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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?
The tech industry doesn't want to face the fact that its pro-immigration, pro-outsourcing, pro-get-it-done-no-matter-who-gets-fucked culture makes this necessary. Most of the clamoring for a UBI is essentially this if you read between the lines:
If we punished outsourcing, H1B use, etc. with hefty FICA taxes levied on their users, we could not only create more domestic jobs, but help reduce the deficits in our welfare system.
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.
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.
Vintage computer adverts: http://www.vintageadbrowser.com/computers-and-software-ads
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.
I can't wait for AI to take over Wall Street and put the traders out of business.
I didn't suggest anything to the contrary. You just missed my point which is that every foreign worker doing an American market-related job is a) not paying FICA taxes (employee or employer) and b) not contributing to the welfare of our national community.
The more a company that does business in the US chooses to export to the US instead of creating jobs in our market, the more they should face in taxes. The more they provide services to our market, the more their native clients should pay in FICA-related taxes. Specifically, I am saying that offshored work should incur punitive FICA excise taxes. A company that sacrifices $5m worth of native worker jobs to offshore to a $800k team supporting them should incur bare minimum a 100% FICA excise tax on the value of the contract. Plus the year end percentage of the company's total workforce based abroad who support the American market should factor into the overall tax rates of the company.
In other words, a company like IBM should be largely treated like a foreign company because it's about 75% foreign employees (citizenship + location) and heavily supports the domestic American market. Accordingly, it should be taxed in a way that privileges companies that have a higher ratio of American citizens to foreign employees.
IBM couldn't evaluate the value of it's workers. In a lot of places senior management really didn't understand what groups did so they came up with different metrics. Unfortunately the metrics often didn't make sense and were eventually gamed. One metric, the amount of time people spent on billable work got totally out of control. Secretaries were all fired because they never did work directly billable against a customer. Company meetings were held at lunch so they wouldn't count against total time. Training budgets were left unspent. IT was internally outsourced, sort of. IT became so incompetent each group had to maintain there computers on their own in spite of it. Older workers had more vacation time which would lower the billable percentage of a group. You could be the most amazing worker in the company but if you had 5 weeks of vacation you were toxic to your groups metrics.
I worked in a secure lab in Ottawa. We were screwed because we didn't fit in the metrics correctly. We billed up to $6000 USD an hour but lost money according to IBM accounting. We had to do our own sales but since we were classified as a delivery group had to give half our revenue to another sales group so that the sales could be counted by a sales group. When we made a sale in another geographic region we would give half the sale to a local sales group and half to the one in the other region. 4 guys, 1 weeks worth of work, bill the customer $250K and we are getting grilled for losing money. Oh, and the grilling counted against our billable hours.