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Cutting 'Old Heads' at IBM (propublica.org)
An anonymous reader shares a report: As the world's dominant technology firm, payrolls at International Business Machines swelled to nearly a quarter-million U.S. white-collar workers in the 1980s. Its profits helped underwrite a broad agenda of racial equality, equal pay for women and an unbeatable offer of great wages and something close to lifetime employment, all in return for unswerving loyalty. But when high tech suddenly started shifting and companies went global, IBM faced the changing landscape with a distinction most of its fiercest competitors didn't have: a large number of experienced and aging U.S. employees.
The company reacted with a strategy that, in the words of one confidential planning document, would "correct seniority mix." It slashed IBM's U.S. workforce by as much as three-quarters from its 1980s peak, replacing a substantial share with younger, less-experienced and lower-paid workers and sending many positions overseas. ProPublica estimates that in the past five years alone, IBM has eliminated more than 20,000 American employees ages 40 and over, about 60 percent of its estimated total U.S. job cuts during those years. In making these cuts, IBM has flouted or outflanked U.S. laws and regulations intended to protect later-career workers from age discrimination, according to a ProPublica review of internal company documents, legal filings and public records, as well as information provided via interviews and questionnaires filled out by more than 1,000 former IBM employees.
The company reacted with a strategy that, in the words of one confidential planning document, would "correct seniority mix." It slashed IBM's U.S. workforce by as much as three-quarters from its 1980s peak, replacing a substantial share with younger, less-experienced and lower-paid workers and sending many positions overseas. ProPublica estimates that in the past five years alone, IBM has eliminated more than 20,000 American employees ages 40 and over, about 60 percent of its estimated total U.S. job cuts during those years. In making these cuts, IBM has flouted or outflanked U.S. laws and regulations intended to protect later-career workers from age discrimination, according to a ProPublica review of internal company documents, legal filings and public records, as well as information provided via interviews and questionnaires filled out by more than 1,000 former IBM employees.
How much money could they have saved if the 40+ folks were still around to point out the historical mistakes they were making?
Enforce the H1B laws and up the H1B min wage to at least 80-150K based on COL.
I was a contractor at IBM ten years ago. I wasn't hard to find accounts from IBM FTEs about how it was nearly impossible for an experienced IBMer (i.e., the older people) to be considered for open positions---all those jobs were getting filled by IBM India, IBM Argentina, etc. Even contractors were feeling the bite: frequent furloughs (four times during the last year I was working with them), no rate increases from year to year. Unless you're a Ph.D. in a field IBM is doing basic research in or maybe a bean counter, I cannot imagine that anyone would consider Big Blue as a career option. I certainly laugh after I get off the phone with recruiters looking to fill contracting positions with them.
You mean the corporate welfare system, where corporations stash profits overseas, and find ways to pay not one cent of US Federal taxes? The one that so vastly underpays its employees that the employees have to get government assistance for basics like food and housing-- not to mention the screaming costs of health care?
BizAmericaInc has been playing both sides of the issue for decades. Corporations are mandated to provide a maximized return for shareholders, and can be sued if they don't. The very phrase "Corporate Citizen" has become an excuse to flaunt the law, and kill the very idea of seniority as a base of pay. They'll make it up by spending face-saving PR to give themselves the make-over of goodness, then bribe a politician to get the legislation or taxpayer-funded growth bonds needed to continue to screw the system. Bah.
---- Teach Peace. It's Cheaper Than War.
I doubt the UBI has any relation with this case... The problem is that the famous 1% are very determined to profit even more regardless of the consequences, and the UBI is just one of the attempts to mitigate these consequences to avoid a social disaster that may, among other things, wipe out the country itself.
I would have gone to the root of the problem and killed the 1%.
Religion: The greatest weapon of mass destruction of all time
IBM has been doing this for 30 years now and it is working quite well - unfortunately. So, don't kid yourself or let anyone tell you that they are failing at it.
When you're tech worker who's thrown on the street in your 40s, you're out of the game.
Retraining is a fairy tale - I have thousands in debt to prove it. A retired manager confided to me, "The reality is if we have a choice between two candidates with similar skills, we're going to go for the younger one."
Notice the word "similar".
And the adage that if you have the skills, you'll get a job is just a feel good phrase that gives comfort to the folks who still have jobs and allows them to delude themselves into thinking it won't happen to them.
Tech is a shit field if you want to work in for the rest of your life.
This shouldn't be news. IBM has been laying off older workers for a while now. My dad was a senior DBA in his group and was used as a model for some of the DB/2 certifications, but was released by IBM due to age. He never had any performance issues and was well liked. As a further blow, IBM laid him off a few days before Christmas. Thankfully he found another job quickly, but not until the new year and a very stressful holiday for the family. Any IBMer approaching middle age should worry about their longevity with the company.
No, I mean Social Security, Medicare and Medicaid are going bankrupt because companies can send all of those taxable positions overseas without facing any consequences. Employers should be given a good set of choices:
1. Be part of society, participate in the safety net and pay very low corporate income taxes.
2. Exist on the margins to hedge your bets and pay through the nose.
If IBM had another 50k American workers tomorrow, all of those employees would be paying income and FICA taxes. IBM would be paying employer share FICA. IBM would then be justified in demanding a 5-10% tax rate and not a 25%+ rate because they're putting a lot of people to work and funding the safety net which is the lion's share of the budget.
Will always overcome youth and skill. Beware, millenials, you won't know what hit you.
The biggest threat UBI addresses is automation, and nobody has yet proposed an effective way to tax that. There's a persistent myth that automation will always simply open new opportunities, new kinds of jobs, while eliminating the old ones, but that ignores exactly what is being automated.
Consider: the industrial revolution with its rapid advancement in mechanized labor largely eliminated those whose place in the workforce was providing brute strength. Humans have a lot more to offer than that, but the labor market for horses and mules never recovered, contributing heavily to the US population crashing from around 22 million in 1900 to only 3 million by 1960.
Today, increasingly dexterous robots are pushing humans into ever-smaller roles on the assembly line, it won't be long before their dexterity exceeds our own, and the only role for humans there will be in roles exercising judgment. Meanwhile AI is rapidly catching up with us in terms of domain specific judgement - we already have AI beginning to outperform lawyers, pathologists, etc. in specific contexts. And there's just not really a whole lot of demand for broad-spectrum good judgement within the economy - and frankly, there's not a lot of humans that possess it anyway. That pretty much leaves what, art and receptionists?
And everyone working those service and luxury jobs will still need to buy all the staples - food, housing, durable goods, so the flow of wealth from the population to the production industries will continue unabated despite automation, but there will no longer be a reciprocal flow of wealth from the production industries to the general population (the former blue-collar employees), which is completely unsustainable. It only takes a handful of people to maintain and manage a fully automated factory or farm, and they can't hope to buy enough service and entertainment to transfer enough wealth to the general population to allow them to purchase all the goods being produced.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
UK companies did that - they were safe slow growth established products type companies. The profit margins weren't high but they were safe and guaranteed. That was good for pension fund managers who invested in 20 year time scales. But that wasn't good enough for the shareholders who wanted these companies to be young, dynamic, taking risks, all-or-nothing type bets, so they got the executive boards to sell off those safe product lines and reassign their engineering teams into the high-risk new markets. If something didn't make the expected profits they closed that division and fired the engineers. Basically turning corporations back into startups. They ended up disappearing.
Other companies had an internal job board that allows people to move around on their choice. They are still around.
IBM fell for the "getting rid of the deadwood" policy that Wall Street loved. Whenever job losses were announced, the stock price would rise, just because. Only years later, they realized they had lost all their institutional knowledge.
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Let's face it, the tech industry just does not like us oldbies. We have to come to terms with it. IT is highly driven by fads, and it takes a suspension of common sense and reason to fake enthusiasm for silly fads. Microservices for non-web-scale projects that bloats the app by 300%, no-sql for medium projects, Node.js, flat UI's where you cannot tell what a button is, "responsive" Bootstrap that wastes screen space AND still doesn't shrink right on mobile devices without 93.28 hours of fiddling per screen on 7 brands.
Nobody uses mobile for our software anyhow: it's for office work. The user even complains about the wasted space, and the youngie says, "But that's the new thing! See, it can reformat on smart-phones! Isn't that neeto!?" The user then says, "nice, kid, but we use desktops here. We intentionally purchased big monitors so we don't have to scroll. Your bloated rewrite makes us have to scroll." The kid ponders a few days, and then says, "We'll, we can toss Bootstrap and start all over again learning the latest UI Javascript gizmo that wastes 3% less space than Bootstrap. Rinse, repeat when a new one comes that wastes 6% less space..."
Old people can spot BS and waste better, but PHB's don't like their BS being exposed. They want kissup, not logic. Trumpish egos and attention-spans are the rule, not the exception in management. He got rich by following, dishing, and catering to bullshit and architecture/redecoration fads. It's why he watches so much TV. The PHB's want young naive snot-nosed kids who think every dumb fad is the greatest invention, which to them it is because it's all they know: they haven't seen the other 27 fads that got dumped on the trash pile or squirmed into tiny niche corners where they belong.
It would be more satisfying having a career where long-time knowledge and experience is actually valued. Although doctors have to face new medicines and treatments, the human body hasn't changed in 150,000 years. Per lawyers, the laws don't change that much either, roughly 1% or less a year.
Our eyes and fingers get slower with time, we cannot realistically keep up with ever changing IT fads like younglings do. Young people seem to have a Fad Lobe in their brain that older people have lost over time.
Table-ized A.I.
It's not that the 1% want to be richer.
It's that they want to wipe out the middle class. If there is no middle class to donate to politicians, then buying politicians becomes cheaper because they don't have to be in a bidding war with socialist-leaning workers, in order to buy Policy. (which includes tax cuts, deregulation, and immunity from the justice system that the rest of us must obey).
These are my friends, See how they glisten. See this one shine, how he smiles in the light.
Corporations are mandated to provide a maximized return for shareholders, and can be sued if they don't.
This is a popular meme but it was invented to absolve psychopath decision makers of responsibility. The reality is that this rarely actually happens and though I am not a lawyer I it seems to me that CxOs regularly engage in even more negligent behavior in pursuit of short term profits.
There is only the weakest of mandates that they maximize shareholder value, I am fuzzy on the details but it's along the lines that they actually do their job.
I don't think it's happening this time. Did offshoring create new offshoring jobs for displaced workers? No. What's the difference between an API that makes a work ticket in a 3rd world country and an API that creates a task to be carried out by an AI?
What about the bottom that fell out of "unskilled labor" ages ago? janitors, office gophers, etc.
These used to be middle class jobs that would hopefully get filled for life by some competent nobody. Now turnover is completely expected. It doesn't matter if you have a complete set of handyman skills and make everything shine like new. The market rates for your labor as a janitor are so low that nobody is going to try to keep you around even if you're saving your employer a small fortune in repairs and maintenance every year.
Did the unskilled labor market ever recover? No.
The days when you could be slow in the head but show up on time and do what your told are over. The people who need these jobs to live will be dogfood. Tell me stories about the buggy whip to defend your position all day but I'm not changing my mind until you tell me what happened to the horse. Technology has replaced most beasts of burden and dumb humans will be next.
The problem with your logic, and the place where all such arguments inevitably fall down, is that employees don't get to choose their pay level. If older employees could say, "I don't need this stress. Demote me to junior grade and reduce my pay accordingly," and then slack off, their experience would make them worth keeping. They can't, and their higher pay grade is basically tied to their age, which means canning the people because of their pay rate is age discrimination, just under a different name.
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Absolutely none of this is about product however. Perfectly profitable products with decades of guaranteed revenue ahead of them get cut every day because they're seen as dead ends. Everything IBM is doing is about their stock portfolio.