IBM's
(Eroding) Total Compensation
If
you think the Cash Balance Plan (CBP) conversion and
Future Health Account (FHA) changes
were the first time IBM has reduced benefits,
this will make you Think Twice.
This is a growing list of
Reductions in IBM's Total Compensation, accompanied by
excerpts from, and links to, postings on the IBM related
clubs on Yahoo!. Many of the items on the list were
pointed out by members of the Yahoo! ibmunion club. If you know of specific dates for
any of these events, please contact Jim Mangi.
An IBM Time
Line is also
available that shows other important dates in IBM
history.
Reductions in
IBM's Total Compensation:
- 1991/01/31 - IBM
announces 10% reduction in pension benefits.
- 1991 (or 1992?) -
Elimination of medical plan's "coordination
of benefits".
- 1992, April -
Elimination of Pre-Retirement Education for
IBMers within 5 years of retirement. Plan
reimbursed up to $2,500 per employee and another
$2,500 for a spouse.
- 1992 - Rolex removed
from 25 year catalog.
- 1992 - Elimination of
$1000 that came with Quarter Century club.
- 1993/04/01 - Louis V.
Gerstner Jr. becomes IBM Chairman and CEO.
Coincidentally, this is April Fool's day... we're
not quite sure of the relationship here... but
many people who thought Lou would look out for
IBM's long term well being sure feel fooled now.
- 1994/02/17 - 320
employees laid of at IBM Endicott.
- 1994/07/27 - IBM
announces Kingston, NY plant closing.
- 1999/05/03 - IBM
mails notice of new "cash-balance" plan
to employees.
- 1999/07/01 - Pension
reductions for employees under 40 due to Cash
Balance Plan conversion.
- 1999/07/01 -
Reduction of retirement medical benefit due to
conversion to Future Health Account (FHA) for
employees with more than 5 years to go before
retirement.
- 2000 (first quarter)
- Reduced 2000 variable pay (70% of previous
years payout for some employees) due to poor
management. Since variable pay is about 10% of
yearly salary, this amounts to a 3% pay cut for
many employees.
- 2000/04/25 -
Sponsored by IEBAC, IBM shareholders' resolution
to restore "pension choice" for
employees receives 28 percent support at
stockholder's meeting.
- 2000/09/14 - IBM
Endicott announces Alternate Work Schedule (AWS),
with mandatory 12 hour work days and weekend
days. Workers must work every other Saturday.
Overtime (and overtime pay) is reduced. 20%
premium for AWS called just a "tip" and
not worth the extra effort. Endicott management
tells employees that day care should not be a
problem, but Alliance@IBM research shows just two
licensed day care providers in the area with 24x7
coverage.
- 2000/10/09 - IBM
announces that new retirees will have to pay for
medical benefits.
- 2001/03/20 - IBM
Endicott holds "all hands" meeting to
announce that it was sending, eventually,
"all" HyperGBA, Blue Devil
manufacturing to China. Reduction: job security.
- Other reductions. We
need exact dates for these. If you have any
information, please forward it to us.
- Unused vacation
no longer carried over to next calendar year.
IBM can legally do this because they do not
take away EARNED vacation. Instead, they
reduce the number of vacation days in the
current year by the number of unused vacation
days for the previous year.
- Elimination of
standby pay.
- Elimination of
mission pay.
- Elimination of
meal reimbursement when working 4 or more
hours overtime.
- Employees began
paying for medical benefits.
- Employees began
having to pay for first day's room and board
of a hospital stay.
- Elimination of
pension growth after 30 years.
- Reduction of
pension growth percentage.
- Mandatory 10%
overtime (effectively reduces employee's
hourly wage).
- Loss of one hour
minimum pay for interruptions when not
working (now get actual time).
- Loss of four hour
minimum pay for callouts (now pays actual
time).
Yahoo! Club
Postings:
On June 29th, 2000, a post
was placed in the Yahoo! ibmunion club that discussed how IBM's Total
Compensation has been reduced in recent years. Several
members added to the list with follow-up posts of their
own. The posts in the thread have been included below.
Original post by
southbury_alliance (Jim Mangi) on 2000/06/29:
I was reading some old
company information. One of the booklets played up
IBM's "total compensation" as being leading
edge. That made me start thinking of all the things
that have happened as far as benefits in the last ten
years.
When I first joined
IBM over 10 years ago, the salary was among the
highest offered, and we also had some of the best
benefits.
The first 'hit' I
remember was when the medical plan was changed and
'coordination of benefits' was taken away. Who
remembers that? I was single at the time, but I think
this coordination of benefits worked so that if a
husband and wife were both IBMers, the 20% not
covered by one insurance would be picked up by the
other, so that, effectively, medical was covered
100%. Since IBM likes to look at total compensation,
then the elimination of this benefit (which is part
of your compensation) means that you had a
compensation reduction. If they didn't increase your
pay accordingly, then, by IBM's definition, you've
had the equivalent of a pay cut. So, that's one pay
cut I can remember.
The next 'ding' was
when employees were forced to start paying for a
portion of their medical coverage. Medical coverage
being part of your compensation, this again was a
reduction in compensation. That's pay cut number two.
Paycut #3 was (for
IGS) the Billable/Productive hours quotas and
mandatory 10% OT. Forget compensation, this was a
true pay cut. Don't even think about the 10% OT,
because for most people to meet their
Billable/Productive targets, take their vacation and
holidays, and attend classes to stay technically
vital (another PBC requirement) you actually have to
put in 15 to 20% OT. What does that mean? If you have
a worker who makes $50,000/year, gets 3 weeks
vacation and 12 holidays, that translates to about
$26.82/hour (52 weeks * 5 days/week = 260
weekdays/year. 260 days - 15 vacation days - 12
holidays = 233 work days. 233 work days * 8 hours/day
= 1864 hours/year. $50,000/1864hours = $26.82/hr).
Now, add %15 overtime, and you get
%50,000/2143.6hours for a new hourly wage of
$23.32/hour. BAM! Another pay cut!
Paycuts #4 and #5 came
in one shot in June of 1999.
#4 was when many of us
had our pensions cut. In my case, my projected annual
pension was cut 42% (using IBM's OWN calculators). To
make up for the shortfall, I would have to put aside
extra savings on my own. Not being an actuary, I
cannot acurately figure that out, but whatever that
amount is, it would be essentially a cut in my
compensation, and therefore my pay.
The last paycut was
the new Future Health Account (FHA). The actuaries
predict, in my case, that my FHA will last between 1
and 2 years after I retire after 30 years. Based on
the projected cost of medical insurance 20 years from
now, I don't even want to think how much I need to
save on my own now to be able to pay for it. Whatever
that amount might be, it would be subtracted from my
total compensation, resulting in the fifth pay cut.
So if someone tells
you IBM has never actually cut salaries, just remind
them that IBM focuses on compensation, not salaries.
Then remind them that compensation most surely HAS
been cut!
-- Jim Mangi, IGS,
Southbury. 10+ year employee.
Join the Alliance@IBM: http://www.allianceibm.org/
Southbury site information:
http://www.HereInTown.com/southburyalliance/
Additional 'dings'
added by others (some are excerpts):
lawn_mower_man1
(posted 2000/06/30):
Somewhere in between
the first hit and the next 'ding', they made us
responsible for paying the first day's room and board
for a hospital stay. Although this was also another
pay cut, they claimed that it was entirely
educational - we needed to become more aware of the
high cost of medical expenses.
Another 'ding' came
for many employees this year when they received only
70% of their variable pay for last year. Since base
pay is supposed to be about 90% of one's total pay,
with variable pay making up the other 10%, that
translates to a 3% pay cut for last year.
Puppy_play
(posted 2000/06/30):
The "use it or
lose it" methodology handling of unused vacation
was another pay cut for many of us, especially when
paired with critical project deadlines in November
and December and the elimination in almost all cases
of mission overtime...
bits_bytes_and_bugs
(posted 2000/06/30):
Jim - I think you have
the biggies for most people, but there are many more
smaller takeaways - in fact, one could probably not
list them all in one post. Here are a few more:
- elimination of
standby pay,
- meal reimbursement when work more than 4 hours OT,
- mileage reimbursement for working unscheduled work
days.
- elimination of mission pay.
skipd45
(posted 2000/06/30):
I remember when I was
working in mfg. if we came in on a Sunday night, and
worked until Monday morning, we would get double time
for the entire night. That was taken away and we were
paid the double time only for the time up until
midnight.
bettyshaef
(posted 2000/06/30):
Let us not forget what
Lou did to the older people (the ones who are able to
take the defined benefit pension plan). The number of
years you have with the company stops at 30. This
means that once you pass 30 years our pension stops
growing.
mrs_adm
(posted 2000/06/30):
>>" This
means that once you pass 30 years our pension stops
growing."
Yes, that's exactly
what it means. And in addition, the percentage per
year was also lowered..
The old calculation
was:
5_yr_avg_pay * actual_yrs * 1.5%
The new calculation
is:
5_yr_avg_pay * Years_up_to_30 * 1.35%
So yes, with the 1995
change, even those who can take the original service
and earnings formula lost.
And the folks who
ended up with the (then) new PCF plan got screwed
because the rate of future accruals was decreased by
this first introduction to wear-away.
tweener_too
(posted 2000/07/03):
Loss of one hour
minimum pay for interruptions when not working (now
get actual time). That doesn't seem too bad until you
get paged three times in one day far from a phone or
awakened two or three times in the middle of the
night (or even in one night!) for several days in a
row.
Loss of four hour
minimum pay for callouts (actually going onsite to a
customer account). Now pays actual time.
Other (Eroding)
Total Compensation related excerpts and links:
The GOP Case Against Pension Theft by Jamshyd Taylor (2001/01/27) -
Excellent points regarding IBM's ethical obligations
Why the GOP should fear Pension
Heists by Jamshyd
Taylor (2001/01/27) - More of IBM's broken promises
|
