Layoffs up – for you and me

2009-Feb-17

A year ago I said that American workers would suffer huge layoffs…but that the guestworkers replacing us would not be laid off. We, I was right.

And once again, American workers are being laid off by the millions. But not the guestworkers being brought in to replace us.

Infosys has no lay off plans

CHENNAI: IT major Infosys has no plans to lay off its employees and is going ahead with placement of all the 18,000 candidates who were extended offer letters.
….
Asked about the US Government’s decision on restriction of H1B visas and the stimulus packages, he said, “Right now, I see there is no impact…” he said.


Looting the corpse of capitalism

2009-Feb-09

Yeah, I remember capitalism. I remember the fables that company officers have a fiduciary responsibility to manage the company for the benefit of the shareholders. Yeah, right. From the Economist, The bonus racket:

In its last three years, Bear Stearns paid $11.3 billion in employee compensation and benefits. According to its 2007 annual report, Lehman Brothers shelled out $21.6 billion in the three years before, while Merrill Lynch paid staff over $45 billion during the three years to 2007.

And what have shareholders got from all this? Lehman’s got nothing (the company went bust). Investors in Bear Stearns received around $1.4 billion of JPMorgan Chase stock, now worth just half that after the fall in the acquirer’s share price. Merrill Lynch’s shareholders got shares in Bank of America (BofA) which are now worth just $9.6 billion, less than a fifth of the original offer value. Meanwhile, Citigroup paid $34.4 billion to its employees in 2007 and is now valued by the stockmarket at just $18.1 billion.

So the “employees” got five or ten times as much as the shareholders. But, you say, doesn’t that mean that we got that money because we are employees? Nope.

For the last decade these companies and most others have been getting rid of all the “rank and file” employees they can, and replacing them with cheap foreign labor. Fifteen years ago most workers were Americans. Now the executives and middle management are American, but a huge percentage of the rest are guestworkers, except where whole operations have been offshored. (The janitors and such are often illegal workers now.) Most of the “employees” who are getting so much more than the shareholders are the CEO and top executives.

At a typical Fortune 500 corporation such as those listed above the project manager and a lead tech may still be American workers, but most the the rest of the staff, the analysts, the programmers, the systems administrators, the database administrators are now mostly contract workers rather than permanent staff. And the contract workers are mostly guestworkers. At my last gig, I was brought in on contract to a major financial services firm (not one of the above) to work on a major project. I found myself in a room of 90 people. Two of us were Americans, me and a secretary to handle the paperwork. All the rest were guestworkers, mostly from India, but the rest from a wide variety of countries. And that is the “new normal”. Not one was brought in because they had unique skills, and nearly all of them ended up getting canned after a few weeks because they couldn’t do the job they claimed. But they were brought in because they were being paid half as much as the standard wage for American workers. And all the money that was saved on employee expenses became bonuses for the upper management. Just look again at the Economist article. Who got the money and who got the shaft?

They don’t care about the shareholders, they don’t care about the quality of the products they create, they don’t care that when they lay off their workers that those workers they lay off can no longer buy their products. They care only about getting as much as they can get before it all comes crashing down.

And the time for it to all come crashing down is just about now…


“Like a Ponzi scheme…that works!”

2008-Nov-19

After spending the day looking at the pitiful remains of my 401K, and despondent of finding a good way to protect the rest of it, I got out of the apartment by going to the movies, this one a showing of I.O.U.I.S.A., a whodunit about our outlandish national debt, on its way to ten trillion dollars, a bit under two hundred grand of debt for each of us.

The movie, even the cut down version did a good job showing the problem, but didn’t say much about a solution. Neither did the panelists, who seemed to have nothing better to say than “Don’t buy what you can’t afford.”

But the quote of the day came from Bill Emmons, an economist at the Fed. After pooh-poohing the inflationary effects of the Bailout, claiming it would get lost in the wash, he then said that our debt wasn’t that bad at all, since we got it at very good interest rates that were less than our GDP growth rate:

It’s like a Ponzi scheme…that works!

Oh. Really. Well, yeah, of course Ponzi schemes work…if you are the one at the top of the pyramid–like the Fed, instead of at the bottom–like us.


Told We Need the Bailout Right Now

2008-Sep-23

Mr. Paulson said in prepared remarks to the Senate Banking Committee:

We need to build upon this spirit to enact this bill quickly and cleanly, and avoid slowing it down with other provisions that are unrelated or don’t have broad support.”

FDR: The First Inagural Address:

Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.


Employees as Commodities

2008-Sep-22

In an otherwise “standard normal” article about American workers being replaced by guestworkers and forced to train their replacements, one quote struck me:

“Any individual employee in the macro sense is no better than any other employee,” Habib said in his office.

Habib’s quote is important, not because he is being unusually obtuse in seeing workers as a commodity rather than as unique human beings with unique skills and talents, but because he is uttering the “new normalcy”. Managers truly believe that their workers are just as much a commodity as the computers on their desks, and can be swapped out and replaced as easily as keyboards.

I was dumfounded last year as I talked with my borker (contract broker), when he told me that contract agencies are getting pressured to offer commodity pricing on contract programmers:

They want us to charge them the same rate for all our contractors, the same rate for a novice Visual Basic programmer as for someone with ten years of SAP or Java. They don’t see why there should be so much of a difference as there is.

I’ve been around a while. I can remember when managers were competent, when most of them at the Fortune 500 level received training in management theory and practice, and were hired and promoted on the basis of their ability to manage people rather than their ability to run Microsoft Project or one of its bastard progeny and get the projected numbers to come out right. I actually was a project manager for years, but I got out and went back to programming when they no longer cared that every project I managed came out on time, under budget, and of higher quality than they expected, but instead they only wanted to see actuals (faked final numbers) align with projections (faked predicted numbers). I remember getting dinged on an annual appraisal when my intrapreneurship got a profit higher than I had been asked for. That’s when I saw the handwriting on the wall and knew that competence was no longer an asset for a manager of a company in this country.

Sometime several decades ago things went out of whack. Those who ran companies decided that people were widgets. They decided that only they themselves at the top were humans and to be allowed freedom and dignity, while the rest of us were “resources” to be exploited. It looks like it is all about to come crashing down. Unfortunately, too many of us allowed ourselves to be commodities to be exploited and we will be the ones to suffer most as the edifice topples into rubble.


Executive Compensation…uh, Overcompensation

2008-Aug-10

I’ve been reading economics blogs lately to see how we will soon become just another third world country. Just came across this tidbit from The Automatic Earth:

What’s wrong with Wall Street? …:
* Rewards employees, not shareholders – It pays as much as 76% of its revenues to the people who work there (e.g., in 2006 Merrill paid $17 billion in compensation and its revenue totaled $22.4 billion). That pay is linked to revenue, not how much money their deals make for customers.

That money is not going to the real employees (the ones who do all the actual work). It is going to the leeches, those CEOs and top execs who get paid many millions, with multimillion golden parachutes beyond that) to take the companies for every dime as they ride its stock down into oblivion.

Decades ago one of my bosses said to me, “Well, a company can make money by selling things or by cutting expenses. And we are in the phone business and everyone has a phone, so our only choice is to cut expenses. And thirty percent of any company’s expenses are employee pay. So if the executives want to get paid more they have to cut rank and file employees. And that is what we are doing.” And the company laid off a quarter of a million employees while I was there, from 355,000 employees down to 120,000 (and many more since).

But right now, look at that thirty percent going to employee wages. That is management and non-management. But that was back in the 1980s, just as the era of downsizing was beginning. Since then per-employee productivity has been rising drastically, as huge numbers of employees have been cut and the remainder forced to do the jobs of those who left…or suffer the same fate themselves. And at the same time CEO pay has skyrocketed from about 30 times the average wage in 1980 to over 350 times now.

Now it appears that not only are CEOs and high level execs getting a much greater cut of employee pay, but now many execs are taking money that would have gone to stockholders or better or cheaper products and keeping it for themselves.

And you and I are paying for it…


The Two Political Spectrums

2008-Jul-24

For decades we have assumed the political spectrum ranged from Liberal to Conservative, and assumed that all political groupings from the Klan to the Commies could be squeezed into that spectrum.

Well, we are about to discover that the importance of the Liberal/Conservative spectrum is becoming secondary to the far more primordial spectrum, that of the Haves vs Have-Nots. Yes, we will still have elections decided on the issue of whether gay guys should be able to have abortions on demand, but when people have to decide whether their kids will get food or medicine this week, at least some of them will get the picture that they must (at least temporarily) set aside their differences and concentrate on physical survival.

We used to have a middle class in this country. But no one will die middle class any longer. In a generation, all middle class jobs will be done by cheap imported or offshored labor for a fraction of their current wages, and anyone who manages to last until retirement will find anything they saved will be eaten up inflated food or energy or transportration costs, by medical costs not reimbursed by their medical plan, or they will have to sign over all their assets to some nursing home.

No need to worry about the “death tax” because only the super-rich will have anything left but debts when they die.

I’m seeing small groups of people starting to get together, getting past old differences, and cooperating on getting ready to survive the coming hard times. I’m seeing networks where leftie Pagans are getting with right-wing Fundie Christians on common issues.

The coming wars (acknowledged or not) will be between the top one tenth of one percent who will own everything and the rest of us who will own nothing…not even ourselves.

If those of us who are prey can get together soon enough to defend ourselves from the predators, we have a chance to make a society with a substantial middle class again and lessen the growing inequality. But so far it’s just a chance…


Intellectual Property

2008-Jun-29

OK, if they think intellectual property is real, then why not let them prove it by paying real property taxes on it?


H1B Auction

2008-Mar-18

Congress is about to try to repay all that corporate cash they are receiving by trying to give the corporations as much cheap labor as possible to lower our wages. Bill Gates just testified before Congress that the world will end if he doesn’t get a massive increase in H1B guestworker quotas:

Congress’s failure to pass high-skilled immigration reform has exacerbated an already grave situation. … Last year, for example, Microsoft was unable to obtain H-1B visas for one-third of the highly qualified foreign-born job candidates that we wanted to hire.

He claims he would be able to hire more Americans if only he could get those “highly qualified” foreign candidates. Of course those Americans might not be paid as much as the H1Bs:

These jobs are very, very, very high-paying jobs.

Wow! We must be paying H1Bs a whole, whole, whole lot for them to be “very, very, very high-paying”! (If he is telling the truth. Otherwise he is lying through his teeth.)

Let’s assume Bill is honest. One problem with the H1B program is that it is a lottery. If there are more applications that slots, then the slots are given away by random chance instead of allowing Bill to get the H1Bs he needs so desperately. And by random chance too many of those slots are given to H1Bs who are low-paid and untrained instead of to those who are “highly qualified” and “very, very, very” highly paid.

We can fix that! Easily. Just turn the H1B lottery into an auction. And I think we can simplify the process so that even poor Americans could administer it.

  • Each H1B application has an LCA (Labor Condition Application) filled out, many by email. This becomes the official application after the Department of Labor certifies it after looking for obvious errors.
  • Each H1B LCA must be placed online by the Department of Labor in a publically available place prior to the auction.
  • The LCA will have an Rate of Pay that will constitute what the employer is willing to pay the H1B.
  • The Rate of Pay must match or exceed the Level IV (Fully Competent) Wage Rate as determined by the Foreign Labor Certification Online Data Library. No other source for wage rates will be allowed. The FLC Data Center library has an updated list of prevailing wages for all appicable job classifications for all areas of the country. (It drastically understates wages that major employers actually pay, but it is a minimum standard until a better national standard can be determined.) If an H1B candidate is truly “highly qualified” and “very, very, very” highly paid, then surely they can reach the lesser standard of “fully competent”.

The only thing new so far is the demand that LCAs be made publically available before the H1Bs are given out, in order to make the process publically transparent to the taxpayers and voters. We now have all the information we need (Employer ID number, date of application, Level IV prevailing wage, offered wage, work location) to conduct an H1B auction. The auction part is the simplest part. I can write the code to conduct it automatically in five minutes:

-----------------------------------------------------------------------------
UNTIL quota reached or run out of valid applications
    for each occupation_code
        eliminate occupation_code if no more applications left for occupation_code

        for each area_code
            eliminate area_code if no more applications left for area_code

            the winner is MAX(offered_wage above prevailing_wage)
             
            if there are ties
                winner is employer with fewest wins so far

                if there are still ties
                    winner is employer with earliest application_date

REPEAT until done
-----------------------------------------------------------------------------

Benefits:

  • Easy: Little needs to be changed in the current process. The code to conduct the auction is incredibly simple and transparent.
  • Diversity: Currently the system is being gamed by IT groups flooding the process with applications and getting most of the H1Bs simply by filling up the lottery. Now each occupational category has a fair chance, and proportionately fewer IT jobs will be taken. And each geographical location will have a fair chance instead of just the major areas that pay most. So more of the country can see the wonderful benefits of H1Bs instead of just IT folks in major urban areas.
  • Transparent: With LCAs visible, anyone could duplicate the process to ensure it is operating correctly. With LCAs visible, anyone can see by auction time if an LCA is for a job where there are tons of available American applicants, ensuring that the Microsofts of the world are speaking the truth about the lack of Americans in that category, and whether the job classification and offered wage are appropriate. Even more transparency could be obtained if the resume of the H1B candidate were included with the LCA…)

If this modest suggestion were adopted, I wonder how many H1Bs would really be found to be needed.


Layoffs Up

2008-Jan-31

From Financial Week:

Layoffs coming, and in large numbers, survey finds
January 28, 2008

Corporate executives are poised to start making substantial cutbacks in their staffing, according to a new forecast by employment consulting and legal firm Career Protection.

In fact, the firm is predicting a 37% increase in layoffs this year over last

On the other hand

Wipro to hire more freshers
19 Jan, 2008, 0000 hrs IST, TNN
BANGALORE: Continuing with its focus on recruiting more freshers, Wipro … has given out job offer letters to 14,000 rookies from engineering colleges for FY09. It is also stepping up focus on hiring non-engineering graduates and has made 3,500 offers to BSc graduates. …

“We have been inducting non-engineers for 10 years now in small batches but decided to ramp up the number last year. Last year, we gave offers to 1,500 BSc graduates, we have hiked the number to 3,500 for next fiscal.” These will be from the BSc Maths, Physics and Chemistry streams.

In Q3, Wipro made a gross addition of 4,900 people of whom about 2,500 were freshers. For the nine months till December 31, 2007, it has added 15,500 people including 8,000 freshers. Total head count now stands at 79,832 employees

Apparently, they need to lay us off over here so they won’t have to lay them off over there…