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    Highlights for week ending November 29, 2003
  • Forbes: IBM says cuts about 200 software jobs. Excerpt: International Business Machines Corp. , the world's largest computer company, said Thursday that it cut about 200 jobs in its software division as part of its efforts to revamp its work force to match the skills it is seeking.

  • Workforce Management: They've Got the Gold Watch Blues Companies are cutting back or eliminating formal recognition for retiring employees, and risking goodwill in the process. Excerpt: Gary Brennecke attended plenty of retirement functions during his 36 years as a salesman for one of the world’s largest pharmaceutical companies. From the start, he was impressed that a retiree’s spouse and children were always present for the festivities. Even spouses of other sales reps were included, and the sales reps were encouraged to say a few words about their departing colleague. By the time Brennecke retired in 2000, though, the hoopla was gone. ... Part of the reason that recognition in general has been de-emphasized is the focus that many companies now have on quarter-to-quarter earnings. Fifteen years ago a huge number of firms were run by people with a sales-and-marketing background who knew the benefit of motivating employees, says Chuck Davis, president of the C.A. Short Co., a performance recognition and award firm in Charlotte, North Carolina. Now, Fortune 1000 companies are steered primarily by accountants who view employees as an expense. As soon as quarterly earnings dip, the quick solution is to whack off a third of the workforce. In that kind of environment, experts say, service and retirement recognition is diminished. ... "If you are five years from retirement and see that the company has treated retiring employees like horses going to the glue factory, why would you pour your heart and soul into the company for the next five years?

  • San Francisco Chronicle: Judge refuses to erase IBM nurse testimony. Excerpt: The judge at the IBM toxics trial denied Monday a motion by the company to strike from the record the testimony of a nurse who said Big Blue had a policy to ignore worker injuries possibly caused by chemical exposure. ... In sometimes passionate testimony, Crouch had said that IBM had an unwritten policy instructing its medical staff to link worker complaints to other factors, such as alcoholism or allergies, but never to possible exposure to chemicals in the workplace. ... Powers pressed Crouch on why she did not report worker complaints that she felt may have been due to chemical exposure. Crouch shot back that the company simply ignored such problems and added that she would have lost her job had she kept on complaining. At one point, Crouch said, "Ma'am, I wish today I never worked for IBM."

  • AFL-CIO News for Working Families: Bush Succeeds in Stopping Congress from Protecting Overtime Pay. Excerpt: Despite bipartisan Congressional support for an amendment to block overtime pay cuts sought by the White House, the Bush administration strong-armed U.S. House and Senate leaders into removing the amendment from a conference appropriations bill. The amendment, which Congress removed on Nov. 21, would have prohibited proposed rules to the federal Fair Labor Standards Act (FLSA) taking away overtime pay protections for some 8 million workers. ... In September, the Senate approved an amendment to H.R. 2660 by Sen. Tom Harkin (D-Iowa) that blocked any new rules to take away overtime pay from workers. The House voted in October to instruct its members who were merging House and Senate versions to accept the Senate’s overtime guarantee. “What did middle-class Americans do to so anger this president that he is intent on punishing them by taking away their access to overtime pay when they work more than 40 hours a week?” asked Rep. George Miller (D-Calif.). “Schoolteachers, nurses, paramedics, firefighters, construction workers, office workers—people who are trying to buy cars, put their children in college, pay their medical bills or pay the mortgage by working long hours.”

  • Financial Times: IBM shakes up software ahead of upturn. Excerpt: IBM is preparing a shake-up of its $13.1bn software business, the world's second largest, in a bid to boost sales within a maturing software market and position itself for an expected upturn in corporate technology markets. The world's largest computer company will announce a series of strategic shifts beginning in early January, which will reorganise its software development and its sales force along 12 vertical industry segments. It will also spend hundreds of millions of dollars in a campaign to lure third-party software application companies to support its e-business infrastructure software.

  • Business Week: Revenge Of The Overworked Nerds. They're suing for overtime pay -- and the outcome could change the tech industry. Excerpt: When Gary R. Oberholtz signed on as a salaried network engineer for Computer Sciences Corp. (CSC ) in 2000, he thought he'd found the ideal job. Especially appealing: He says he was promised a 40-hour workweek. But soon Oberholtz was routinely working 48-hour weeks and many weekends, he says. When he asked about overtime, his bosses at the El Segundo (Calif.)-based provider of tech services told him he wasn't eligible under state and federal employment laws. ... Now, four months after being laid off, Oberholtz is suing. He joined a class action filed on Nov. 12, alleging that CSC dodged paying overtime to some of its employees by improperly classifying them as exempt. "I want to send a message," Oberholtz says. "If you're going to make us work all these hours, you have to compensate us."

  • Dave Finlay: I've put new versions of the Social Security calculator in the files section of this group. They include all the SS changes for 2004. (Editor's note: You may need to join the Yahoo! IBM Retiree group to access its files section).

  • PBS NOW with Bill Moyers: Downward Mobility. Excerpt: NOW often looks at the flip-side of the American dream, as in its profile of the struggles of low-wage workers in "Downward Mobility". NOW also keeps track of the high end of the income spectrum. Recently we updated viewers on the fate the past years' corporate scandals. It seems that all the bad press and shareholder outrage, executive pay keeps on rising. According to a August 2003 report by THE ECONOMIST, median senior total pay among America's top 350 companies rose by 10 percent last year, even as median total shareholder returns in those companies fell by more than 5 percent. Turns out that American executive compensation rates are quite different from those of the rest of the developed world. In Japan a typical executive makes eleven times what a typical worker brings home; in Britain, 22 times. In America...

    According to recent studies, the top one percent — the wealthiest among us — are getting richer and richer. The Organisation for Economic Cooperation and Development (OCED) has found the United States to be the most unequal society of all industrialized nations. The U.S. ranks last among OECD nations in terms of income equality, yet in 1993 the poorest 10% of the U.S. population was still wealthier than two-thirds of the rest of the world. In its recent report "The State of Working America 2002-03," the Economic Policy Institute estimated that the bottom 80 percent of American households control only about 17 percent of the nation's wealth. Meanwhile, wages, benefits, and working conditions for workers at the bottom continue to decrease.
Coverage on the Medicare Bill
  • Chicago Sun-Times: GOP pulled no punches in struggle for Medicare bill. Excerpt: During 14 years in the Michigan Legislature and 11 years in Congress, Rep. Nick Smith had never experienced anything like it. House Speaker Dennis Hastert and Health and Human Services Secretary Tommy Thompson, in the wee hours last Saturday morning, pressed him to vote for the Medicare bill. But Smith refused. Then things got personal. Smith, self term-limited, is leaving Congress. His lawyer son Brad is one of five Republicans seeking to replace him from a GOP district in Michigan's southern tier. On the House floor, Nick Smith was told business interests would give his son $100,000 in return for his father's vote. When he still declined, fellow Republican House members told him they would make sure Brad Smith never came to Congress. After Nick Smith voted no and the bill passed, Duke Cunningham of California and other Republicans taunted him that his son was dead meat.

  • New York Times: Some Experts Foresee Revolt by Elderly Over Drug Benefits. Excerpt: Experts fiercely debate whether employers will react to the legislation by dropping retiree care. The Congressional Budget Office estimates that 23 percent of employees — or 2.7 million people — who are now receiving drug benefits from their employers will lose those benefits after the Medicare drug program is instituted in 2006. Richard Evans, an analyst with Bernstein Research, said that most employers would view the Medicare legislation as a heaven-sent opportunity to reduce expenses. The legislation offers employers tax incentives to continue paying for retiree health expenses that amount to 28 percent of drug costs, from $250 to $5,000 a retiree a year. But Mr. Evans estimated that employers would save, on average, $1,000 a retiree if they refused the tax incentives and dropped coverage.

  • New York Times: Florida Elderly Feel Let Down by Drug Benefit. Excerpt: Hollywood, Fla., Nov. 29 — In the condominiums and on the palm-shaded beaches here, where Medicare is a frequent topic of conversation, few people expect to get much help from the new drug benefit just approved by Congress. They express disappointment but little surprise because, they say, they never had high hopes. They say they feel they were sold out, by Republicans and AARP, which endorsed a Medicare bill drafted mainly by Republicans. But the Democrats, they say, did not fight hard enough for a better drug benefit.

  • New York Times: AARP Support for Medicare Bill Came as Group Grew 'Younger'. Excerpt: William D. Novelli, the chief executive of AARP, sat in his downtown Washington office on Tuesday, still glowing from the Senate's passage of prescription-drug legislation that his group had endorsed, and slid a copy of the glossy AARP magazine across a mahogany table. The actress Lauren Hutton was on the cover, along with blurbs for stories about "where to find love" and "amazing new sex drugs." The message was clear. "Boomers," Mr. Novelli declared, "are the future of the AARP." Indeed, baby boomers are a big reason AARP, the retiree lobby, decided to endorse the Republican-backed Medicare bill, a move that people on both sides of the political aisle say ensured its passage.

  • Molly Ivins (courtesy of the Miami Herald): Bills benefit drug, insurance, oil barons. Excerpt: Oh, and as for you, senior citizens, who believed that amusing little claim that you all would benefit from this bill -- suckers! According to Public Citizen, pharmaceutical companies have given $44 million since 1999 -- 78 percent to Republicans, 22 percent to Democrats -- and spent millions more hiring an army of lobbyists that physically outnumbers the 535 members of Congress. The Health Reform Program of Boston University estimates that of the bill's $400 billion price tag, $139 billion will go to increase drug-company profits over eight years, a 38 percent increase in what is already the world's most profitable industry.

  • Watson-Wyatt: Medicare Reform Legislation Update - Summary and Next Steps. Watson Wyatt is modeling and analyzing the effects on employer-sponsored retiree health plans, and it is clear that the act could present significant cost savings opportunities for many employers. As a result of the act, employers will need to make important decisions about their retiree health plans. Now is the time for employers to start reviewing the final details, analyze the alternatives and decide how your organization will respond to these important changes. Specifically, employers will need to decide whether to maintain drug benefits as a “qualified” plan and whether to send retirees to stand-alone prescription drug plans or integrated Medicare Advantage plans. Perhaps different approaches for different groups of retirees will be your best option.

  • Watson-Wyatt: Retiree Medical and Medicare+Choice Plans: Planning for an Uncertain Future. Excerpt: As time goes by, many more new and innovative ways to provide retiree health benefits at an acceptable employer cost will emerge. For many retirees, health care is their single biggest expense and their single biggest worry. Given the growing number of workers nearing retirement, retiree health care will become an increasingly compelling issue for employers as well.

  • Associated Press: Medicare Drug Costs Will Rise. Excerpt: Seniors will face annual increases in premiums and deductibles — and a growing gap in coverage — for the prescription drugs they buy under the new Medicare law, budget analysts say. For example, the $250 annual deductible at the start of the program in 2006 is projected to rise to $445 by 2013.

  • Associated Press: AARP Faces Rebellion Within on Medicare. Excerpt: The bill "destroys one of the most successful programs in the history of this country," Isaac Ben Ezra, president of the Massachusetts Senior Action Council, said as he led a demonstration of about 40 people here against the bill Monday. "Shame, AARP."

  • The Foundation for Taxpayer and Consumer Rights: Corporateering of the Year Award Goes to Medicare Profiteering Protections. Excerpt: Not allowing the government to use its bulk purchasing power to get the cheapest price for prescription drugs is a Congressional and Presidential blank check to the pharmaceutical industry to charge as much as they like, " said Court. "This corporateering eclipses even Enron, Worldcom, and Tyco because it is the biggest public giveaway on Capitol Hill since the S&L bailout. Congress and the President have socialized costs and privatized gain for industries that are the most prolific campaign givers on the hill." ... "Any prescription plan that ties the hands of the federal government from using its market clout to negotiate cheaper drugs is absolutely unacceptable. This is bill is a thanksgiving feast for the nation's most powerful special interests: the pharmaceutical industry, health insurers and hospitals," said Jerry Flanagan of FTCR. "Seniors will likely pay more for prescriptions under the new plan, not less."

  • Washington Post: Alarms Sounded On Cost of GOP Bills. Lawmakers Increase Spending to Win Votes. Excerpt: Maya MacGuineas, executive director of the Committee for a Responsible Federal Budget, said the biggest impact of the new legislation will come toward the end of the decade, when baby boomers begin to retire. The true cost of the Medicare bill, for instance, would not begin until 2007, but it would escalate rapidly from there. In 2007, the Congressional Budget Office estimated, the bill would cost $40.2 billion. By 2013, that price tag would be $65.2 billion. CBO Director Douglas Holtz-Eakin has told members of Congress that the bill's cost in its second 10 years could reach between $1.7 trillion and $2 trillion. Likewise, analysts said, the cost of the energy bill is understated by unrealistic "sunsets" that would eliminate nearly half of the legislation's 46 tax cuts well before the bill's overall expiration date of 2013. If all those tax cuts were extended the full decade, the bill's cost would roughly double, according to the liberal Center on Budget and Policy Priorities.

  • Boston Globe: Undermining the Rx benefit. Excerpt: Republican Senator John McCain of Arizona, one of the few conservatives to stick to his principles in opposition to the creation of a major new entitlement program, added that the subsidies to "special interests" like insurance and drug companies stand in stark contrast to the absence of any means of keeping costs from skyrocketing. In particular, he noted (as did many progressives) a truly bizarre section of the legislation that literally prohibits the government from bargaining over price with the drug companies and other suppliers to beneficiaries. He also noted that this is precisely what enables the Veterans Administration and the core of the Medicare bureaucracy that deals with hospitalization to keep drug prices below what they are in pharmacies for veterans and retired people in hospitals. It is no accident, McCain said, that the profits of drug companies are officially expected to grow by $9 billion as a result of this protection from having to negotiate with the biggest bulk purchaser of them all.

  • Baltimore Sun: Health reform losers, winners. Excerpt: The $400 billion drug benefit Congress voted to add to Medicare is a brand-new entitlement for 40 million elderly and disabled people. But while some will do better with the new coverage, others will not. And some will likely do worse. Drug companies and providers, insurers and doctors and hospitals that treat Medicare patients stand to reap a windfall. But there are pluses and minuses for those players, too. Politically, as well, the measure will yield winners and losers.

  • New York Times: Medicare Plan for Competition Faces Hurdles. Excerpt: The most politically charged feature of the Medicare legislation passed by Congress — its attempt to make the federal Medicare program compete with private managed-care plans — is also the least likely to come to fruition on the seven-year schedule set in the bill, according to health policy experts. Similar plans, the experts say, have failed to find support among patients, doctors and hospitals, or even some insurers. Even people who favor the idea say the potential for trouble this time is formidable. "There is really no political constituency for competition," said Robert D. Reischauer, a health policy expert and a former director of the Congressional Budget Office.
Coverage on H1-B and L1 Visa and Outsourcing Issues
  • Reuters: US tech giants persist in offshoring. According to economists, IBM could move 200,000 jobs annually overseas in the next decade; look to tap English-speaking professionals from India. Excerpt: U.S. technology services giants such as IBM could move as many as 200,000 engineering jobs annually overseas in the next decade as they trim white collar workforces in the United States, according to industry groups and economists. The loss of these jobs -- with median annual salaries exceeding $100,000 -- is expected to boost the unemployment rate among U.S. engineers above the 6.7 percent rate today, which is already five times greater than in 2000.

  • Washington Post: Europe's Cheap U.S. Labor. Excerpt: The irony is that these European-based global enterprises are the kind of model corporate citizen over there that has all but vanished over here. In Europe, they pay their workers decently, tend to health and safety concerns and actually encourage their employees to unionize. When they cross the Atlantic, however, they find themselves in a brave new world where wages have eroded (a new Russell Sage Foundation study concludes that 24 percent of U.S. workers make less than $8.70 an hour) and employees' rights to unionize have been effectively abolished. And rather than bring their Euro standards with them, the companies go native. ... So it's come to this: When European employers look to the United States, they see roughly the same thing that U.S. employers see when they look to China: millions of low-wage workers who have all but lost the right to organize and a government intent on keeping things just the way they are. The erosion of worker power and the growth of employer supremacy here have transformed the bottom half of the U.S. workforce into a vast exploitable mass worthy of a colonial backwater. Something to chew on as we give thanks for the marvel that once was America.

  • Sunday Herald (Scotland): Wake-Up Call for the West. Excerpt: Concern is growing at the exodus of British jobs to call centres in India ... but we have seen nothing yet. Political Editor Douglas Fraser visits Bangalore for a glimpse of the future.

  • Sunday Herald (Scotland): Call Centre Kings. Excerpt: Karnik talks of India’s advantage not only in English language, but in hundreds of thousands of accountancy and law graduates, all of whom can adjust to British and American requirements with a moderate amount of training, because sub-continental accounting and law is based on Anglo-Saxon models. “These guys know accountancy, they have computer skills, they speak English, they’re ready and willing to do the job, and that combination is a killer. “We’re looking at moving up and getting more sophisticated, not just in transactions, but analysis of balance sheets, so we have chartered accountants. And now at the higher end, there is equities analysis, not so much from the UK yet, but from the US where equity research firms on Wall Street have begun to move here and recruit MBAs.”

  • Sunday Herald (Scotland): If the rich nations really wanted these jobs why didn’t they value them? Excerpt: But when you consider that 500,000 American jobs have been “offshored”, many to the Philippines and India and with many more forecast to leave, that is either a reason to be grateful we’re not American or a reason to be very scared that the same scale of transition is about to happen to UK plc. The academic economists who reported this week on the future of Scotland’s call centres said there could be a flood of offshoring, or it could be a gentler growth, as they detailed the problems of managing staff 6000 miles away. Indians are confident it will be more of a flood. They know they can continue to pick off call centre jobs by the thousand, but for them, that’s yesterday’s news, just as the cutting edge of Indian software programming is also well established with their pioneering role working in and for Silicon Valley through its boom years. They are now eyeing a massive sector of Western economies, which basically includes anyone who works on-screen. That starts with the back office, dealing with data entry, account reconciliation and transaction reporting. It is now continuing through travel and expenses departments, order processing and even human resources, then into professional services and some of the top-earning jobs. If a process is digitised in Scotland or the City of London, it can be done in India, and more cheaply. Pay rates can be one-tenth of those in Britain, and once other costs are factored in, overall savings tend to come out between 40-60%.

  • Forbes: US state weighs response to high-tech outsourcing. Excerpt: An Indiana senate committee on Monday will look into why the state awarded a computer contract to an Indian company that planned to import workers to do the job. "We're supposed to be helping unemployed and underemployed Hoosiers," said State Sen. Jeff Drozda, referring to the popular name for people who live in Indiana. "This is clearly contrary to our mission." While the $15.2 million contract to a subsidiary of Tata Consultancy Services, India's biggest software company, has been canceled, the controversy over outsourcing high-tech work overseas remains.

  • Computerworld: Job agency hires foreign help. An Indiana unemployment agency has hired a company that's bringing in up to 65 programmers from India. Excerpt: New York-based Tata America International Corp. will send up to 65 IT staffers from India to work alongside 18 state employees over the next two years at a government facility in Indianapolis. The team will replace a tax and unemployment claims processing system that runs on Unisys Corp. mainframes with a client/server application written in Java, said Patrick Murphy, a deputy commissioner at the Indiana Department of Workforce Development. The DWD awarded Tata a $15.2 million contract last summer, and development work began Nov. 4. But the contract has infuriated some state legislators and Indiana residents, particularly because of the nature of the work done by the DWD. "This is such an egregious example, and many policy-makers find it baffling," said Jeff Drozda, a Republican state senator.

  • Computerworld: State agency cancels controversial outsourcing deal. Excerpt: The Indiana Department of Workforce Development (DWD) has canceled a controversial $15.2 million IT development contract with TCS America that would have brought up to 65 Indian contract workers to overhaul a system used to process unemployment claims and taxes.

  • New York Times: Tech Workers' Losing Fight to Match Overseas Wages. Excerpt: Atul Vashistha, the chief executive of neoIT, a California-based company that specializes in advising companies on moving work overseas, and whose clients include Siemens and Lucent Technologies, said that most of the jobs being outsourced overseas are "lower end" positions in data processing and programming. But Marcus Courtney, president of the Washington Alliance of Technology Workers, a union affiliated with the Communications Workers of America, said high-level white-collar workers were just as endangered as anyone else. "Any job can be exported, irrespective of skills," he said. "This goes beyond training and education. Employees shouldn't snow themselves into believing that if they have an advanced certification or an M.B.A., their job can't be sent overseas."

  • Computerworld: India hits back on outsourcing job fears. 'We are cheaper and better,' says India's external affairs minister. Excerpt: The Indian government went on the offensive last week on the contentious issue of the loss of U.S. and European jobs to India due to outsourcing. Offshore outsourcing from the U.S. and Europe to India is the result of barriers to free movement of Indian professionals to these countries, Indian Prime Minister Atal Bihari Vajpayee told a business summit of the European Union and India on Saturday in Delhi.
This week on the Alliance@IBM Site:
  • Age Discrimination Lawsuit Against IBM - Informational Meetings. Excerpt: Informational meetings will be held in Poughkeepsie at the Best Western Conference Center 2170 South Street (Rt 9). The meetings are intended to provide a forum for participants who may want to join the lawsuit to get answers to their question.

  • Australian IT: Stronger union move on Big Blue. Excerpt: Unions have opened another door at IBM, extracting concessions from Big Blue for unionised employees who will be shifted over to the company following the termination of IBM's Global Services Australia joint venture with Telstra and Lend Lease. IBM has told the Community and Public Sector Union that the workers, employed by Telstra before being shifted to the joint venture, will be covered by a special workplace agreement that carries over their Telstra employment conditions. Some 6000 IBM GSA employees are being moved to IBM Australia and 92 per cent have signed up with the company. Those employees are expected to begin working at IBM Australia in the first week of January. The prospect of a bloc of unionised workers at IBM would have been unimaginable just a few years ago. IBM employees traditionally have not been strong unionists.

  • Burlington Free Press: Health care costs irk ex-IBMers. Excerpt: About 200 IBM retirees complained their former employer was gouging them by raising insurance premiums more than 10 times the rising cost of health care at a Monday evening meeting. Rep. Bernie Sanders, I-Vt., said he called the meeting after hearing from retired IBM workers worried about the sharp increase in insurance premiums. "We heard reports from some people that they are seeing increases of 250 percent in one year, and over 500 percent during a two-year period," Sanders said. "What people were extremely disturbed about was that these huge increases are much, much higher than the increase in health care that Vermont is experiencing." ... Al Maitner, who worked in the personnel department, said he owed the employees an apology. "When I recruited people, I told them IBM was a company that cared about people, they have unparalleled job security and they had outstanding job benefits now and when you retire," he said. "I apologize. I was wrong."

  • IBM spouse speaks out on benefit changes. Excerpt: I am the wife of an IBM employee. I depend upon my husband for health benefits. Needless to say, I am outraged at the prices IBM is charging for spouses and family members for healthcare next year. Many retirees will be priced out of coverage. And the sad part about all this is that the people who will suffer most are women like myself who stayed home, raised the kids, and expected to have decent health care benefits in their old age. Why will we suffer the most? Chances are we will outlive our husbands.
This week on the TechsUnite site:
  • AT&T Wireless Blocks Employees’ Access to News Stories About Offshoring. Excerpt: AT&T Wireless is now tracking all Internet browsing by its employees, at one point last week even blocking access to online media stories that were perceived by company officials as critical of its offshoring activities. Employees reported last Thursday that when they attempted to read online news reports about AT&T Wireless offshoring activities on The Seattle Times and the Seattle Post-Intelligencer Web sites, a blocking alert appeared on their Web browsers warning them that access to those stories was blocked. "Warning Notice," the alert reads. "You have attempted to access a site that has been deemed inappropriate by our business and blocked from ALL internal access. A record of this request has been logged and will be provided to Business Security upon request."

  • Seattle Forum Addresses Offshoring of White-Collar Jobs. Excerpt: Alan Tonelson has seen the future—and it is bleak. Bleak, at least, for the American middle class, as it continues to witness high numbers of well-paying jobs disappear, either through steadily declining wages or the disappearance of white-collar jobs altogether. Tonelson, a research fellow at the U.S. Business and Industry Educational Foundation, based in Washington, D.C., announced his gloomy verdict before about 50 audience members at a forum entitled, "Exporting Washington’s White Collar Jobs." The Nov. 20 forum was sponsored by the Washington Alliance of Technology Workers (WashTech) at the University of Washington.
"The test of our progress is not whether we add more to the abundance of those who have too much; it is whether we provide enough for those who have too little." — Franklin D. Roosevelt
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