in many countries; - the opportunity to work on products that are used by some of the world's biggest companies (in the case of working on the Cognos Business Intelligence platform); - the opportunity to choose another IBM office to work in, in the same or a different country, if the necessary conditions are met.
  Cons: In my opinion, IBM is a company with no ambition and a lot of red tape. There is a feeling of mediocrity and complacency in the company; a good indicator is in my opinion the fact that they insist on using Lotus Notes for mail / im, when there are far better and easier to use products available for free. This is just one of the examples of company practices that make no sense to most employees, and that seem to exist just in order to make your life more difficult.
  
  There is also a feeling of disregard for employees that are not management, and there are also too many managers in the company; a large percentage of them seem at least uninterested in their jobs, if not incompetent.
  
  Advice to Senior Management: Let go of antiquated corporate practices and learn from the innovators. Google, Facebook and Microsoft must be doing something right to constantly be rated as some of the best places to work in by their employees. Unlike IBM.
- “Three decades at Big Blue—always an interesting journey” Current Client Technical Adviser in London, England (UK). Pros: The people are excellent and the culture is generally positive. Cons: Too much "management by spreadsheets" - not enough respect for the individual. This used to be one of our core values. Advice to Senior Management: The company's greatest asset is supposed to be its people and their values, hence the proud statement "I'm an IBMer" - we should treat them accordingly!
- “Plenty of opportunity, but overwork is a necessity” Current Marketing Manager in Austin, TX. Pros: A lot of opportunity to try new things, learn new skills and take on new projects. In marketing you can always find a way to work on a project (or 5) that interest you. And in the right department travel is easy to come by. Cons: You are expected to work on multiple projects at one time and not just the original job you were hired for. 40 hours is a joke, but to get the ratings for promotions and salary bumps 55+ is very realistic. Advice to Senior Management: Understand that not everyone wants to be working on 10 projects at one time. It is distracting and leads to lower productivity.
Alliance for Retired Americans: Friday Alert. This week's articles include:
- Seniors Join Pro-Retiree Members of Congress to Protest Benefit Cuts
- Moderate Democratic Senators Come Out Against Chained CPI
- Senate Passes Older Americans Month Resolution
- Big Pharma Gives $1.57 billion to CEOs, Charges Medicare Exorbitant Drug Costs
- “Observational” Hospital Stays Continue to Leave Seniors with Big Bills
Wall Street Journal: As Companies Step Up Buybacks, Executives Benefit, Too. By Scott Thurm and Serena Ng. Excerpts: Safeway Inc. Chief Executive Steven Burd received a $2.3 million stock award this past March in part because he oversaw a 61% jump in the company's per-share profit last year.
The earnings increase didn't come from the grocery chain's sales, which barely budged. And it didn't result from Safeway squeezing out more profit as its operating margin narrowed.

What made the difference was $1.2 billion in stock buybacks mostly financed with borrowed money. By reducing the number of shares by which Safeway's profits had to be divided, the buybacks lifted per-share earnings growth by about half. That improved a metric used to determine the CEO's incentive pay.

As corporations step up stock repurchases to return cash to shareholders, compensation targets tied to per-share earnings—a common factor in executive-pay calculations—are helping to increase many executives' pay. The link worries some investors and compensation advisers because they fear the figure is too easily manipulated. The debate is a tricky one, though, because buybacks are generally seen as a plus for shareholders and thus something to be encouraged. ...

Researchers say companies that tie executive pay to per-share earnings are more likely to buy back stock. In a recent paper, Carol Marquardt, an accounting professor at Baruch College, and two co-authors found that companies that use accelerated share repurchases are even more likely to reward executives for increasing per-share earnings.
New York Times: Latest Product From Tech Firms: An Immigration Bill. By Eric Lipton and Somini Sengupta. Excerpts: The television advertisement that hit the airwaves in Florida last month featured the Republican Party’s rising star, Senator Marco Rubio, boasting about his get-tough plan for border security.
But most who watched the commercial, sponsored by a new group that calls itself Americans for a Conservative Direction, may be surprised to learn who bankrolled it: senior executives from Silicon Valley, like Mark Zuckerberg of Facebook and Reid Hoffman of LinkedIn, who run companies where the top employees donate mostly to Democrats.

The advertising blitz reflects the sophisticated lobbying campaign being waged by technology companies and their executives.

They have managed to secure much of what they want in the landmark immigration bill now pending in Congress, provisions that would allow them to fill thousands of vacant jobs with foreign engineers. At the same time, they have openly encouraged lawmakers to make it harder for consulting companies in India and elsewhere to provide foreign workers temporarily to this country.

Those deals were worked out through what Senate negotiators acknowledged was extraordinary access by American technology companies to staff members who drafted the bill. The companies often learned about detailed provisions even before all the members of the so-called Gang of Eight senators who worked out the package were informed. ...

In the many phone calls and hallway asides on Capitol Hill this year, those lobbyists realized that they had to give a little to get a lot of what they wanted. At the top of their wish list was an expansion of a temporary visa program called the H-1B, which allows companies to hire foreigners for jobs in the United States. There are a limited number of H-1Bs available each year, and competition for them is fierce.

Companies like Facebook and Intel use them largely to bring workers to their own offices. Consulting companies like Tata, based in India, use them to supply computer workers at American banks, oil companies and sometimes software firms.

Critics of H-1B visas point out that they mostly bring workers at the lowest pay scales. The technology industry’s main rivals in these negotiations were lawmakers who have long been critical of guest worker visa programs, chiefly Senator Richard J. Durbin, Democrat of Illinois, and groups that represent American engineers. ...

What emerged was a Senate measure that allows American technology companies to procure many more skilled guest worker visas, raising the limit to 110,000 a year from 65,000 under current law, along with a provision to expand it further based on market demand. The bill would also allow these companies to move workers on guest visas more easily to permanent resident visas, freeing up more temporary visas for these companies. ...

To negotiate the details on the immigration bill, Mr. Rubio hired Enrique Gonzalez, who took a leave from a law firm that handles H-1B visa applications for many technology companies. Mr. Gonzalez said the assignment presented no conflict of interest because he works with universities handling visas, not technology companies.

The fact that technology lobbyists were given an unusual degree of access to the negotiators on the bill is entirely justified, he said. “Because of the unique needs of the technology industry, the newness of it, the novelty of a lot of the issues they are confronting, I think that was why there were more engaged than some of the other industries were,” he said.
Washington Post opinion: Employers lack confidence, not skilled labor. By Robert J. Samuelson. Excerpts: Are we missing a couple million jobs? These would be jobs that exist but lack workers to fill them. The notion that the recovery is being hobbled by too few skilled workers is seductive. It might explain today’s stubbornly high unemployment and why aggressive government policies to promote recovery have been so ineffective. Low interest rates and big budget deficits can’t cure bottlenecks in the job market. They can’t make construction workers into computer scientists.
There’s only one problem with this story: It’s mostly fiction.

Superficially, it seems compelling. Consider the evidence. The Labor Department’s latest estimate (February) of job vacancies was 3.9 million, up 80 percent from the latest low in July 2009. Just recently, the Wall Street Journal reported a “shortage of help hits nursing homes.” Employer complaints of scarcities abound, notes Darrell West of the Brookings Institution. Even in 2010, manufacturers said they couldn’t fill 227,000 jobs. More than half (55 percent) of state governments report difficulty hiring for IT openings. Microsoft says it struggles to fill thousands of computer science slots. ...

If shortages were widespread, Burtless and other economists argue, wages would be rising rapidly as employers competed for scarce skilled workers. There’s scant evidence of this. From April 2012 to April 2013, average hourly manufacturing wages rose 1 percent, reports the Labor Department. Over the same period, the gain for all private nonfarm workers was 1.9 percent. Among computer programmers, inflation-adjusted wages have remained flat for a decade, says a study by the Economic Policy Institute, a liberal think tank. ...

No doubt the economy’s future would be brighter if workers had more skills. But we shouldn’t mistake a long-term goal for a short-term problem. The idea of widespread labor shortages in an era of high unemployment seems absurd — and is. Today’s crucial scarcity is not skills. It’s confidence.
Inc.: Is the STEM Shortage a Myth? By Jana Kasperkevic. Excerpts: As many businesses push for expansion of the H-1B program, American IT graduates struggle to find jobs in their field, says a recent study.
Amid the heated immigration debate, many businesses claim there aren't enough high-skilled, domestic workers to fill the vacancies within the STEM industries.

But is that actually the case?

Not so, according to a recent a study released by Economic Policy Institute, which found that U.S. colleges do produce a sufficient number of STEM workers to meet the market demand.

The study, which focused only on the IT/Computer Science field, found that for every two American students who graduate with an IT degree, only one is hired into a STEM job. A third of the graduates who did not make it into an IT job said it was because such jobs were unavailable. More than half said that they found a better opportunity outside their field. ...

It looks like about 50 percent of new job openings are being filled by guestworkers and the number could probably be even higher, but a conservative estimate would be 30 to 50 percent. It's very large and it's very concentrated in IT labor market. So then the question becomes: Is there a shortage? Is there an inability of U.S. to produce people for these labor markets? ...

Typically if there is demand, the wages go up, and students respond. That's consistent with all the data. That leads us to what happened to IT wages, where there is shortage. And what is notable here is how consistent the evidence is, which is that the wages are flat. In these IT fields, the wages went up during the dot com bubble, came down afterwards and have been flat. So the wages are now what they were 14 to 15 years ago.

Why do you think that is? Two plus two seems to equal four. There is large inflow of guestworkers, wages are flat, and domestic students are still in plentiful supply, but not as plentiful as they once were. They are going to jobs that pay better.
Washington Post: Obama’s modest proposal to cap retirement entitlements. By Fred Hiatt. Excerpts: When Republican presidential candidate Mitt Romney admitted to keeping assets in the Cayman Islands, money managers for the wealthy were not surprised.
When it emerged that he had paid taxes at a lower rate than millions of Americans who earn far less, money managers yawned.

But when they discovered that Romney held as much as $100 million in his IRA — the kind of retirement account to which most Americans can contribute only $5,500 per year — even the most sophisticated financial analysts were impressed.

The campaigns moved on, but President Obama’s budget team remembered. This spring Obama proposed a cap of about $3.4 million on how much people can save in their tax-advantaged IRAs and 401(k) plans — enough to generate an annual retirement income of about $205,000.

The response to that modest proposal, which would raise about $9 billion in tax revenue over 10 years, says a lot about what — and who — is wrong with Washington these days. ...

Tax law limits traditional pensions to about $205,000 per year, so the administration proposes to put defined-contribution plans on an equal footing. As the limit rises with inflation, so would the ceiling on your IRA or 401(k). Beyond that, you could keep saving, but you wouldn’t get a tax break.

The average total wealth of white families in the United States — including not just IRAs but all savings, homes, cars and everything else — is $632,000. For blacks and Hispanics, average total wealth is a meager $103,000, according to the Urban Institute.

Meanwhile, according to the Employee Benefit Research Institute, about 0.06 percent of IRA account holders have more than $3 million in their accounts, as do about 0.0041 percent — that’s one in 25,000 — of 401(k) account holders.

For most Americans, IRAs and 401(k)s offer a way to shelter some income from tax during their high-earning years; when they withdraw the savings later, they may be paying at a lower rate. For the super-wealthy, the plans have become a means to defer huge tax bills and even to shelter inherited wealth. ...

The entitlement culture, as the Post’s Robert Samuelson wrote last week, runs deeper than the entitlement programs we normally think of, like Medicare and Social Security. Whisper the possibility of cuts, or even of slower growth in spending, and everyone from wind farmers to political science professors to Big Bird immediately gears up to insist that his piece of the pie is fundamental to the American way of life. Silicon Valley tycoons, preeningly progressive at most times, descend on Washington to defend their carried-interest loophole whenever Congress threatens to narrow their sweet deal.

Now it’s the top one-thousandth demanding their right to tax breaks for socking away unlimited wealth in retirement plans.
Reuters: Despite risks, retirement savers plow into target-date funds. By John Wasik. Excerpts: A torrent of money flowing into target-date funds suggests many retirement investors may be ignoring the risks of this key category.
These funds now represent the second-most-popular allocation after U.S. large-stock funds within defined-contribution plans like 401(k) accounts, according to pension consultant Callan Associates. Target-date assets have climbed above $500 billion, attracting $16 billion in the first two months of 2013 alone, according to Strategic Insight. ...

The premise behind most of the glide paths is that bonds are safer than stocks. But when interest rates rise, bond prices fall, so bond funds within target-date funds are likely to lose money. And sooner or later, either a recovering economy or improving job situation will compel the Federal Reserve to raise interest rates. A legion of market observers are warning of a decline in the bond market, which is said to be nearing the end of a 30-year bull run. ...

While many investors may think target-date funds reduce risk over time, they still have large exposures to the stock market. That helps retirement investors keep their portfolios growing over the long term but also leaves them vulnerable to a market sell-off. For example, the T. Rowe Price 2020 fund performed poorly in 2008, with a 33 percent loss. ...

Target-date fund holders pay dearly for convenience, shelling out as much for a group of mostly passive funds as they would for an actively managed fund. Expenses for funds with target dates ranging from 2016-2020 averaged 0.71 percent, just slightly lower than the 0.78 percent average for more than 300 U.S. active stock funds tracked by Morningstar. Furthermore, higher-priced target-date funds do not deliver better performance than the lower-priced ones, according to a study by Marc Fandetti, principal of the Meketa Investment Group in Westwood, Massachusetts.
Human Resource Executive Online: Connecting Work/Life Balance to Turnover. Employees who do not feel their companies uphold workers' efforts to juggle work and home obligations may be more likely to jump ship, new research finds. That means managers need to get better at recognizing the signs of burnout, experts say. By Kecia Bal. Excerpt: More than one in four employees at organizations not perceived to support work/life balance plan to leave their employers within the next two years, compared to 17 percent of employees who feel supported, according to a study by the Philadelphia-based global management consulting firm Hay Group. "Organizations across the globe continue to ask their employees to do more with less, leading to increasing dissatisfaction with work/life balance," says Mark Royal, senior principal at Hay Group Insight. The most recent figures in the firm's annually updated database compared employee responses from the top- and bottom-performing companies ranked by effectiveness in helping employees manage work/life issues. The database is comprised of responses from more than five million employees and 400 organizations worldwide.

New on the Alliance@IBM Site

Job Cut Reports
- Comment 05/05/13: Wow. Seriously? Is it even possible to have so much BS in one email." Randy MacDonald has been a treasured asset" "deeply valued his creativity" " pushed us to anticipate major shifts" – "IBM is now recognized as the gold standard in leadership development"– "following our lead in workplace flexibility", "employee wellness" the "global deployment of talent."."Diane is a recognized leader in progressive workforce practices". Amazing! -Most-talented-BS -artists-ibm-
- Comment 05/05/13: Hey, will Randy get his 401K match for this year? (probably doesn't need it anyway). "Will remain a trusted advisor" - does that mean he gets another $1mil office next to Sam to do nothing.? -anonymous-
- Comment 05/06/13: I am hoping that it is no coincidence that it is because Old Randy McDonald got ripped to shreds in the UK courts over the attempted pension heist in the UK. Not only did he, the former UK CEO, the former UK HR director (Ferrar, now safely hidden in Armonk) contradict themselves in court, but the revelations were startling beyond most people comprehension. Plus IBM contrived to lose a vital piece of paperwork (no, really!) and the judge indicated he was less than impressed (which means he is furious). Weeagerly await the Judge's verdict expected in a couple of months. Interestingly it has already cost IBM UK more to put the first case they lost right than they "saved" (which really means transferred to the Corp to bolster the EPS numbers for 2010). You truly could not make this up if you tried. The sad think is that in neither of our great nations, ahem, there is no legislation to stop this. -Bored-
- Comment 05/06/13: Randy MacDonald retiring. About time! Another self-absorbed and self-serving egomaniac Type A that was imported to IBM under the Gerstner era. Thank God he is FINALLY going out to his old farm. Another piece of the problem with IBM leaving: Him, Sam, Mike Daniels, etc. More to follow for sure now. They are all bailing with their golden parachutes and stock options mega $wealth$ Ginni might not be so lucky... -Dogbert2go-
- Comment 05/07/13: They are putting color signs on all the water fountains in BTV, "NOTICE The chiller on this water fountain has been unplugged for Energy Conservation!" Now that is CHEAP. -UsedtobeBlue-
- Comment 05/07/13: Randy McDonald appeared in front of a judge in London's High Court in Feb 2013 for the IBM Pensions case. He was cross-examined for 2.5 days. If IBM loose this case in which McDonald is a player - it could cost a small fortune - enough for him to be forced to retire maybe. I am sure IBM know the outcome. Business Conduct Guidelines were a key part of the case. -RandyM-
- Comment 05/07/13: They removed the option on APU to pay former employees. We use to be able to send a check to people that needed to be reimbursed for travel expenses. Not any more. Just because IBM documents a policy in no way changes the legal statutes for expense reimbursement; which vary from state to state. -Anon-
- Comment 05/07/13: Albany R&D at nanotech. Contractors and LTS let go. Management is using exempt engineers to cover late shift work and call-backs to avoid paying overtime to technicians. Of course the engineers have no problem stabbing the non-exempts in the back. I wonder when the site exec will figure out he destroyed a strong R&D team. -Outside looking in-
  Alliance Reply: Thanks for the information. Not ALL exempt engineers are "backstabbers". Many simply fear losing their job if they refuse to 'cover' for the fired Contractors and LTS'. Remember, that solidarity and standing up for your right to form a union takes a great deal of courage; especially when people are so isolated from their co-workers and each other. A good rule of thumb is: Don't judge the whole group by the actions (or inaction) of a few. This is why Alliance@IBM has continually said that IBMers that "think" 'things aren't right here; need to do something or say something' and MUST seek other IBMers that feel the same way. That is what is called organizing.
- Comment 05/08/13: Who are Europe's top IT services firms in Q1 of 2013 and what happened to IBM? I thought I would publish ISG's list of the companies that took the biggest shares of this spend. What is a surprise is IBM's absence? Strange, in 2009 according to Gartner IBM was the number one IT services firm in Western Europe (which accounts for most the EMEA spend.) Most the usual suspects are all there but there are also a few I don't know at all, as well as some specialists thrown in. Top 20 IT services firms in terms of total EMEA contract value won in the first three months of 2013. This is in alphabetic order:
  - Accenture
  - AT&T
  - Capgemini
  - CGI
  - Communisis
  - Evry
  - Genpact
  - HCL
  - HP
  - Infosys
  - Lottomatica
  - Nokia
  - SQS
  - Swisscom
  - TCS
  - Thales
  - Tieto
  - Virtusa
  - Xchanging
  - Xerox
- Comment 05/08/13: Albany. The exempts are not covering for the laid off contractors. They are taking the overtime from full time non-exempt IBMers. These call-backs have always been handled by non-exempt techs. The engineers know that they are skirting around the labor laws concerning overtime and job codes. Sorry, but if the exempts do not say no to taking our work and overtime away they are as much of the problem as the managers. -On the inside-
  Alliance Reply: You are correct about the exempts being part of the problem, IF they are not part of the solution. In this case, Alliance members on the inside, need to be actively organizing ALL the non-management employees; which includes the exempts. The only way that the exempts will say NO to taking away OT from the non-exempt techs, is to organize them into a group that stands up and refuses to do it. If you can't beat them, it is better to get them to join you and any other Alliance members and supporters. This is the point that was poorly made in a previous Alliance reply. This is what solidarity means.
- Comment 05/09/13: Big meeting in Austin last week. Leblanc, all hand exec's, SWG honcho's, several IBM fellows, and more. Mandate from Ginny that PureFlex must succeed. Everything plus kitchen sink being thrown into it to make it attractive and folks buy, use it. Stated IBM facing critical juncture worse than in 1990's. Ginny on witch hunt who, how her admonishing employees video was leaked to Wall Street Journal. -Anonymous-
- Comment 05/09/13: Strong indicators point to Thursday 05/16/13 as "Resource Action" day in Essex for STG. -Woodchuck in Vermont-
- Comment 05/09/13: Heard from a reliable source that the axe is coming down on Tuesday at IBM East Fishkill NY with up to a 20% reduction in head count. Some managers will be on vacation with a stand in executioner doing their handy work! IBM Today mainly cares about shareholders and using their employees as blood money trying to make up for any lost profit margin! Question is in the end will there be anyone left to make a product ?? Last one to leave turn the lights off! -Roadkill 2012 !!-
- Comment 05/09/13: We just had an all hands meeting in Dubuque and let me tell you that was disturbing. They have nerve to show a list of people who received promotions this year. I seen about 5 people on the list this year that were also promoted last year, yet most are getting screwed. Such a toxic hell-hole to work in, I cannot wait to get out. Such miserable people to work with, I really feel for their spouses. -trainerjoe-
- Comment 05/09/13: While the big meeting was taking place they were letting go practically all of the contractors. -Austin-
- Comment 05/10/13: Here it comes folks. Meetings are being called all over the place. -hereitcomes-
- Comment 05/10/13: Most or all contractors in STG Germany were let go this month. As they were friends to many of the regular employees, you can easily figure that motivation to boost IBM's EPS is at an all-time low. They are draining IBM of its most valuable asset: The knowledge that leaves with colleagues that are kicked or that leave on their own.
  @Anon: I'm surprised IBM is not in the top 20 of the ISG list, but one thing is true: In Europe IBM earned itself a reputation of "not to be trusted". You have seen the reports about the UK Pension cases and there are similar cases in Germany. Here is a link to a web site of a court in Stuttgart: http://www.lag-baden-wuerttemberg.de/servlet/PB/menu/1276763/index.html. This court is usually quite biased in favor of employers and in general German courts don't publicly criticize companies like IBM. Thus the following quote was notices and re-played by all relevant media in Germany:
  
  "Besonders bedenklich ist, dass die Firma IBM nicht bereit ist, die Grundsatzentscheidungen des Bundesarbeitsgerichts zu akzeptieren. Die Firma IBM untergräbt damit die Autorität der Rechtsprechung. Außerdem steht das Verhalten der Firma IBM im Widerspruch zu den eigenen Ethik-Richtlinien, wonach sich jeder Unternehmensangehörige zur Einhaltung der Gesetze und der allgemein gültigen ethischen Standards verpflichtet."
  Translated: "It is particularly disturbing that the company IBM is unwilling to accept the decisions of the Federal Labour Court. The company IBM thus eroding the authority of the law. There is also the behavior of by IBM in contrast to their own ethical guidelines, according to which every corporation undertakes to comply with the laws and generally accepted ethical standards."
  
  Taking this together with reports about "Project Liquid", more law suits in US and elsewhere makes customers (especially SMBs) very concerned about entering business with IBM. I think IBM needs to rethink it's strategy in regard to CSR, if it doesn't want to destroy it's reputation and brand equity. -Left in 2011 and happy about it-
- Comment 05/11/13: east Fishkill layoff date is 6-1-13 not 5-16-13.. -jj fishkill-
- Comment 05/11/13: At this point, do employees really care about IBM? We all know how the workers are stepped on, managers are pathetic for the most part, there is no leadership, and morale is so low it cannot go lower. Everyone knows something has been coming since the earning report. By doing nothing, productivity is less than 50%. Everyone is just going through the motions waiting for the axe to fall.
  Older workers on the old pension plan are just hoping to be part of a sell off or just a couple more years. Younger workers already know IBM is a ZERO-growth company. Why look for another position when you know you go straight to the bottom of the totem pole for the next round of layoffs in 6-12 months?
  
  If you are an IBMer and not updating your resume, you have to be crazy at this point. I am stuck and have another year or so before I can leave on my own terms. If that was not holding me hostage, I would be sending my resume out already. There would be no notice of departure. I would walk into my managers office, hand my laptop and badge, take my remaining PC days, and be gone.
  
  Good luck finding anyone that can decipher what I really do. It will take 12 months to figure it all out and the resources needed to figure it out will be 2-3x what I make. We all know layoffs are coming within the next 2 weeks. Those affected have to be gone by June 30th so all losses can be counted against the current quarter. If I get tagged, I will get my severance, resume ready to go, and be able to sustain for at least 12 months while looking for a new job. Most people in my dept that have been let go have found jobs in 3-4 weeks making 20-30% more, far less stress, and companies that appreciate them. -WhoCares?-

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform

Unions for Single Payer Health Care: The Unhappy Marriage of Economics and Health Care. By Gerald Friedman. Excerpt: America's health care system is collapsing, and we can blame the Economics profession. Most economists approach health care in the wrong way, viewing it as a commodity like shoes or the laptop on which I write. Instead, health care is an idiosyncratic commodity, subject to uncertainty and "asymmetric information" leading to destructive behavior. Trying to force health care into a box, treating it like other commodities, economists have promoted cost sharing, market competition, and insurance oversight of health care providers that have inflated the administrative burden while denying ever more Americans access.
Health care spending has been rising throughout the world as aging and more affluent populations spend on their health. Nowhere, however, has the cost of health care risen as fast as in the United States where costs soared because of rising administrative expense. Compared with other affluent countries in the Organization for Economic Cooperation and Development (the OECD), the United States spends over twice as much per person as is spent elsewhere. Before 1971 when Canada enacted its Medicare program, a single-payer government funded health care system, Canada spent a higher share of its national income on health care than did the United States; since then, however, while Canada has controlled costs, spending has soared in the United States so that we now spend over $3000 more per person. That is $12,000 for a family of four that is not available for travel, education, housing, or food.
New York Times: Slowdown in Health Costs’ Rise May Last as Economy Revives. By Annie Lowrey. Excerpts: One of the economic mysteries of the last few years has been the bigger-than-expected slowdown in health spending, a trend that promises to bolster wages and help close the wide federal deficit over the long term — but only if it persists.
Major new studies from researchers at Harvard University, the Henry J. Kaiser Family Foundation and elsewhere have concurred that at least some of the slowdown is unrelated to the recession, and might persist as the economy recovers. David M. Cutler, the Harvard health economist and former Obama adviser, estimates that, given the dynamics of the slowdown, economists might be overestimating public health spending over the next decade by as much as $770 billion. ...

That led economists to surmise that other factors were at play. In new research, the Kaiser Family Foundation estimated that the recession accounted for about three-quarters of the lower spending trajectory, with the rest attributed to other factors not directly related to the economy. Professor Cutler of Harvard calculates that the recession accounted for about 37 percent.
New York Times: About Half of Adults Lacked Adequate Health Coverage in 2012. By Ann Carrns. Excerpts: About half of United States adults ages 19 to 64 didn’t have health insurance for at least part of last year or were underinsured, a new report from the Commonwealth Fund says. ...
One bright spot, the report found, is that the proportion of young adults without health insurance fell significantly over the last two years, probably because of a provision of the Affordable Care Act that allows young adults to stay on their parents’ health plans until age 26. The rule took effect in September 2010.

Nearly eight out of 10 (79 percent) young adults reported that they were insured, up from 69 percent in 2010. That marks “an abrupt reversal in a decade long climb” in the number of uninsured young adults, the report said.

Uninsured rates for other age groups, however, either rose or stayed the same. About half of adults ages 19 to 64 didn’t have health insurance for all of 2012 or were underinsured, meaning that they had insurance but struggled to pay for medical costs anyway. ...

The survey also found that people are increasingly skipping needed health care because they can’t afford it (about 43 percent answered yes to that question). That’s up from 37 percent in 2003, the report noted. ...

The report found that about two out of every five adults had trouble paying medical bills last year or were paying off medical debt over time, and that many of those struggling with medical debt (42 percent) said they had received a lower credit rating as a result.
New York Times: Hospital Billing Varies Wildly, Government Data Shows. By Barry Meier, Jo Craven McGinty and Julie Creswell. Excerpts: A hospital in Livingston, N.J., charged $70,712 on average to implant a pacemaker, while a hospital in nearby Rahway, N.J., charged $101,945.
In Saint Augustine, Fla., one hospital typically billed nearly $40,000 to remove a gallbladder using minimally invasive surgery, while one in Orange Park, Fla., charged $91,000.

In one hospital in Dallas, the average bill for treating simple pneumonia was $14,610, while another there charged over $38,000.

Data being released for the first time by the government on Wednesday shows that hospitals charge Medicare wildly differing amounts — sometimes 10 to 20 times what Medicare typically reimburses — for the same procedure, raising questions about how hospitals determine prices and why they differ so widely. ...

Medicare does not actually pay the amount a hospital charges but instead uses a system of standardized payments to reimburse hospitals for treating specific conditions. Private insurers do not pay the full charge either, but negotiate payments with hospitals for specific treatments. Since many patients are covered by Medicare or have private insurance, they are not directly affected by what hospitals charge.

Experts say it is likely that the people who can afford it least — those with little or no insurance — are getting hit with extremely high hospitals bills that may bear little connection to the cost of treatment.

“If you’re uninsured, they’re going to ask you to pay,” said Gerard Anderson, the director of the Johns Hopkins Center for Hospital Finance and Management. ...

Mr. Blum, the Medicare official, said he would have anticipated variations of two- to threefold at the most in the difference between what hospitals charge.

However, hospitals submitted bills to Medicare that were, on average, about three to five times what the agency typically pays to treat a condition, an analysis of the data by The New York Times indicates. And variations between what hospitals charge may be even greater. ...

“There’s very little transparency out there about what doctors and hospitals are charging for services,” Mr. Zirkelbach said. “Much of the public policy focus has been on health insurance premiums and has largely ignored what hospitals and doctors are charging.”
Forbes: Hospital Billing Varies Widely -- But Quality Has Nothing To Do With It. By Leah Binder. Excerpts: If you are a Rational Person and unfamiliar with the business of healthcare, you will have trouble believing that price and quality are generally unrelated in an industry that represents nearly 18 percent of the Gross Domestic Product (GDP). Coincidentally, another report also came out yesterday that allows you to see for yourself. The report is an update of the Hospital Safety Score (from my nonprofit, The Leapfrog Group), which assigns letter grades of “A,” “B,” “C,” “D,” or “F,” to more than 2,500 general hospitals, rating them on errors, accidents, injuries and infections that unintentionally kill or harm patients. What you will find is that a hospital that gets an “A” isn’t necessarily high-priced, but hospitals that get a “C”, “D”, or “F” sometimes are. Both of these reports, the pricing report and Hospital Safety Score report, are available free to the public, so you can look up your local hospital on both websites to see how the hospital’s charges compare with its safety score.
For instance, in my community, Washington, D.C., the highest scoring hospital is Sibley Memorial, which earned an “A.” Sibley also lists charges of about half of the highest-priced hospitals in the region. You likely won’t find any rhyme or reason between prices and safety in your community either, with one exception: You may find that in some markets, hospitals with poor safety records have the highest prices because patients are expected to pay for the cost of failed care, and errors are expensive. Healthcare is the only industry where making more errors can earn you more profits.
Economic Policy Institute: Increased health care cost sharing works as intended. It burdens patients who need care the most. By Elise Gould. Excerpts: A number of different health care policy proposals that have emerged in recent years share a common goal: make households directly pay for a larger share of most health expenditures by encouraging higher deductibles, higher copays, or higher co-insurance rates. The rationale of such proposals is that too-generous insurance policies (either those provided by employers or public insurance such as Medicare) distort the prices consumers face, and that removing this distortion would allow patients to choose their health care more wisely, hence slowing health care cost growth. The “success” of increased cost sharing hinges on the ability of patients to make educated decisions about their health care purchases much like they do when buying other goods and services such as milk, cars, or cell phone plans.
This brief argues that this is a flawed strategy for health care cost containment. The health care market is unlike other markets; thus, forcing increased cost sharing on American households is a deeply inefficient strategy for trying to contain health care costs. Forcing Americans to pay a higher share of health costs will not induce them to shop around and compare prices when they are experiencing chest pains or their child is suffering from an asthma attack. Further, consumers of health care are in no position to second-guess their doctor when she tells them an MRI is better than an X-ray (and hence worth the higher price) to diagnose a condition. Lastly, unlike other markets, prices of health care services faced by consumers bear very little relation to providers’ cost to supply these services. Hence, these prices provide little to no information for consumers looking to judge the relative efficacy of various health care interventions.
Kaiser Health News: Colorado Launches $2M Ad Campaign For New Online Marketplace. By Phil Galewitz. Excerpt: With less than five months until Colorado’s new online health insurance marketplace opens for business this fall, officials are concerned that few state residents have heard of it.
This week, it became the first state to launch a public awareness campaign with television, print, radio and billboard ads that will cost $2 million and run two months. The TV ad shows a woman at her kitchen table scrolling through health plan information on the Connect for Health Colorado website. The voice over says the website lets people shop and buy a health plan online.

“When health care companies compete, there is only one winner: you,” says the voice over, as the woman jumps up and down as if celebrating a sports victory. The 30-second ad makes no mention that the new website is a result of the 2010 federal health law known to most Americans as Obamacare.
Healthcare Blog: Privately Insured Americans to Learn about the Health Insurance Marketplaces. By Kathleen Sebelius, Secretary of Health and Human Services. Excerpts: Today, the Departments of Health and Human Services and Labor are taking another step to let you know about new insurance options available in 2014. Over the course of the remainder of the year, businesses and health insurers in the individual market will send Americans information about coverage through the Marketplace.
Among those who will get notices are the approximately 7 million individuals and their dependants who become eligible for coverage through COBRA every year, including people who may be in between jobs and have the option to buy into their former employer’s coverage. COBRA coverage is generally expensive, and a number of people turn it down and become uninsured. From now on, people leaving their jobs will learn that they may be eligible for affordable insurance through the Marketplace. People who purchase coverage through the Marketplace instead of COBRA could cut their premiums by as much as half. They may also qualify for a new kind of tax credit that lowers monthly premiums right away.

News and Opinion Concerning the "War on the Middle Class"

"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.

New York Times opinion: A Disappointing Debut. Excerpt: Mary Jo White, the new chairwoman of the Securities and Exchange Commission, has gotten off on the wrong foot. Last week, in her first commission vote, Ms. White led the commissioners in approving a proposal that, if finalized, could leave investors and taxpayers exposed to the ravages of reckless bank trading.
At issue is the regulation of the multitrillion-dollar market in derivatives. When speculative derivative bets go right, the results are lavish bank profits and huge banker paydays. When they go wrong, the results are shareholder losses and taxpayer-provided bailouts. Even when derivatives are used in a relatively prudent manner — say, to hedge against price swings in food or fuel — the largely deregulated and opaque way they are traded allows the big banks that dominate the market to charge more than they could if trading were more transparent, enriching bankers at the expense of businesses and consumers.
The Nation: The Reverse Revolving Door: How Corporate Insiders Are Rewarded Upon Leaving Firms for Congress. Disclosures reveal that corporations and lobbying firms award six-figure bonuses to staff who leave to take powerful positions on Capitol Hill. By Lee Fang. Excerpts: In February of this year, news broke that Treasury Secretary Jack Lew received an exit package worth over $1 million from Citigroup shortly before joining the Obama administration in 2009. In fact Lew’s contract with Citigroup made explicitly clear that the banker’s eligibility for a special bonus was contingent on his securing a “full time high level position with the U.S. government or regulatory body.
Critics like Bloomberg News columnist Jonathan Weil were astounded by what appeared to be “some sort of a bounty” paid by Citigroup to burrow their executives deep within government. But far from an aberration, such bonuses appear to be fairly common on Capitol Hill.

Recent disclosures and employment agreements reviewed by The Nation show that current leadership staff to both Democratic and Republican lawmakers have received six-figure bonuses and other incentive pay from corporate firms shortly before taking jobs in Congress. In many cases, these staffers are well positioned to influence multibillion-dollar legislation on issues ranging from tax policy to defense, and which impact their previous employers. If government officials turned lobbyists reflect a well-known “revolving door,” paying corporate employees big bucks to leave lucrative posts to take jobs in government reflect a “reverse revolving door.” ...

Congressional staffers can earn as much as $170,000 as a federal employee, but such pay pales in comparison to what many have come to expect on K Street, where top lobbyists earn several million a year. The bonuses, which cut across industries, from defense contracting to broadcasting, and which can amount to several hundred thousand, help staffers to maintain the fixed costs associated with a lobbyist lifestyle.

This is emblematic of the cash culture of K Street, where salaries continue to climb as special interests seek power in Washington, says Jeff Connaughton, a former lobbyist and senior congressional staffer. To Connaughton, who chronicles the influence of big money in Congress in his 2012 book, The Payoff: Why Wall Street Always Wins, bonuses paid to reverse revolving-door lobbyists must be judged on a case-by-case basis. Some, he said, are simply a share of profits earned during the previous year. But in some cases, bonuses are part of an effort by special interests to maintain influence on Capitol Hill.
New York Times: Corporations Find a Friend in the Supreme Court. By Adam Liptak. Excerpts: Not long after 10 a.m. on March 27, a restless audience waited for the Supreme Court to hear arguments in the second of two historic cases involving same-sex marriage. First, however, Justice Antonin Scalia attended to another matter. He announced that the court was throwing out an antitrust class action that subscribers brought against Comcast, the nation’s largest cable company.
Almost no one in the courtroom paid attention, despite Justice Scalia’s characteristically animated delivery, and the next day’s news coverage was dominated by accounts of the arguments on same-sex marriage. That was no surprise: the Supreme Court’s business decisions are almost always overshadowed by cases on controversial social issues.

But the business docket reflects something truly distinctive about the court led by Chief Justice John G. Roberts Jr. While the current court’s decisions, over all, are only slightly more conservative than those from the courts led by Chief Justices Warren E. Burger and William H. Rehnquist, according to political scientists who study the court, its business rulings are another matter. They have been, a new study finds, far friendlier to business than those of any court since at least World War II.
The Berkeley Blog: The Roberts Court’s corporate romance. By Dan Farber. Excerpts: Forty years ago, before going on the Supreme Court, Lewis Powell wrote a call to arms for business interests, calling on them to counter “enemies of the free enterprise system” like Ralph Nader. Among other things, he recommended a concerted campaign to influence the courts. The campaign seems to have been a success. The New York Times reports today on a new study suggesting that the current Supreme Court is the most business friendly since the end of World War II. In particular, John Roberts and Samuel Alito are the two most business-friendly Justices of the past 70 years.
The new study is especially noteworthy because of its authorship. The authors are a leading expert in empirical legal research and two prominent scholars whose own work is highly business friendly (Richard Posner and William Landes). In short, this isn’t just another attack on the Roberts Court by disgruntled liberals.
The Christian Science Monitor: How Republicans quietly repeal laws they don't like. Repealing laws by hollowing them out – failing to fund their enforcement or implementation – works because the public doesn’t know it’s happening, Reich writes. Enactment of a law attracts attention; de-funding it doesn’t. By Robert Reich. Excerpts: That’s been the Republican strategy in general: When they can’t directly repeal laws they don’t like, they repeal them indirectly by hollowing them out — denying funds to fully implement them, and reducing funds to enforce them.
Consider taxes. Republicans have been unable to round up enough votes to cut taxes on big corporations and the wealthy as much as they’d like, so what do they do? They’re hollowing out the IRS. As they cut its enforcement budget – presto! — tax collections decline.

Despite an increasing number of billionaires and multi-millionaires using every tax dodge imaginable – laundering their money through phantom corporations and tax havens (Remember Mitt’s tax returns?) — the IRS’s budget has been cut by 17 percent since 2002, adjusted for inflation.

To manage the $594.5 million in additional cuts required by the sequester, the agency has announced it will furlough each of its more than 89,000 employees for at least five days this year.

This budget stinginess doesn’t save the government money. Quite the opposite. Less IRS enforcement means less revenue. It’s been estimated that every dollar invested in the IRS’s enforcement, modernization and management system reduces the federal budget deficit by $200, and that furloughing 1,800 IRS “policemen” will cost the Treasury $4.5 billion in lost revenue.

But congressional Republicans aren’t interested in more revenue. Their goal is to cut taxes on big corporations and the wealthy. ...

In a similar manner, congressional Republicans and their patrons on Wall Street who opposed the Dodd-Frank financial reform law have been hollowing out the law by making sure agencies charged with implementing it don’t have the funds they need to do the job.

As a result, much of Dodd-Frank – including the so-called “Volcker Rule” restrictions on the kind of derivatives trading that got the Street into trouble in the first place – is still on the drawing boards.
The Washington Monthly, courtesy of AlterNet: How Taxes Fund the Outrageous Pay of "Fix the Debt" CEOs Pushing Austerity on the Rest of Us. This scheme deserves the admiration of con artists everywhere. By Kathleen Geier. Excerpts: You may have heard about a relatively recent player in the national debate over austerity-nomics. Fix the Debt portrays itself as a public interest group that is earnestly committed to fiscal responsibility and looking out for our children’s future (it always is about their touching concern for the children, isn’t it?) The group claims to support “a common sense solution to prevent disaster and renew America’s economic strength,” and it likes to give the public the impression that its membership is heavily made up of ordinary citizens and workers.
But actually, what it is is another elite-driven Pete Peterson front group consisting of billionaire CEOs lobbying for reverse Robin Hood fiscal policies that enrich themselves, immiserate the rest of us, and continue to run this country’s economy into the ground. Last week, the Institute for Policy Studies and the Campaign for America’s Future released a report that reveals new information about the group’s hypocritical and self-serving agenda.

An earlier report on Fix the Debt exposed the group’s extensive ties to defense contractors. The new one looks at the ways that 90 publicly held corporations that are members of Fix the Debt exploit loopholes in the tax code to help themselves to taxpayer subsidies worth many hundreds of millions of dollars. They happily rake in the taxpayer cash at same time they’re crying wolf about deficits and trying to pick the pockets of the rest of us by inflicting an austerity agenda. It’s a hustle so brazen that it deserves the sincere admiration of professional con artists everywhere. ...

The biggest offenders include UnitedHealth Group, the nation’s largest HMO, which taxpayers have subsidized to the tune of at least $68 million in pay for its CEO, Stephen Hemsley; and Discovery Communications, which lined its pockets with $37 million in taxpayer subsidies for the pay of its chief executive, David Zaslav.

Meanwhile, these fine corporate citizens are demanding that government slash Social Security and other government programs that millions of Americans rely on — especially in a depressed economy where many need them more desperately than ever.
Smirking Chimp: Local Fights Against Austerity are Growing Across the U.S. By Mark Vorpahl. Excerpts: Between sequestration, with its damaging impact on workers and the economy, and the billions of dollars in cuts to Social Security, Medicare and other necessary social programs that President Obama is pushing, it is evident that the economic policies of both major parties are not intended to promote a recovery for working people.
You cannot lift up a nation's economy while slashing away at its consumers' pocketbooks. In order to justify their defiance of this elementary law, both Republicans and Democrats start talking the language of "austerity," that is, the notion that economic policy must be guided by reducing budgetary deficits first and foremost, and that workers exclusively must be made to pay the cost.

Policies associated with austerity include the cutting of public programs, privatizing existing government assets, mass layoffs of public workers and wage freezes for those who remain, union busting in the public sector and the revising of labor laws to further enhance the power of employers at the expense of employees.

Enforcing these policies during a recession prevents a recovery. Economic theory predicts this and history demonstrates it. Why, then, would the politicians promote austerity? Because these policies assure that the 1% will be let off the hook from paying their fair share of taxes that help subsidize the social safety net, and will have vast pools of public capital opened up for their private investment.

Why worry about the overall economy when the real power brokers from the corporations and banks are making out just fine with austerity? The message seems clear: As long as Wall Street is enjoying the "recovery," no one else gets to. Wall Street has used its vast wealth to lobby politicians for policies that are in its interests. In order for working people to climb out of the recession, they will have to organize in order to create their own power base.
New York Times editorial: Banks Still Behaving Badly. Attorney General Eric Schneiderman of New York announced this week that he plans to sue Bank of America and Wells Fargo for failure to adhere to the terms of a $26 billion settlement that was supposed to provide relief to homeowners and end foreclosure abuses.
The lawsuits are another sign that more than a year after the mortgage settlement between five big banks and state and federal officials banks are still mishandling foreclosures in ways to benefit themselves while harming borrowers. Mr. Schneiderman is right to object, but the sad truth is that a concerted government effort to hold banks accountable has never materialized. ...

The issues raised by Mr. Schneiderman are not the only ways in which the settlement seems to be falling short. From data that have been compiled so far, it appears that banks are directing much of the required relief toward large mortgages, presumably for higher-income borrowers. That would be another blow to lower-income borrowers, many of them minorities, who were hit hardest by predatory lending and abusive foreclosures.
Huffington Post: Elizabeth Warren: Student Loans Should Have Same Rate Big Banks Get. Excerpts: Sen. Elizabeth Warren (D-Mass.) unveiled her first bill Wednesday, designed to set student loan interest rates at the same level the Federal Reserve offers to big banks.
With some student loan rates set to double on July 1 -- from 3.4 percent to 6.8 percent -- Warren's bill would reduce student loan interest rates to 0.75 percent, opening the Fed's discount window to students.

"Every single day, this country invests in big banks by lending them money at near-zero rates," Warren told The Huffington Post. "We should make the same kind of investment lending money to students, who are trying to get an education." ...

The Fed justifies loaning money essentially for free to major banks so they can maintain liquidity during emergencies. But Warren noted that student loan debt also affects the economy. Research by the Federal Reserve Bank of New York, reported by Washington Post's Wonkblog, found that the amount of student loan debt of Americans under the age of 25 has doubled in less than a decade, from $10,649 in 2003 to $20,326 in 2012. Along with this increase in student debt comes a decrease in the likelihood someone will take out an auto loan or a home mortgage. That burden is a drag on the economy.
Washington Post: Labor wrestles with its future. By Harold Meyerson. Excerpts: Since the emergence of capitalism, workers seeking higher pay and safer workplaces have banded together in guilds and unions to pressure their employers for a better deal. That has been the approach of the American labor movement for the past 200 years.
That approach, however, has begun to change. It’s not because unions think collective bargaining is a bad idea but because workers can’t form unions any more — not in the private sector, not at this time. There are some exceptions: Organizing continues at airlines, for instance, which are governed by different organizing rules than most industries. But employer opposition to organizing has become pervasive in the larger economy, and the penalties for employers that violate workers’ rights as they attempt to unionize are so meager that such violations have become routine. For this and a multitude of other reasons, the share of unionized workers in the private sector dropped from roughly one-third in the mid-20th century to a scant 6.6 percent last year. In consequence, the share of the nation’s economy constituted by wages has sunk to its lowest level since World War II, and U.S. median household income continues to decline.
New York Times: Economists See Deficit Emphasis as Impeding Recovery. By Jackie Calmes and Jonathan Weisman. Excerpts: The nation’s unemployment rate would probably be nearly a point lower, roughly 6.5 percent, and economic growth almost two points higher this year if Washington had not cut spending and raised taxes as it has since 2011, according to private-sector and government economists.
After two years in which President Obama and Republicans in Congress have fought to a draw over their clashing approaches to job creation and budget deficits, the consensus about the result is clear: Immediate deficit reduction is a drag on full economic recovery.

Hardly a day goes by when either government analysts or the macroeconomists and financial forecasters who advise investors and businesses do not report on the latest signs of economic growth — in housing, consumer spending, business investment. And then they add that things would be better but for the fiscal policy out of Washington. Tax increases and especially spending cuts, these critics say, take money from an economy that still needs some stimulus now, and is getting it only through the expansionary monetary policy of the Federal Reserve.

“Fiscal tightening is hurting,” Ian Shepherdson, chief economist of Pantheon Macroeconomic Advisors, wrote to clients recently. The investment bank Jefferies wrote of “ongoing fiscal mismanagement” in its midyear report on Tuesday, and noted that while the recovery and expansion would be four years old next month, reduced government spending “has detracted from growth in five of past seven quarters.”

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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Highlights—May 11, 2013

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News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform

News and Opinion Concerning the "War on the Middle Class"