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• Job Cuts Status & Comments page
  • Comment 07/25/09: Re: Poor performance on IBM contracts to states. Prior to being acquired by IBM, Rational Software tried sourcing some IT support to IBM. The results were very poor, and IBM was booted out. Shortly thereafter, we were bought by IBM, and now have no choice but to use IBM for IT. But the states have a choice, and I'll be unsurprised if Indiana never gets the performance they think they paid for, and cancels the contract. IBM is very successful at marketing themselves for services, apparently not so successful at actually providing them. -irRational
  • Comment 07/26/09: It appears as though IBM management is definitely not expecting to transfer many Global Services employees into the GDFs along with the work they are delivering currently. The account work will move there suddenly and employees will be cut. They are hoping to lure a few people into relocation as well as to bring on board new people with the promise of a 1-year contract term. Once you move there and accept the work, your pay will be reduced in the following year, even though you have shelled out the money to relocate yourself just to keep your job. Those who buy into IBM's promises relayed through these headhunters will also find a surprise awaiting them once they begin working onsite. Those in IGS are not safe, no matter what account you are supporting. -Hula Girl-
  • Comment 07/27/09: Of course IBM management doesn't want folks to transfer into the GDF's. Those managers must get bonus money if their employees quit and IBM doesn't pay them any severance money. IBM is all about more profit with less revenue now. What a lousy financial business model, unless one is an IBM executive who will reap more obscene stock option grants and $$$ from it all. -anonymous-
  • Comment 07/27/09: Just had my exit interview as part of the 3/26 Application Services RA. Severance payment was taxed even higher than expected (I expected the 25% federal but not the state doubling their rate). To make it worse the check with combined regular/vacation pay was also taxed at these rates when I was told it wouldn't be. Time to call the ESC. Other than that I am very happy to be moving on. Although during a department meeting last week, the manager stated that they had made a mistake in the number of people let go as they are now having problems filling positions. Another thing to note for those left behind, all of the 3's and a good chunk of the 2's are now gone. A lot of people will see reduced ratings come December. Sad -Incognito
  • Comment 07/27/09: Want to hear a kick in the butt. Laid off in January and looked on IBM's website and they were hiring for my old job! Nice. -EFK 'ED-
  • Comment 07/27/09: Many RA'd were 2+ performers - I was 2+ for many years. I know some who were rated 1 performers. One was extended and billing on an account - and the customer and IBM account exec did not know in advance. The person was called one day by his "HR" manager and told. That person had to then tell the customer and IBM exec. A number of people RA'd in March were kept longer than 30 days due to projects - their last day was negotiated relative to their finishing work on a project and / or training teams in IBM India to do the work (like me). I know some with a last day even out to October. -anonymous-
  • Comment 07/28/09: I work for power systems sales in Canada. How can we unionize? Many on my team are now for it. We have had enough. Could a union influence quota setting - they are set in a way to make us no commission. All other jobs want proof you exceed numbers so this leaves you poor and stuck. Cadence meetings are a problem too - would like to have a union control these and perhaps attend. Am I crazy or does this make sense? -G afraid to say yet- Alliance reply: Please contact our partners in Canada at http://www.cwa-scacanada.ca/index_EN.shtml
  • Comment 07/28/09: Just RA'ed today given 30 days' notice. ITD/EUS. Jobs going to GDF's -YOYO-
  • Comment 07/28/09: Can anyone validate/substantiate the rumor that marketing & communications will outsource or offshore 40% of the workforce at the end of August? -anon-
  • Comment 07/28/09: Got the news I'm RA'd today as part of the Boulder consolidation. Looks like 1 week per 6 mos. severance. 30 days notice. -JustAnotherNumber-
  • Comment 07/28/09: My manager is on sick leave (again) but I am hearing employees in ITD departments closely related to mine are being laid off today. This one will be a big, big resource action for US IGS delivery. The GDF move is just a red herring with IGS betting that employees won't go or IGS not identifying the exact GDF move to the RA'd employees. Delivery managers are in the dark, customers are in the dark. IGS U.S. corporate customers really need to monitor what is happening to the resources that they are funding--directly! Customers, ask questions, demand to know the news. Also, if you did not agree to global resource performing services in your contract, IGS cannot move your headcount there without your authorization. I know of three people that were reinstated in 2008 after customers challenged the resource actions. Also, has anyone noticed that "Lean" is out of the picture? What a farce that was! -US DUCK-
  • Comment 07/28/09: Got RA'd by phone this morning - people getting let go in Software Group/Rational/Services. 16 years with IBM, but only 12 weeks severance, dating back to Rational acquisition -SoMuchForLoyalty-
  • Comment 07/28/09: 1200 US IBM employees in Network Services (NS) were moved over to AT&T as part of the new IBM/AT&T partnership in 2008. Project GO (an AT&T outsourcing project) will take 700 of those 1200 US jobs and move them out of country. Thanks AT&T for doing IBM's dirty work for them. If the workers are laid off by Feb 2010, IBM pays the sev packages. Guess when the 700 will be cut by? You got it. Different company, same BS game. -blue on AT&T-
  • Comment 07/28/09: RA'd today, normal T&Cs, and am IBM PM and PMP Certified, 13 years with IBM. Strangely freeing, while under led for most of my career, I never expected to be resource actioned, more like fired etc. I don't think joining the union will work, or will it be successful before IBM can offshore all but its elite 20% of remaining NA employees. -burtonrider- Alliance reply: We need copies of the RA packages so we can track the numbers and prove cuts are taking place. Names are confidential. Send RA packs to allianceibmunion@gmail.com
  • Comment 07/28/09: rcvd my call today with a 60 day notice (too much knowledge that people don't have). disappointed? yes. surprised? only that it came about 5 months sooner than expected. i'll be drained until i'm gone. i am glad that i have a little extra time that some do not have. -sassy-
  • Comment 07/28/09: I am so sorry to hear about the RA-s that have just occurred. To the folks that were RA-ed because their jobs were moving to Boulder...Were you asked to move to Boulder at any point? Did you have to train your replacements? What departments were affected? This is scary news!!! I feel for all of you. -dun-4-
  • Comment 07/28/09: Canada - 3600 Steeles Ave. We were told today that we have until November. Many regular employees and contractors effected. Our jobs are moving over to India and Brazil. 15 years service.....for what? They want us to train them.. very nice. -Gone-
  • Comment 07/29/09: It is the Job Skills Matrix that's doing most people in. While performance does count. The matrix is used in a Geographic Costing spread sheet. That being what is the cost for an employee with skill "X" in location(Country) "Y" versus the same in another location. India, Brazil will always win out. Having worked with PM's on Corporate roll outs, the quality and level of competence between a U.S. Certified Project Manager [high] with Indian PM's in their 20's [low] . The Indian PM's blindly follow spreadsheets with no understanding of the process they are managing. If this is the level and quality of service internally are forced to work with and accept. G-d help our customers. The joke used to be "yestudai I wuz a pizza Delivery person, Today I are an IGS Technical Support Representative" Now it is "Yesturdai I wuz a Tandoori cook, Today I are an IBM Project Manager" -anon-
  • Comment 07/29/09: Unbelievable. Now they have outsourced employment verification. Any company to which you apply for a job and wants to verify your employment has to register on some site and pay $30. Why don't they just outsource the ENTIRE COMPANY and everybody in it! Maybe that's the plan. -annonymous-
  • Comment 07/29/09: To whomever said Software Group developer jobs are safe... I would say safer but not safe. Same for STG and sometimes it's hard to know who was stealthily let go. Though the company hates to impact product schedules, they do lay off developers and testers who are in developer job families. And they do it in flagship products like WebSphere. Mainframe people are not safe either and Sam and the sadists are just getting started and getting a taste for the short term (as in 3 month) returns from laying people off. Only a union with enough members will have the negotiating strength make it more costly than a few weeks severance to RA a dedicated employee. -25yrsofsacrifice-
  • Comment 07/30/09: IBM Rational Software brand just went through another round of resource actions cutting 12 more positions. I believe all in the US but I'm not entirely sure. -Mike-
  • Comment 07/30/09: To goldfingerRTP - Software development jobs in SWG or anywhere in IBM are not safe. I was in SWG development, solid 2, 2+ and 1 performer over the years, with awards, accolades and so on. I was RAed in Jan along with numerous developers, senior, mid level, junior, and many of which I've known for almost 2 decades and I can provide you lists of awards, promotions and so on of dozens of people, ALL IN DEVELOPMENT who were RAed this year. No one is safe; repeat - NO ONE IS SAFE. AT-WILL Employment means just that. And these RAs are NOT about balancing workload, skills, or anything that mgt would have you believe. It is all about the money, and they are cratering projects to make bottom line numbers (note, NOT top line, which is what a healthy business does) and letting the 1st and 2nd line mgrs how to figure out how to get the work done (and many of my friends who are (still) directors told me they were also not allowed to de-commit any projects as a result of losing double digit percentages of their DEVELOPMENT teams). One more time - NO ONE IS SAFE. -RAed in Jan-
  • Comment 07/30/09: I know that most of the senior folks B and D and higher were given spreadsheets with alternate leadership job locations outside of their region. We were told to go ahead and apply (with a preferential hiring) into any one of the hundreds of offshore positions. Problem was that we would have to take these positions at lower pay even if it was a VP, Director, etc role but working out of India, Spain, Brazil, Eastern Europe, Japan. Given the connections, they gave many of the D and higher folks job leads to the decision makers in other divisions in the US.

    Listen it's hard to take a job, even in a lead role, in another country when you have a lifestyle based on income of $300K or more as most Ds and higher do. Point of the above is that if you want to, you can get these lists, just try to pester your second level or higher manager - if you have the social capital you can get the same benefits as others in the higher levels are being given (some offers as immediate sub positions with a rehire, others bridges to retirement, etc). Story is that there are 2 rulebooks being used for the RAs, one for the masses and the other for the execs.

    Try your best to get the perks of the second set, your treated with kid gloves...nice exit all in all...direct links to other firms (suppliers, etc) for jobs etc. Be aggressive about it, you have nothing to loose at this point Some staff threatened bias, profiling, etc and they held off on the RA for the individuals. Should give a few more months as they do the review. Enough of you guys do this (only if you feel you were unfairly targeted for the resource action) and it may choke their internal ability to manage it and may hold off the RAs for a bit. ....good luck -Big Who-

  • Comment 07/30/09: Atlanta and Dallas Call Centers to be resourced starting Sept 2009...jobs being shipped to call centers in Manila Philippines, Cairo Egypt and a totally manned by contractors center in Boulder Colorado...announcement was made yesterday July 27th... -Soon to be resourced IBM call center rep-
  • Comment 07/30/09: To the call center rep who will be losing his/her position, can you tip off the local press in some way, perhaps get a state legislator to put pressure on IBM for sending the work offshore, to people who probably won't communicate well with callers? Invoke the terrible mistake Dell made by doing this. -anonymous-
  • Comment 07/31/09: Just heard that folks in Sales and Distribution got hit with a resource action. I am trying to get one of those affected to forward the package to you or to me to forward to you.... Last day at work will be August 27 -badnewsbares-
  • Comment 07/31/09: Hey IBM Management - can you tell us what skills we should grow at this point? Or are we just doomed as IT workers in the USA? It is that we either need a PhD in Computer Science, or we should prepare to leave IBM and find another profession? How about some guidance, please? You used to say we'd simply have to travel to cover the "plethora of US commercial contracts", but even if the recession didn't happen and those contracts actually existed, it now it seems that they too will be offshored. So, are we just doomed? How about being honest and forthright for a change? -Doomed IT worker in the USA-
  • Comment 07/31/09: Some bold alumnus posted this on LinkedIn - many of the replies talk about how horribly they were treated on their last day.... interesting reading. The Group Discussion is under "The Greater IBM Connection: IBM's alumni program for past and present IBM employees" and has almost 40,000 in it. Where were you on first hiring day of IBM, where were you at the high water mark line of your IBM career? Where were you when you left IBM? -silly willy-
  • Comment 07/31/09: "can you tell us what skills we should grow at this point?" Right on -Doomed IT worker in the USA-! Ok, then IBM if you are not forthcoming with this information what ever happened to IBM RETRAINING for the hot jobs in this supposedly "smarter planet" you like to boast about? IBM doesn't retrain anymore. That is puzzling.They consider it more economical to just RA workers instead of spending a little $ to enable them to offer the skills IBM needs. Another thing the Watsons must be doing flips in the tomb over. Maybe if IBM was committed to retraining it's employees then some real revenue might eventually flow instead of IBM just relying on cost cutting and cheap labor profits. Also IBM you make us incessantly fill out these stupid skills profiles and nothing ever constructive happens for the employee with them. What do you use these skills profiles for anyway? -retrainornot-
  • Comment 08/01/09: to doomitworkerintheus I have seen people with MBAs, PhDs and people with very current skills, experience and education get the axe. The simple reason is that the job can be done much much cheaper offshore. IBM does not care if the job is done nearly as well, just so it is cheaper. Customers are getting upset at SLAs being dropped and complaints from THEIR customers. In one group I watched the numbers shrink over the last 2 years and 6 people are doing the work that started 2007 with 13. But as long as the 6 put in 70 hour workweeks and get the job done, IBM is happy. I am almost done feeling sorry for them since they show no desire to join here and make a stand. Come this coming week we will see a couple more posters whining about losing their jobs. Folks, God helps those who help themselves!!! -badnewsbares-
  • Comment 08/01/09: JUST GOT word of layoffs at SSO, one person for sure maybe two. -BADNEWS-
• General Visitor's Comment page
  • Comment 07/25/09: In the mid-90s, the Business Roundtable (IIRC) came out with its new position that executive management's primary function was to maximize their company's short term stock price. Since then short term stock price is the only thing that matters and long term viability of the company no longer mattered. Stock price is proportional to profits (unless you choose to buy back billions of stock like IBM has). Profits are revenue minus the cost of producing the revenue. To increase profits (and stock price) a company can either grow revenue or cut costs or both.

    IBM has not been able to grow revenue except by playing games with pension accounting, by financial engineering and by purchasing profitable companies and selling businesses. Thus, IBM has resorted to massive cost-cutting. If you can't grow revenue, you must cut costs to raise profit. We saw this in the 2Q announcements this week. It also happens that cutting costs is a lot easier and faster than the hard work of raising revenue.

    You are considered by IBM to be a cost - this explains the large number of US layoffs, the chronically frozen expense plans, the failure to invest in education for US employees, the scrooge-like minimal and infrequent pay raises and lack of promotions. It also explains the moving of work offshore to inexperienced, low skills labor in low cost countries. IBM has an anorexic, insatiable desire to cut costs - regardless of the impact of the business.

    Where this breaks down is the false executive assumption that inexperienced and minimally trained offshore resources can replace the more expensive, and more experienced, and more productive and higher skilled US resources. The truth is they can't. A lot of US employees are handling the messes and fixing the failures of these low cost resources.

    My point here is to not rail against IBM, but to communicate a reality. The reality is that if IBM executives think they can replace you and what you deliver with a lower cost resource whether they are in Iowa or Bangalore, they will do it. It doesn't matter if the low cost resource can actually do the job, what matters is what the executives think that the resource can. The key thing to remember is that as a cost, you are endangered. If you can clearly and obviously offer vastly superior value in terms of impact on IBM's revenue stream that nobody cheaper can deliver, you increase your chances of surviving this situation. That's not a guarantee, but it is about the best you can do until the failures of low cost, low skill resourcing become widely evident. -Frank Reality-

    Alliance reply: So how does the US IBM worker 'offer' a 'vastly superior value'; in the face of losing the very job they plan to apply their superior skills to? As individuals, that offer will fall on deaf executive ears; but collectively, as a unionized highly skilled workforce, it could be a noise executives hear and eventually bargain with for a 'smarter' IBM.

  • Comment 07/27/09: Tried looking for a job in Notes? Well, try looking for a job migrating from Notes to Exchange 'cause from what I see, the big Notes users (GSK, DUKE, REVLON) are jumping off the Notes bandwagon -ex notes ex-
• Pension Comments page
• Raise and Salary Comments IBM CEO Sam Palmisano: "I am pleased to announce that we will not only be paying bonuses to IBMers worldwide, based on individual performance, but that they'll be funded from a pool of money nearly the same size as last year's. That's significant in this economy -- and especially so, given the size of the 2007 pool. Further, our salary increase plan will continue, covering about 60 percent of our workforce. As always, increases will go to our highest performers and contributors. We should all feel good about the company's ability to invest in people in these very concrete ways."
  • Comment 07/25/09: Salary = 127,000; #Yrs Since Raise = 1; %Raise = 2; Band Level = 9; This Yr-PBC = 1; Years Service = 9; Hours/Week = 50; Location = RTP, NC; Message = The reward for being a "top performer" at IBM is an year-to-year pay reduction (accounting for inflation).... -Anon-
  • Comment 07/27/09: Salary = 39k; Band Level = 6; This Yr-PBC = 3; Job Title = Test; Years Service = 1; Hours/Week = 40; Message = Been with IBM a year and it has gradually dawned on me how the PBC system works. It doesn't really matter how well you do your job. What matters is how many meetings you schedule and invite others to and ensuring you kiss the right ass. Some people have a skill of appearing to work hard while not actually contributing anything of value, while others work hard, contribute, but don't make a fuss about it. If you are willing to back-stab, tell lies without shame, and backslap, you will go along way in IBM. But if you have ambition and drive and want to avoid politics and don't want to kiss ass every day, IBM is probably not the place for you. -Anon-
  • Comment 07/30/09: Salary = 105,000; #Yrs Since Raise = 1; %Raise = 4; Band Level = 9; This Yr-PBC = 1; Job Title = IT Specialist; Years Service = 5; Hours/Week = 50; Div Name = S&D; Location = US; Message = No motivation due to this year's new "Profit Sharing Plan" -Anon-
  • Comment 08/01/09: IBM global 2010 GDP and salary plan = no better than 0%. Keep working hard sheep (resources). Maybe we will not fleece or cut you or your pay in 2010 since we gotta get to our EPS so us managers and executives get more rich with stock options and bonuses. Us managers will do what is in our best interest. We can promise you that. Your interest should just be to keep acting like sheep who don't flock. -anonymous-
• PBC Comments
• International Comments
  • Comment 07/30/09: Country = UK; Union Affiliate = No; Job Title = IT Specialist; IBM Division = GTS; Message = Anger in UK at pension scheme closure. As more details emerge of IBM UK's plans, it gets worse. Not content with closing the existing final salary schemes next April, there will be big increases in the penalties made for taking early retirement. At present, a 55 year old can take early retirement with a 15% reduction of his pension. From April this will rise to about 50%. There will be a window in 4Q when those affected can apply for early retirement, to leave by April 2010. This is widely seen as a cheap way of trying to offload older and more highly paid employees, without paying for severance packages. Many workers are joining the Unite union, until now IBM UK has largely been a non-union company. -easyrider-

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

• BusinessWeek: Health Insurers Fight a Public Plan, but Rarely Each Other. Studies show health insurance is one of the least competitive markets in the U.S., which may be why premiums are rising. By Catherine Arnst. Excerpts: Health insurers are on board with many congressional proposals for health-care reform. But they are vociferously opposed to the creation of a publicly financed insurer, arguing that they couldn't possibly compete against a low-cost public plan that has no need to earn profits. They may have a point. Many economists say insurers face very little competition now across large swaths of the U.S.

  Various studies have found that health insurance is one of the most concentrated markets in the U.S., and that the lack of competition may be one factor behind sharply rising premiums. Each year, the American Medical Assn. surveys the competitive landscape for commercial health insurers; the latest report found that out of 314 metropolitan areas across the nation, 94% can be defined as highly concentrated, with two companies or even a single provider dominating the market. In 15 states, one insurer has half or more of the entire market, and in seven states, a single insurer has 75% or more.

• New York Times: Hospital Savings: Salaries for Doctors, Not Fees. By Gardiner Harris. Excerpts: Visiting the Cleveland Clinic this week, President Obama held up that well-known hospital as a model for the rest of the country. But for most of the nation’s nearly 6,000 hospitals, copying the Cleveland Clinic would be like asking the Durham Bulls, a minor league team, to copy the New York Yankees. A more accessible example is a hospital that sits a bit more than a home-run blast from the Baseball Hall of Fame here. Called Bassett Healthcare, this modest hospital of 180 beds delivers high-quality care at low costs in the face of federal reimbursement policies that discourage many of its best practices.

  Changing those policies is crucial to the success of health care reform, economists say — something Mr. Obama said that he would do. “Our proposals would change incentives so that doctors and nurses finally are free to give patients the best care, not just the most expensive care,” the president said Thursday in Ohio. But almost nothing in proposed legislation that has so far emerged in Congress would encourage the creation of similar hospitals.

• New York Times editorial: Health Care Reform and You. Excerpt: The health care reform bills moving through Congress look as though they would do a good job of providing coverage for millions of uninsured Americans. But what would they do for the far greater number of people who already have insurance? As President Obama noted in his news conference last week, many of them are wondering: “What’s in this for me? How does my family stand to benefit from health insurance reform?”
• New York Times: Getting Good Value in Health Care. By Pauline W. Chen, M.D. Excerpts: In the enormous pie that makes up health care expenditures, only 1 to 3 percent can be attributed to preventive interventions. The miniscule size of this share is due in part to the fact that very few clinical preventive services actually result in savings. In fact, the data for savings is so lackluster that some economists have argued that it is less cost-effective to prevent illness than it is to simply let people get sick. Other economists have taken that argument even further, contending that preventive care adds to societal costs by extending lives and thus the time we must care for people (though one would hope that costly treatments might result in the same “problem”). ...

  But as long as the focus is on savings and not on value, such support is not likely to be forthcoming, and preventive care stands to remain a nearly negligible part of our health care expenditures. “Community health and wellness have been pushed aside in the health care reform debate partly because we have been focused on net savings, not value,” Dr. Woolf observed. “That analysis has not been favorable with preventive medicine, so people continue to get highly expensive studies and procedures that are ineffective, even though we have cost-effective public health interventions at our fingertips.” “It’s as if our house is going up in flames,” Dr. Woolf continued. “There is one room, filled with explosives, that hasn’t yet caught on fire. But people are hesitating to put out the fire because they believe they don’t have the data.”

• New York Times op-ed: An Incoherent Truth. By Paul Krugman. Right now the fate of health care reform seems to rest in the hands of relatively conservative Democrats — mainly members of the Blue Dog Coalition, created in 1995. And you might be tempted to say that President Obama needs to give those Democrats what they want. But he can’t — because the Blue Dogs aren’t making sense.

  Reform, if it happens, will rest on four main pillars: regulation, mandates, subsidies and competition. ...

  There has been a lot of publicity about Blue Dog opposition to the public option, and rightly so: a plan without a public option to hold down insurance premiums would cost taxpayers more than a plan with such an option. But Blue Dogs have also been complaining about the employer mandate, which is even more at odds with their supposed concern about spending. The Congressional Budget Office has already weighed in on this issue: without an employer mandate, health care reform would be undermined as many companies dropped their existing insurance plans, forcing workers to seek federal aid — and causing the cost of subsidies to balloon. It makes no sense at all to complain about the cost of subsidies and at the same time oppose an employer mandate. ...

  So what do the Blue Dogs want? Maybe they’re just being complete hypocrites. It’s worth remembering the history of one of the Blue Dog Coalition’s founders: former Representative Billy Tauzin of Louisiana. Mr. Tauzin switched to the Republicans soon after the group’s creation; eight years later he pushed through the 2003 Medicare Modernization Act, a deeply irresponsible bill that included huge giveaways to drug and insurance companies. And then he left Congress to become, yes, the lavishly paid president of PhRMA, the pharmaceutical industry lobby.

• New York Times: A Bid to Tax Health Plans of Executives. By Leslie Wayne and David M. Herszenhorn. Excerpts: Goldman Sachs is one of the nation’s richest banks, and hundreds of top Goldman employees have a health care package to match — one of the “gold-plated Cadillac” plans cited by those involved in the health care debate in Washington. Goldman’s 400 or so managing directors and its top executive officers participate in the bank’s executive medical and dental program as part of their benefits, according to documents filed with the Securities and Exchange Commission. The program generally costs the bank $40,543 in premiums annually for each participant’s family. ...

  A health care package costing $40,000 or more a year would generally have no co-payments or deductibles, according to Paul Fronstin, an analyst at the Employee Benefit Research Institute, a Washington nonprofit that studies benefits. It would also have no limits on doctors or procedures, no restrictions on pre-existing conditions and no requirements for referrals. Few people have such policies, Mr. Fronstin said. “It would only be top executives who run big businesses, mainly people in the C suite,” said Mr. Fronstin, referring to companies’ chief officers.

• Cleveland Plain-Dealer: Idea that members of Congress get free or low-cost, highest quality health-care plans is a myth. By Stephen Koff. Excerpts: It is repeated so often that many Americans believe it: Congress gets free or extremely low-cost, gold-plated health care. Reuben Grossberg of Pepper Pike, a structural engineer and former project manager for an architectural firm, certainly thought it was true, arguably with good reason, because Congress has done almost nothing to knock it down. "I want the same quality of health care as the politicians get, and I don't want to have to pay any more for it," Grossberg, 63, said in an interview last week when President Barack Obama was flying to Cleveland and Congress struggled to craft a trillion-dollar health reform package.

  Problem is, the belief that Congress gets cheap-but-Cadillac-quality health benefits is a myth. Some members of Congress, in fact, pay higher premiums for their health plans than they would if privately employed. "They are pretty good plans," said Robert Krughoff, president of the Center for the Study of Services, a Washington, D.C., consumer organization that publishes a guide called Consumers' Checkbook as well as an authoritative guide to federal benefits. "They're not the best plans anyone has. Many employers in the private sector have plans that are just as good or better."

• New York Times: Health Policy Is Carved Out at Table for 6. By David M. Herszenhorn and Robert Pear. Excerpts: The fate of the health care overhaul largely rests on the shoulders of six senators who since June 17 have gathered — often twice a day, and for many hours at a stretch — in a conference room with burnt sienna walls, in the office of the Senate Finance Committee chairman, Max Baucus, Democrat of Montana. President Obama and Congressional leaders agree that if a bipartisan deal can be forged on health care, it will emerge from this conference room, with a huge map of Montana on one wall and photos of Mike Mansfield, the Montanan who was the longest-serving Senate majority leader, on the other. ...

  Already, the group of six has tossed aside the idea of a government-run insurance plan that would compete with private insurers, which the president supports but Republicans said was a deal-breaker. Instead, they are proposing a network of private, nonprofit cooperatives. They have also dismissed the House Democratic plan to pay for the bill’s roughly $1 trillion, 10-year cost partly with an income surtax on high earners.

• Reuters, courtesy of New York Times: Starbucks to Match 401k But Health Benefits Costlier. Excerpts: - Starbucks Corp will make discretionary matching contributions to 401(k) retirement plans for its 2009 plan year but employees will face higher health-care costs, Chief Executive Howard Schultz said in a memo to employees on Monday. Starbucks, known for its generous health-care benefits, said those costs have risen sharply over the past several years on skyrocketing U.S. health care expenses. In the memo, Schultz said the company now spends "almost as much on health care for our partners as we do on the green coffee we buy."
• Employee Benefit Research Institute: Health Insurance Coverage of Individuals Ages 55−64, 1994−2007 (PDF). Excerpts: EBRI estimates from the latest Current Population Survey data show adults ages 55−64 were one of two groups—the other was children—most likely to have health insurance coverage in 2007. That year, 12 percent of adults ages 55−64 were uninsured, compared with about 32 percent of adults ages 21−24, 26 percent of those ages 25−34, and 23.5 percent of all younger adults. There were 4 million adults ages 55−64 without health insurance in 2007, accounting for 9 percent of the 45 million individuals under age 65 who were uninsured.

  The fact that adults ages 55−64 are the least likely age group of adults to be uninsured is usually overlooked when considering that employers have substantially cut back on employment-based health benefits for early retirees. It is also important to understand the health insurance status of individuals ages 55–64 because of access and affordability issues with the nongroup market.

  The erosion of retiree health insurance may ultimately change retirement patterns as employees nearing retirement age postpone their decision to retire upon learning that, without a job, they may not be able to obtain health insurance coverage or afford health care services that are not covered by insurance. The health insurance status of the population nearly eligible for Medicare also has implications for the Medicare program, to the degree that any increase in the uninsured population entering Medicare results in higher costs to the program.

• Washington Post: A Market for Health Reform. By Ezra Klein. Excerpt: The central problem in health-care reform is that good policy and good politics point in opposite directions. Good policy proceeds from the understanding that our health-care system is a fractured, pricey, inefficient mess. Good politics, however, proceeds from the insight that a lot of people rely on this fractured, pricey, inefficient mess and don't trust Washington to change it. Good politics means, as Barack Obama frequently says, that if you like what you have, you get to keep it. But put those imperatives together and you have a strange problem indeed: How do you reform a system that you're not allowed to change?
• New York Times: Texas Hospital Flexing Muscle in Health Fight. By Kevin Sack and David M. Herszenhorn. Excerpts: One of the largest sources of campaign contributions to Senate Democrats during this year’s health care debate is a physician-owned hospital in one of the country’s poorest regions that has sought to soften measures that could choke its rapid growth. The Democratic Senatorial Campaign Committee collected nearly $500,000 at a reception here on March 30, mostly from physicians and others affiliated with Doctors Hospital at Renaissance, financial disclosure records show. ...

  Although Congressional negotiations over health care legislation are continuing, Doctors Hospital seems to be getting much of what it wants. Thus far, physician-owned hospitals have been insulated from some of the most onerous potential restrictions in the health care legislation moving through Congress. Representative Pete Stark, a California Democrat who wants to clamp down on physician-owned hospitals, said their formidable lobbying had helped eliminate his proposal to limit physician ownership to 40 percent at any hospital. “Particularly led by these guys in Texas, these guys who have been raising tons of money for contributions,” Mr. Stark said in an interview. “I am sure that some of my colleagues have been willing to hear them out.” ...

  The gleaming, well-equipped Doctors Hospital at Renaissance, which has expanded to 503 beds from 30 in six years, has become a footnote in the health care debate. It was featured unflatteringly in a June article in The New Yorker about geographic disparities in health care spending, a story that President Obama has cited repeatedly in speeches and meetings. The article, which is sharply disputed by hospital officials, posited that physician ownership provided “an unholy temptation to overorder” tests and procedures because doctors earn not only their fees but also a share of the hospital’s profits. At Doctors Hospital, where 353 of its 452 owners are physicians, net revenue amounted to $64 million in 2008.

• Wall Street Journal: Despite Making Concessions, Insurers Face Renewed Attacks. By Janet Adamy. Excerpts: Health insurers are facing renewed fire from President Barack Obama and Democrats, but are still mostly on board with the president's effort to overhaul the U.S. health-care system. That's because the industry conceded months ago to key demands that Mr. Obama has just begun promoting. And insurers still have much to gain from an overhaul because they could get millions of new customers. ...

  If health legislation succeeds, the industry would likely get a fresh batch of new customers. In particular, many young and healthy people who currently forgo coverage would be forced to sign up and pay premiums that would offset the cost of insuring older Americans.

  Insurers have focused their opposition on some Democrats' push to create a new public health-insurance plan -- an entity they fear will drive private insurers out of business. House versions of the legislation include a public plan, but the Senate Finance Committee is expected to opt for nonprofit cooperatives that would pose less of a threat to private insurers. ...

  Meanwhile, insurers continue to wage an aggressive campaign against Democrats' proposals to create a public health-insurance plan. America's Health Insurance Plans has stationed employees in 30 states who are tracking where local lawmakers hold town-hall meetings. Big insurer WellPoint Inc. has set up an online network where it makes the case against the public health insurance plan and urges consumers to contact their elected officials.

• New York Times op-ed: Health Care Realities. By Paul Krugman. Excerpts: At a recent town hall meeting, a man stood up and told Representative Bob Inglis to “keep your government hands off my Medicare.” The congressman, a Republican from South Carolina, tried to explain that Medicare is already a government program — but the voter, Mr. Inglis said, “wasn’t having any of it.”

  It’s a funny story — but it illustrates the extent to which health reform must climb a wall of misinformation. It’s not just that many Americans don’t understand what President Obama is proposing; many people don’t understand the way American health care works right now. They don’t understand, in particular, that getting the government involved in health care wouldn’t be a radical step: the government is already deeply involved, even in private insurance. And that government involvement is the only reason our system works at all.

  The key thing you need to know about health care is that it depends crucially on insurance. You don’t know when or whether you’ll need treatment — but if you do, treatment can be extremely expensive, well beyond what most people can pay out of pocket. Triple coronary bypasses, not routine doctor’s visits, are where the real money is, so insurance is essential.

  Yet private markets for health insurance, left to their own devices, work very badly: insurers deny as many claims as possible, and they also try to avoid covering people who are likely to need care. Horror stories are legion: the insurance company that refused to pay for urgently needed cancer surgery because of questions about the patient’s acne treatment; the healthy young woman denied coverage because she briefly saw a psychologist after breaking up with her boyfriend.

  And in their efforts to avoid “medical losses,” the industry term for paying medical bills, insurers spend much of the money taken in through premiums not on medical treatment, but on “underwriting” — screening out people likely to make insurance claims. In the individual insurance market, where people buy insurance directly rather than getting it through their employers, so much money goes into underwriting and other expenses that only around 70 cents of each premium dollar actually goes to care.

News and Opinion Concerning the U.S. Financial Crisis

"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: Bankers Reaped Lavish Bonuses During Bailouts. By Louise Story and Eric Dash. Excerpts: Thousands of top traders and bankers on Wall Street were awarded huge bonuses and pay packages last year, even as their employers were battered by the financial crisis. Nine of the financial firms that were among the largest recipients of federal bailout money paid about 5,000 of their traders and bankers bonuses of more than $1 million apiece for 2008, according to a report released Thursday by Andrew M. Cuomo, the New York attorney general.

  At Goldman Sachs, for example, bonuses of more than $1 million went to 953 traders and bankers, and Morgan Stanley awarded seven-figure bonuses to 428 employees. Even at weaker banks like Citigroup and Bank of America, million-dollar awards were distributed to hundreds of workers. ...

  Mr. Cuomo, who for months has criticized the companies over pay, said the bonuses were particularly galling because the banks survived the crisis with the government’s support. “If the bank lost money, where do you get the money to pay the bonus?” he said. All the banks named in the report declined to comment. ...

  At Morgan Stanley, for example, compensation last year was more than seven times as large as the bank’s profit. In 2004 and 2005, when the stock markets were doing well, Morgan Stanley spent only two times its profits on compensation. ...

  Though it has been known for months that billions of dollars were spent on bonuses last year, it was unclear whether that money was spread widely or concentrated among a few workers. The report suggests that those roughly 5,000 people — a small subset of the industry — accounted for more than $5 billion in bonuses. At Goldman, just 200 people collectively were paid nearly $1 billion in total, and at Morgan Stanley, $577 million was shared by 101 people. All told, the bonus pools at the nine banks that received bailout money was $32.6 billion, while those banks lost $81 billion.

• New York Times editorial: Of Banks and Bonuses. Excerpts: Earlier this month, when Goldman Sachs reported record quarterly profits — and prepared to pay juicy bonuses — it was widely, and correctly, noted that the firm was leading the way back to a future in which outsized pay for short-term gains could once again foster excessive risk taking.

  Sure enough, last week, Morgan Stanley explained its quarterly loss by saying that some of its traders were still “gun shy” after last year’s near-death experience in the financial markets, but that the firm now planned to increase its risk taking. To try to stay competitive with Goldman and other banks, Morgan Stanley has also allocated a big chunk of its net revenue for compensation.

  This from a couple of firms that 1) probably wouldn’t even be around today were it not for ongoing government rescues of the financial system and 2) by dint of being too big to fail, now enjoy an implicit guarantee of future bailouts if their bets go wrong. The financial system may be stabilizing for now, but the danger to taxpayers if markets were to buckle again is at least as great as ever. ...

  The problem is that the bonus-driven risk culture is reasserting itself now, while comprehensive reform will probably take until next year, if it occurs at all. A solution is for Congress to handle bankers’ compensation as a stand-alone issue, as the House Financial Services Committee has said it is ready to do. There is no question about the need to end the perverse incentives that helped to set off the financial crisis. There is ample, and justified, anger among Americans about outsized pay — often to the very same bankers who profited from the bubble — to warrant fast-tracking the issue.

• Huffington Post: Wall Street on Speed. By Robert Kuttner. Excerpts: The New York Times recently reported that the latest scheme--or scam--on Wall Street is something called High Frequency Trading. Very sophisticated financial firms, such as Goldman Sachs, are tipped off by the New York Stock Exchange's own computers to pending buy and sell orders. Armed with ultra sophisticated computer algorithms, the insiders anticipate the direction of the market based on what they learn about supply and demand for a given security. They can make an extra penny here and an extra penny there at the expense of us suckers, adding up to billions. "Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed," wrote the Times' Charles Duhigg in a front page piece that was the talk of New York and Washington. "High-frequency trading is one answer."

  As debates in the blogosphere in the last couple of days have made clear, there are a couple of possibilities of what is at work here. One is that Goldman and others are literally using privileged information to make trades ahead of markets, in which case they are committing a felony. Specifically, the abuse is known as "front-running," or trading ahead of customers, and it is an explicitly illegal form of market manipulation. Front running is epidemic on Wall Street--the whole point of an investment bank trading for its own account is to take advantage of its specialized knowledge of markets--and the SEC or the Justice Department shuts down front-running when it becomes too blatant to ignore.

  The other possibility is that the Goldmans of the world have found themselves a nice loophole. Tapping into the Stock Exchange's own computers and other sources of trading activity is something that anyone in theory could do, but only a few privileged insiders have the sophistication to exploit what they find. Often orders are placed, only to be cancelled. Their purpose is to figure out what the market is willing to pay, and then get in ahead of it. ...

  Now, as then, it is a mark of Wall Street's stranglehold on politics that the most sensible of remedies seem impossibly radical. One very good way to damp down the dictatorship of the traders, and raise some needed revenue along the way, would be through a punitively high transactions tax on very short term trades. Genuine investors should get favored fax treatment. Pure traders should be taxed, and very short term manipulation taxed into oblivion. If the financial crisis has proven anything, it is that capital markets have become an insiders' game in which trading profits crowd out the legitimate business of investment. The whole business-models of the most lucrative firms on Wall Street are a menace to the rest of the economy. Until the Obama administration recognizes this most basic abuse and shuts it down, it will be more enabler than reformer.

• Time: An Anthropologist on What's Wrong with Wall Street. By Barbara Kiviat. Excerpts: In 1996, Karen Ho got a job on Wall Street. The student of anthropology, who would later go on to get her Ph.D., was fascinated by how even in the midst of an economic boom, corporate downsizings were rampant — and how each time a company announced a major layoff, its stock rallied. What she found from her perch at Bankers Trust — and later in interviews with people at firms such as Morgan Stanley, Merrill Lynch, Lehman Brothers, Goldman Sachs, JPMorgan, Salomon Brothers, Kidder Peabody and Lazard — was that it wasn't just an ideological commitment to boosting shareholder value that drove decisions to merge, break up and restructure companies, but also the work culture of Wall Street itself. Ho, now a professor at the University of Minnesota, talked with Barbara Kiviat about her findings, presented in Liquidated: An Ethnography of Wall Street, and how she thinks the recent financial collapse has — or hasn't — changed things.
• New York Times Editorial: The Financial Truth Commission. Excerpt: Congress has pledged to reform the banking system, but too often over the past year lawmakers have chosen instead to shield the financial industry, a big campaign contributor, from accountability. So the public has every right to ask whether the newly formed Financial Crisis Inquiry Commission — created by Congress to investigate the meltdown — can be counted on to put the public interest ahead of political loyalties, professional ties and ideological biases.
• New York Times: How Firms Wooed a U.S. Agency With Billions to Invest. By Eric Lipton. Excerpt: As a New York money manager and investment banker at four Wall Street firms, Charles E. F. Millard never reached superstar status. But he was treated like one when he arrived in Washington in May 2007, to run the Pension Benefit Guaranty Corporation, the federal agency that oversees $50 billion in retirement funds. BlackRock, one of the world’s largest money-management firms, assigned a high school classmate of Mr. Millard’s to stay in close contact with him, and it made sure to place him next to its legendary founder, Laurence D. Fink, at a charity dinner at Chelsea Piers. A top executive at Goldman Sachs frequently called and sent e-mail messages, inviting Mr. Millard out to the Mandarin Oriental and the Ritz-Carlton in Washington, even helping him hunt for his next Wall Street job.

Vault Message Board Posts

Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. Sample posts follow:

• "Raises are effective 7/1" by "bigbertha92". Full excerpt: Don't expect a raise if you're a 2 performer. Only top contributors (1 & 2+) will receive a raise. The raise will most likely be around 1%. No kidding. Executives are not getting raises this year.
• "IBM Just don't get it" by " Toa". Full excerpt: If you get the same money for a half ar*ed effort as you do for a good effort then why bother trying to do a good job! I've even seen 2+ being downgraded to a 2 because the manager didn't believe the 2+ was valid.
• "Let's Go Global!" by "bigbertha92". Excerpts: Everything is "global" - from EO training to forced-by-mgmt-to-take IBM learning courses. Learn when no means yes, how not to be offensive, and watch slang!

  We all have to play nice-nice with our GR (global resource) peers. and when your GR team lead sends notes to IBM US mgmt that they need MORE WORK from their US counterparts, IBM mgmt. rolls over and gives them more work. Reminds me of an old CCR song: Fortunate Son.

  And when you ask them, how much should we give? Ooh, they only answer more! more! more. What a sad, pathetic, f'ng company.

• "The Truth Can't Be Told" by "Frank_Reality". Full excerpt: Yes, even though the GRs in India can't handle simple tasks on time, with adequate quality and within cost, they are given more and more responsibility they cannot begin to handle. And of course when they screw up and fail as often happens, it's always the US teams' fault. It is pathetic (and clueless) to reward this incompetence with more work and more responsibilities.

  What's more pathetic is how India is not held accountable since they are Sam's chosen ones and how anyone who reports problems with India are considered anti-team, racist and uncooperative.

  The sacred cows over in India aren't cattle, they're the "office boys" pretending to be IT professionals working for IBM. What a sad, pathetic f'ng company indeed.