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Highlights for week ending August 2, 2003
- New York Times: Judge
Says I.B.M. Pension Shift Illegally Harmed Older Workers. Excerpts: A federal court ruled
yesterday that I.B.M. violated age discrimination laws in the way it changed its traditional
pension plan in the 1990's. The decision could cast doubt over similar changes hundreds of companies
have made in plans covering millions of workers, and I.B.M. said it would appeal. Judge G. Patrick
Murphy of Federal District Court in the Southern District of Illinois ruled that I.B.M. had
discriminated against its older workers in several ways when it converted its pension plan because
the changes would leave them with smaller benefits at retirement than younger workers would
have when they eventually retired. ... The lawsuit has been certified a class action, covering
about 130,000 I.B.M. workers and retirees in the United States. Court documents show that I.B.M.
projected it would save billions of dollars in pension costs over the years after the changes
took effect. Some of that was to be used to create pensions for executives.
Judge Murphy also pointed to I.B.M.'s practice — found at other companies as well —
of including earnings from the pension fund in its corporate profits. This practice is permitted
under existing accounting rules but has increasingly troubled securities analysts and others,
who say companies may be taking advantage of the pension accounting rules to make their business
performance look better than it really is. In his decision, Judge Murphy noted that I.B.M.'s
pension earnings made up 7 percent of the company's profit in 1997, and 13 percent in 2001,
after the conversions were in place and the plan was less costly. Janet Krueger, a former I.B.M.
programmer and the leader of a group of employees who joined the lawsuit, said that the ruling
gave her a feeling of exoneration. She recalled in an interview that at an I.B.M. shareholders'
meeting she had publicly asked the company's chief executive at the time, Louis V. Gerstner
Jr., why the employees' lawsuit was not mentioned in the annual report. "He said, `Because
we feel this lawsuit has no merit,' " Ms. Krueger said. "In some ways, I feel exonerated
because I've had so many people telling me that I.B.M. didn't really do anything wrong, and
you shouldn't be wasting your time." If link is broken, view
Adobe Acrobat version [PDF--34 KB].
- Wall Street Journal: IBM
Pension-Plan Changes Are Ruled Discriminatory. Finding Is Viewed as Boon To Older Workers in
U.S. Excerpts: Employers had been quietly converting to cash-balance plans since the 1980s.
The conversions have been popular with employers because they typically reduce company liabilities
and reduce annual pension cost. That is because instead of calculating a pension by multiplying
years of service and final average salary, the company provides a hypothetical annual contribution,
say 5% of pay, as in IBM's case, which grows with interest. This leads to smaller pension growth
for longer-serving, older workers, who no longer benefit by a rapid build-up in pension value
in their later years. IBM's conversion to a cash-balance plan in 1999 led to a fire storm of
protest from longtime employees, who estimated their pensions would fall by 20% to 40% or more.
In response, the company relented and allowed people older than 40 with 10 years of service
to remain in the prior plan if they wished. Employees nonetheless filed suit in 1999, saying
the company's pension practices discriminate against older workers. If link is broken, view
Adobe Acrobat version [PDF--38 KB].
- Text of Judge's Order in IBM Cash Balance Plan Conversion
Case [PDF--847 KB] 24 pages. Entered July 31, 2003. (U.S. District Court for the Southern
District of Illinois, courtesy of the American Benefits Council).
- Associated Press, courtesy of the San Jose Mercury-News: IBM
Loses Closely Watched Pension Lawsuit. Excerpts: "It's awesome - I knew we had a case,"
said the lead plaintiff, Kathi Cooper, 53, of Bethalto, Ill., a 24-year IBM veteran who filed
the case in 1999. "When IBM converted to a cash balance plan, it hurt almost every single
employee over the age of 40, 45, because it reduced our accrued benefits. The law says you cannot
reduce benefit accruals on account of age. ... That formula was part of the greed from the 1990s
- it's all about greed."
"IBM's plan became ... the poster child for cash balance abuse," said Norman Stein,
a pension expert at the University of Alabama. "This was the very kind of employer that
you wouldn't expect this kind of action from and I think the employees regarded this literally
as an act of betrayal." Stein said Thursday's ruling appears to reject arguments IBM and
numerous other companies have made in defending their shift to cash balance plans. In doing
so, it could force lawmakers to tackle an issue they have been so far reluctant to touch, he
and others said. "The judge, in very plain English says the laws says that these cash balance
plans ... discriminate against older employees and are unlawful. His reasoning is so crystal
clear, it's so consistent with the language of the law that it would apply to every cash balance
conversion," said Karen Ferguson, director of the Pension Rights Center, a Washington,
D.C.-based worker advocacy group.
Cooper, who performs internal reviews for IBM's Global Services division, acknowledged that
working for the company has been strained since she sued, but she said she was happy she put
up the fight. "I love that company. It's like having an errant teenager on drugs, and you'll
do anything to make it right," she said. "This is bad behavior. It's got to be stopped."
posted the memo sent by Randy MacDonald, Senior Vice President, Human Resources, to IBM
employees after the announcement that IBM had lost in the Cooper v. IBM lawsuit. Full excerpt:
In late 1999, a lawsuit was filed which alleged that IBM violated age discrimination laws
when it changed its U.S. pension plan in 1995 and 1999. IBM has been defending this lawsuit
to preserve our pension plan. Despite our efforts, earlier this afternoon, the U.S. Federal
District Court in Illinois ruled that IBM's current pension formulas violate the age discrimination
provisions of federal pension law. We strongly disagree with this ruling. IBM will appeal,
and we believe we will prevail.
Let me reassure you that IBM's pension plan does not discriminate on the basis of age --
or any other factor. Indeed, to suggest that our pension plan is age discriminatory is an
affront to this company and every employee. IBM has a longstanding record of providing industry-leading
benefits for employees and has continued to do so in the face of sweeping changes in this
company, this industry and this country.
This ruling threatens not only IBM's pension plan, but also the plans of hundreds of other
companies who have adopted similar formulas. Indeed, the court's reasoning would go farther
and invalidate scores of other pension plans, some of which have been in existence since
the 1930s. The ruling is also contrary to other district court decisions.
We are continuing to analyze the ruling to fully understand all its ramifications. I ask
for your patience and understanding as we work through these complex and technical issues.
In the meantime, we will provide regular updates on w3.
Like many of you, I hope for a successful conclusion to this case. We are confident that
the underlying illogic of this ruling will be acknowledged as we move through the appeal
Senior Vice President, Human Resources
- Linda Guyer comments
on Mr. MacDonald's letter. Full excerpt: MacDonald's letter clearly shows he is angry. He
did get punched twice in the last two weeks by employee activists - first with the offshoring
article in the NY Times, now with this lawsuit ruling. Nevertheless, at his level in IBM, I
think his letter should have been more professional and less threatening in tone. His arrogance
shows in his statement about how this ruling threatens all pensions. There was a recent quote
by the plaintiffs' attorney that every pension conversion must be looked at separately, that
this case would not necessarily apply to others.
Somehow I think that the attorney on this case would know better its applicability to others
than an HR professional would. But he's applying the official IBM spin - spreading fear that
we'll lose what we have - with a very angry tone. You can almost infer their thinking ---
"We executives have the power and you little morons are lucky you have what we give you.
If you keep fighting us, we'll take away your money". Even more worrisome is the fact
that this letter shows how hopelessly out of touch he is with ordinary employees (aka "what
planet are you from?"). I have not talked to a single employee yet who did not feel insulted
by this letter.
Another mistake they made was to have the "Values Jam" scheduled at the same time
as when the court ruling was expected. This gave a unique opportunity for employees to express
their displeasure with his note in a forum for all to see.
- Janet Krueger comments on
this statement in Mr. MacDonald's letter: "This is a situation where a few have spoiled
it for millions of U.S. workers." Full excerpt: I thought the meaning was obvious—a
few [greedy executives] have spoiled it for millions of U.S. workers. After all, before the
greedy executives intervened, companies like IBM contributed to their pension funds each year
on behalf of their current employees, and used the excess pension funds to pay COLAs to the
retirees. You didn't see the press printing messages of doom and disaster each time the companies
contributed to the pension funds—it was normal, expected behavior! But once the greedy
executives intervened, COLAs ended, contributions ended, and in order to get more virtual profits
for the bottom lines, companies had to periodically slash the pension formulae just to stay
ahead. Then, when simple changes weren't enough to generate the desired amount of vapor profit
they had to start cutting benefits with these new hybrid plans, like pension equity and cash
balance plans. How can anyone look at the sequence of events, and not understand that the greedy
executives are at fault? I wonder if the communications person who pulled the press release
together knows yet just how much of a truism s/he wrote.
- Barre-Montpelier Times Argus (Vermont): IBM
workers in Vermont welcome ruling on pension plan. Excerpts: IBM workers and others in Vermont
are hailing a recent ruling by a federal judge in Illinois that IBM Corp. had illegally discriminated
against 140,000 older employees when it changed its pension plans in 1995 and 1999. “This
was a great victory for IBM employees and for millions of employees at other companies which
will probably think twice before they switch to other plans and rip off their employees,”
James Leas said Friday. Leas is an attorney in South Burlington and a former IBM employee who
helped spearhead the fight against the pension plan switch both in Vermont and nationally. ...
Friday, the Vermont plant's executives distributed a memo that blasted the ruling and promised
to fight to the end. “The note was almost a slap in the face. It almost seemed like it
should have been directed to stockholders,” said Paul Sala, who works in Global Services
in Vermont. “Everyone in the halls is talking about how inappropriate it was.”
- Janet Krueger comments on
what might happen next following Judge Murphy's ruling. Full excerpt: On the surface, it
(the ruling) means that the plaintiffs and IBM would sit down and negotiate a fair settlement
in front of the judge, and there would be a new non-discriminatory formula put in place, with
the pensions of anyone who left since 1995 recalculated, with interest added in for the late
payments... Additionally, because of the age discrimination charges, the judge would have the
ability to add damages to the recalculated pensions. However, I'll be surprised if there are
any active settlement discussions before the case is appealed. My prediction is that IBM won't
accept a ruling from the federal appeals court, either, and that there will be an appeal to
the Supremes before we are through and see any signs of a settlement. That should make all of
you care a little bit more about whether any new Supreme Court judges being appointed are worker-friendly,
or so much in favor of 'capitalism' and 'free trade' that they will support whatever big corporations
like IBM have chosen to do!
- IBM Press Release: IBM To Appeal Lower
Court Decision in Pension Case.
- Wall Street Journal: Pension
Rulings Roil Hundreds of Businesses. Companies Seek U.S. Role In Cash-Balance Plans. (Editor's
note: This is an excellent article. It provides a good historical perspective and explains the
implications of the Cooper v. IBM ruling, and explains why corporations such as IBM embraced
cash balance plans.) Excerpts: Two landmark court rulings against companies that sought to profit
by revising employees' pension plans have unsettled hundreds of companies that have adopted
similar programs and are likely to force Congress and the Treasury Department to decide how
to regulate so-called cash-balance pension plans. The separate rulings, against International
Business Machines Corp. and Xerox Corp., sliced through the arcana of pension rules to conclude
that cash-balance plans discriminate against older workers, cut older workers' benefits and
serve to lower the costs and bolster the profits of employers that use them. ... The judges
in both of last week's cases refuted a key defense of employers, that cash-balance plans aren't
pension plans that should be subject to the usual pension regulations because they are "hybrids"
that are modeled on 401(k) plans controlled by employees. No dice, said Judge Richard Posner,
one of the three-member panel in the Seventh Circuit Court of Appeals that decided against Xerox:
"For 'hybrid,' " he wrote, "read 'unlawful.' " ...
Throughout the 1990s, companies adopted cash-balance plans because they were a valuable way
to boost earnings. With the aid of consulting firms, employers increasingly understood that
pension accounting rules reward companies that cut pensions. That is because when the return
on pension assets is greater than the annual cost of the benefits, the excess is reported as
income, almost as though it were profit from goods and services. Thus, companies had an incentive
to cut pension benefits, even though their pension plans were robustly overfunded. While any
kind of pension cut can achieve this result, cash-balance plans were one of the most popular
ways to cut pensions, because benefits and costs could be reduced, beyond the simple cost of
future payouts being lower.
After a conversion, for instance, older workers often stop building benefits for months or years,
a phenomenon called "wearaway," because employers established "opening account
balances" that were of lower value than what the employees had earned. If someone's pension
were valued at $100,000 had it been converted to an immediate cash payment, for example, a company
might establish an opening balance at $80,000. The employee then would have to wait until his
annual pay credits and interest built back up to $100,000 until he actually began building a
new benefit. In contrast, a new or young worker would begin to build a balance right away. Another
reason employers liked cash-balance plans was that employees could rarely tell that their pensions
were being cut. That changed in 1999 when IBM employees noticed, and sued. If link is broken,
Adobe Acrobat version [PDF--43 KB].
- Wall Street Journal: IBM
Pension Ruling Likely To Fan Flames Of Debate. Excerpt: The federal court ruling, which
IBM has already said it will appeal, directly contradicts key elements of a proposal the U.S.
Treasury is preparing. The Treasury proposal addresses questions about whether cash-balance
plans are age discriminatory. Some experts say that arguments over cash-balance plans will eventually
be decided outside of the current realm of debate. "It is likely that the issue will ultimately
be resolved neither by the appellate courts nor by the executive branch but by the Congress,"
said J. Mark Iwry, a senior fellow at the Brookings Institution and the former benefits tax
counsel at the Treasury Department. The Treasury Department said it's studying the IBM ruling.
... In general, cash-balance pensions came under scrutiny in part because of the IBM case, a
class-action suit brought in 1999 that represents about 130,000 workers. "IBM was the poster
child for this issue; it was IBM's cash-balance plan and the reaction of its workforce that
really first touched off the public debate over this issue," said David Certner, director
of federal affairs at the AARP. If link is broken, view
Adobe Acrobat version [PDF--32 KB].
- Poughkeepsie Journal: Judge
hits IBM pensions. Plan called discriminatory. Excerpts: ''IBM, like many other corporate
plan sponsors, proceeded with open eyes and was fully informed of the consequences of the litigation
that was sure to come,'' he wrote. Federal age discrimination laws cover all employees age 40
or older. ... The judge noted that the 1995 pension changes were successful in reducing what
had been a generous early retirement benefit, and by the close of 1997 the pension trust fund
had a surplus of $8 billion. Even so, IBM opted to further reduce pension benefits in 1999 at
an annual savings that would reach almost $500 million in 2009. The pension savings boosted
the company's profits and represented 7 percent of the company's earnings in 1997.
- Pension Rights Center Press Release: Pension Rights
Center Hails IBM Decision as “Victory for Employees” [PDF--35
KB]. Excerpt: IBM created the controversy by moving from a traditional defined benefit
pension plan, that promised pensions based on all of an employees’ years of work and final
pay, to arrangements where contributions and interest credits were paid to hypothetical accounts.
By switching to the new inferior plans, with different rules and different payment formulas,
IBM made the missteps that caused it to run afoul of provisions of pension laws that protect
- Journal News (Westchester, Rockland and Putnam Counties, New York): Ruling
on IBM pension plans causes stir. Excerpt: The greater peril to IBM might be in the court
of public opinion, said James E. Lukaszewski, chairman of The Lukaszewski Group Inc. of White
Plains and an expert in crisis management. "This has upset a lot of people. This is IBM
country," Lukaszewski said. IBM employs about 9,000 people in Westchester County, where
corporate headquarters executives and research scientists both toil. In Dutchess County, IBM
has about 11,000 employees who manufacture microchips and mainframes, among other tasks. Widely
criticizing the judge's ruling isn't the smartest move for IBM, Lukaszewski said. "I have
a feeling that they are going to tone down their rhetoric as they get closer to the appeal date
because judges read the newspaper," he said. Debate on the topic was active yesterday on
Internet message boards and on television. It was almost enough to dampen Cooper's good mood
as she watched CNBC. "They're lying," she exclaimed as she listened to one analyst
warn that the ruling could threaten pensions at hundreds of companies. "It's a false threat
that they're hoping people will buy." As far as her own hopes go, Cooper said she wants
the pension promised before the first set of changes in 1995. "I want to be restored to
what IBM promised me before all the shenanigans started," she said. Cooper said she's still
loyal to IBM — though she hasn't had a raise in pay since she filed her suit. She blames
the pension reductions in part on a corporate culture of greed. "I think we had a catastrophic
failure of capitalism in the 1990s."
- Kathi Cooper, lead plaintiff
in Cooper v. IBM, comments on the results of the lawsuit. Full excerpt: I want to thank
everyone that has supported this case. It was never my case. It was always our case. We worked
hard. Why? Because we are special people. IBM only hires the best, and the best of us were there
to help do what was the right (and legal) thing to do. I thank everyone for your calls and notes
and ask that we each in turn give one another a virtual group hug. WE WON! CONGRATULATIONS!
(Editor's note: Thank *you* Kathi for your incredible courage and the long hours you've spent
for the cause. You're a class act!).
- Janet Krueger comments on
who is affected by the Cooper v. IBM lawsuit. Excerpt: If you were employed at IBM, but
left or retired before 1995, then this lawsuit will not impact you. The class was certified
for something called "Injunctive Relief" which means that all people who were employed
at IBM from 1995 on are officially part of the class; there is no opting out or opting in. Once
IBM loses their appeal, they will have to fix the plan for *EVERYBODY* who has earned pension
benefits at IBM since 1995. This *DOES* include groups of employees whose pensions were cashed
out when they were sold to companies like AT&T, Celestica, or Hitachi. IBM's settlement
would include a recalculation of their cash-out amounts, with the difference, plus interest,
and possibly damages, being paid to the impacted employees, in a form that can be rolled over
to their IRA accounts.
- Representative Bernie
Sanders (I-VT) Hails Federal Court Ruling that IBM Cash Balance Plan is Age Discriminatory.
Excerpt: Sanders said, "Today's ruling is a victory for employees at IBM and at the hundreds
of other companies that have converted to age discriminatory cash balance plans. The court recognized
what I and others have been saying since IBM's conversion, namely that these cash balance plans
- which slash the pension benefits of older workers by as much as 50% -- are illegal. My hope
is now that IBM will not drag this out in court but instead will give their employees the pension
benefits they were promised."
- CBS Evening News video: IBM's
Day In Court. A judge ruled IBM's Cash Balance Pension Plan discriminates against older
workers who have fewer years to build value than younger ones. IBM plans to appeal, Richard
Schlesinger reports. (Editor's note: We recommend you have a broadband connection to the Internet
to watch this video. Janet Krueger is prominently featured).
- Janet Krueger reports
that she received an "interesting comment regarding the CBS report from a staffer on
Capitol Hill". Excerpt: "As usual, Janet, you ruled! Way to go! I don't have
to tell you what a fight we'll have on our hands when Congress gets back in session in September.
Look out for Portman-Cardin as the vehicle that every CEO in America will be looking at
to legalize age discrimination in cash balance plans. They may have to call in the Capitol
Police again! Have a great weekend."
Ms. Krueger then adds "So, stay tuned -- we'll have some critical calls to action this
fall!!! We have an extremely good chance of winning the appeal, *IF* the laws are left as
is. But if IBM executives and their cronies succeed in retroactively changing the legal
definition of defined benefit plans to include all the age discriminatory hybrids, then
we all lose. If you have a chance to talk to your representative and Senators this summer,
tell them how important pension protection is, and let them know that you don't want them
meddling with our right to a day in court!!!"
- Wall Street Journal: Xerox
to Pay $300 Million In Suit Over Pension Plan. Excerpt: Xerox Corp. lost its case in the
7th Circuit Court of Appeals, where it hoped to reverse a lower court's ruling that the company
had underpaid employees in its cash-balance pension plan, and will have to pay $300 million
in damages. The decision comes a day after a federal judge concluded that International Business
Machines Corp. discriminated against older workers when it changed to a cash-balance plan in
- Washington Post: Overtime
Plan Draws Angry Letters. Excerpt:The letters and e-mails from nurses and prison guards,
from stay-at-home moms and corporate executives, fill dozens of bound white plastic folders
on shelves in a Labor Department reading room, part of more than 80,000 comments on the Bush
administration's effort to change the rules that govern payment for overtime work.
Coverage on H1-B and L1 Visa and Outsourcing Issues
- iSeries Network: Are
Unions the Answer to IT Workers’ Outsourcing Worries? Excerpt: In March, Harry
Newman and Tom Lynch, IBM’s outgoing and incoming directors of employee relations,
respectively, held a live Internet broadcast with Big Blue’s 2,000 human resource
managers around the globe. At the time, they probably didn’t foresee that their
electronic pow-wow would become the subject of a July
22 New York Times story that would quickly spread across the business and IT press
and community. But spread it has — like wildfire. The hour-long discussion was recorded
and stored in digital form on an internal IBM Web site. An employee with access to the
recording, who was reportedly upset about the contents of the discussion, “outed”
the company by passing a copy to the Washington
Alliance of Technology Workers (WashTech), which, in turn, passed a copy to the New
York Times. The cause of the furor is IBM’s clearly stated intention to move thousands
of white-collar jobs from the U.S. to other countries, most notably, India. WashTech quotes
Lynch saying during the meeting, “We don’t want to sit back and say ‘Don’t
do it.’ because it’s going to be a problem. Our competitors are doing it,
and we have to do it.” If link is broken, view
Adobe Acrobat version [PDF--31 KB].
- The Journal News (Westchester, Rockland and Putnam Counties, New York): Flow
of jobs overseas has human toll. Excerpt: The first two times that IBM Corp. asked
Bonny Berger to train a foreign worker to take over her job, she didn't mind because another
position was waiting. "I wasn't worried for my job, so for me it was fine. Maybe
there were people who were less naive than I was," said Berger, a wife and mother
from East Brunswick, N.J. Berger felt secure largely because of her track record at AT&T,
where she was employed as a programmer for 21 years before IBM took over the telecom giant's
computer operations in 1999. Berger said colleagues were happy to join IBM because Big
Blue had a reputation for hiring. "We found out later that they're hiring in India
and other countries," she said. In January 2002, Berger learned for the third time
that her job was being sent "offshore." This time there wasn't another position
- Gartner: 1
in 10 Tech Jobs May Move Offshore. Excerpt: Offshore outsourcing" is the euphemism
the computer industry uses to describe the transformation of software development, computer
services and customer call-center work. As a global economic downturn has bit hard over
the past two years, U.S. companies have embraced as never before a decade-old trend to
hire educated workers abroad who can be employed for one-tenth the cost of U.S.-based
- ABC News: White-Collar
Exodus. High-Paying Jobs Are Moving Overseas, U.S. Workers Replaced by Foreigners.
Excerpt: Michael Emmons thought he knew how to keep a job as a software programmer. "You
have to continue to keep yourself up to speed," he said. "If you don't, you'll
get washed out." Up to speed or not, Emmons wound up being "washed out"
anyway. Last summer, he moved his family from California to Florida for the Siemens Co.,
makers of electronics and equipment for industries. Not long after, Emmons and 19 other
programmers were replaced by cheaper foreign workers. Adding insult to injury, Emmons
and the others had to train their replacements. "It was the most demoralizing thing
I've ever been through," he told ABCNEWS. "After spending all this time in this
industry and working to keep my skills up-to-date, I had to now teach foreign workers
how to do my job so they could lay me off."
- Electronic News: Offshore
Outsourcing Saves Dollars, But Costs Talent, Gartner Warns. Excerpt: "To many
CIOs and business executives, the decision to outsource activities offshore is fiscally
sound -- the cost, quality, value and process advantages are well-proven," said Diane
Morello, VP and research director at Gartner, in a statement. "At a time when IS
organizations are struggling with poor credibility and IT is being scrutinized, offshore
outsourcing is becoming a tool for improving service delivery and a source of highly qualified
talent in greater numbers." However, Gartner analysts said that CIOs and other business
executives can't ignore the impact of offshore outsourcing on their business strategies,
their organization or their employees. Three areas of concern that Gartner noted are loss
of future talent, loss of intellectual assets and loss of organizational performance.
- Time Magazine: Where
the Good Jobs Are Going. Forget sweatshops. U.S. companies are now shifting high-wage
work overseas, especially to India. Excerpt: Little by little, Sab Maglione could
feel his job slipping away. He worked for a large insurance firm in northern New Jersey,
developing the software it uses to keep track of its agents. But in mid-2001, his employer
introduced him to Tata Consultancy Services, India's largest software company. About 120
Tata employees were brought in to help on a platform-conversion project. Maglione, 44,
trained and managed a five-person Tata team. When one of them was named manager, he started
to worry. By the end of last year, 70% of the project had been shifted to India and nearly
all 20 U.S. workers, including Maglione, were laid off.
- Linda Guyer comments
on IBM's outsourcing plans. Full excerpt: I can tell you what we've been told by a
very good source. I cannot name the source nor prove it is true, so with that disclaimer:
IGS plans to move 30,000 US jobs, or approx. 25% of its employees, overseas by end of
2004. The plan is to ultimately move EVERY job that supports an internal account. I also
hear they are behind schedule at the moment.
- Daily Freeman (Kingston, NY): IBM
'outsourcing' indicative of trend. Excerpt: "In the Northeast, it's been something
we've been experiencing for years ... with the moving of manufacturing first to south
then to South America and the Far East," said Chester Straub, president of Ulster
County Development Corp. Straub also said advances in telecommunications and greater utilization
of the Internet are making white-collar jobs more portable. "In the case of IBM,
it's part of their continuing effort to maximize profits while maintaining market position,"
he said. Union organizer Lee Conrad, with Endicott-based Alliance@IBM/Communications Workers
of America Local 1701, a union not recognized by IBM, put it more bluntly. "I think
it has more to do with greed, plan and simple," Conrad said. "Companies like
IBM are going where the lowest costs and wages are."
- Boston Globe: Double
standard on globalization. Excerpt: If you get into a conversation with a billing
representative of your credit card provider or phone company, you may notice a faint Indian
accent. That's because the services industry is shifting more back room operations to
India, where labor costs are a fraction of those in the United States. IBM, likewise,
will soon move several thousand computer programming jobs to India, where programmers
get far lower salaries. This decision has angered IBM employees and is contributing to
a rare unionization drive at the high-tech giant, a company that once prided itself on
never laying anyone off. ... In these cases, industry defends the moves as cost-effective
and economically logical. If productive English-speaking workers in India can perform
the jobs, why not move the work there and pass the savings along to shareholders and consumers?
Most economists, enthusiasts of free commerce, agree that these shifts help both India
and the United States.
But hold on a moment. India figures in another controversy. Indian pharmaceutical labs
make prescription drugs at a fraction of the cost that American drug makers charge consumers.
In this case, however, it is illegal for American consumers to benefit. The politically
powerful pharmaceutical industry contends that imports of cheaper foreign drugs violate
patent rights and safety regulations. The industry is also battling legislation that
would allow consumers to import cheaper drugs from Canada, which legally manufactures
or purchases the drugs under license from the US pharmaceutical companies and conforms
to US safety standards or better. If you notice a double standard here, you're right.
- The White House: President
Bush Discusses Top Priorities for the U.S. Press Conference of the President, including
a question concerning overseas outsourcing. Excerpt: Question. Thank
you, Mr. President. Staying with that theme, although there are some signs of improvement
in the economy, there are sectors in the work force who feel like they're being left behind.
They're concerned about jobs going overseas, that technology is taking over jobs. And
these people are finding difficulty finding work. And although you're recommitted yourself
to your tax cut policy, do you have any ideas or any plans within the administration of
what you might do for these people who feel like there are fundamental changes happening
in the work force and in the economy? THE PRESIDENT: Sure. Listen, I
fully understand what you're saying. In other words, as technology races through the economy,
a lot of times worker skills don't keep up with technological change. And that's a significant
issue that we've got to address in the country. I think my idea of reemployment accounts
makes a lot of sense. In essence, it says that you get $3,000 from the federal government
to help you with training, day care, transportation, perhaps moving to another city. And
if, within a period of time, you're able to find a job, you keep the balance as a reemployment
bonus. I know the community colleges provide a very important role in worker training,
worker retraining. I look forward to working with our community colleges through the Department
of Education, coordinate closely with states, particularly in those states in which technology
is changing the nature of the job force. I've always found the community college -- and
this is from my days as the governor of Texas -- found the community college to be a very
appropriate place for job training programs because they're more adaptable, their curriculums
are easier to change, they're accessible. Community colleges are all over the place. And
-- but you're right. I mean, I think we need to make sure that people get the training
necessary to keep up with the nature of the jobs, as jobs change.
- Institute of Electrical and Electronics Engineers (IEEE): President
Blames Unemployment on Lack of Skills! Engineers Must Correct this Mistake. Excerpt:
It is essential that engineers tell the President that the unprecedented levels of unemployment
in the high-tech sector are not the fault of American workers. But if we are to be heard,
we need as many engineers as possible to e-mail the President and express their concern.
These e-mails MUST be received in the next few days, no later than Friday, August 1st,
to be effective. When you write the President, tell him that unemployment in the high-tech
sector has very little to do with the competency of American workers, and a great deal
to do with the low cost of using foreign workers. American electrical engineers are as
good as their counterparts in other countries. But it is difficult to compete with engineers
from Asia and Eastern Europe who are paid 20% to 50% less than the prevailing wage in
This week on the Alliance@IBM
- Attention Boulder area employees: A meeting with the subject "Offshoring your Job!"
will be held Thursday, August 7, at 5:30 pm. at the Shepard on the Hill Church, 71st and
Lookout Rd in Gun barrel (near the IBM Boulder location, east of King Soopers). We will
be meeting in the fellowship hall.
- A new page with information
about the Cooper vs. IBM lawsuit has been added. Content on this page includes:
- Summary of Judge Murphy's ruling
- Full text of Judge Murphy's ruling
- Who is included in the class action?
- Excellent article in the NY Times
- IBM's Press Release in response to the ruling
- Letter from J.R. MacDonald, Sr. VP of Human Resources, to employees
- Consultant Watson Wyatt, not surprisingly, takes IBM's side.
- Offshore Lore - Myths and facts
of white-collar out-sourcing.