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The following are previous TidBit articles for your reading

 

 
Boards keep showering execs with juicy perks and severance packages while shareholders foot the bill. This time, it's Nike, eBay, Fedders and Starwood Hotels passing out treats.

After years of public outrage over gold-plated perks for top execs -- from $6,000 shower curtains to private jets and expensive race-car driving lessons for the kids -- you might think that companies have wised up and cut back on the giveaways.

You'd be wrong.

The perk-fest lives on. So far this year, execs have gotten a bevy of sweet deals that would make former Tyco International (TYC, news, msgs) CEO Dennis Kozlowski proud. Here are a few examples of some of the lavish goodies that companies have showered on execs:

bulletAn outgoing chief executive at Nike (NKE, news, msgs) got $579,649 for home remodeling.
bulletThe new finance chief at eBay (EBAY, news, msgs) will get up to $700,000 if he can't get the price he wants for the Texas house he gave up to take his job with eBay in California.
bulletA new president at Starwood Hotels & Resorts Worldwide (HOT, news, msgs) will get $1.5 million for airfare during his first year on the job. The money is meant to help him commute to work in New York so he can keep his home in California while his son finishes high school there.

"After all we've been through, you would think boards would be extra diligent about awarding perks that basically waste money with little to show in return," says Daniel Pedrotty, an attorney at the AFL-CIO Office of Investment, which tries to pressure companies to be more responsible with money. "It strikes me as unusual that boards don't have more discipline with company money in light of all the attention this issue has gotten."

"What we have is a major crisis in America with ineffective directors," agrees Don Hodges, president of the Hodges Fund (HDPMX, news, msgs). "When they become directors, they join the country club, so to speak. They forget they are working for shareholders. Probably 85% of them feel like they work for the CEO, so they lay down on the job and give away large chunks of the company."

The companies say that top talent is worth the price, and that competition for that talent creates and legitimizes the need for generous pay packages. But from a shareholder's point of view, it's hard to see how these kinds of sweet deals for execs help. Pay experts believe executive compensation works best when it's linked to performance -- and these execs get their perks no matter how good a job they do.

One solution, says Chuck Collins at United for a Fair Economy, would be to give shareholders greater say in pay packages. "Until compensation packages get approved by shareholders, and not boards that are hand-picked by management, we are going to keep seeing this kind of stuff."

Top prizes

Here's a closer look at some of the juicier perks executives have gotten so far this year, thanks to Michelle Leder at footnoted.org.

bulletWhen former Nike Chief Executive William Perez resigned last January after a little over a year on the job, he got a very sweet golden parachute. Nike gave Perez a severance package worth $5.5 million, including $2.8 million that represents two years' base salary and a $1.75 million bonus for 2006 even though he didn't serve for most of the year. Nike accelerated the vesting of restricted stock -- allowing Perez to take another $11 million.

Nike also purchased his Portland, Ore., home for the price he paid, or $3.18 million. But here's the kicker: The company picked up the tab on $579,649 worth of renovations Perez made at the home. Nike also offered $56,500 to cover prepaid athletic club fees if he quits the gym.

"If you are making that kind of money, do you really need to have someone pay your athletic club fees?" asks Leder.

All of Perez's severance benefits were built in to his initial employment agreement, responds Alan Marks, the director of media relations at Nike. "In approving Mr. Perez's original employment agreement in November 2004, the board thoroughly reviewed, discussed, and approved these matters and determined at that time that the employee agreement was reasonable."

bullet At a time when many home sellers have to cut their asking prices to make a deal, eBay has made sure its finance chief Bob Swan is spared this tribulation.

Swan accepted his job at eBay last February, for a $600,000 base salary and a $1 million retention bonus paid annually in five parts. But in early July, eBay threw in a sweetener that shields Swan from softness in the real-estate market in his old hometown of Plano, Texas. The terms of the deal: If Swan has to sell his house for less than the $3 million he paid for it, eBay makes up the difference, up to $700,000.

"This is asking shareholders to protect this guy from market forces, which I think is absurd," says Robert McCormick, vice president of research at Glass Lewis & Co., a consulting firm that advises institutional investors how to vote on proxies.

"Like many companies," responds eBay director of corporate communications Hani Durzy, "eBay offers competitive relocation packages to executives to ease the personal and financial burden associated with moving a home and family."

bulletAt a time when the price of a plane ticket keeps going up, the new president of the hotel group at Starwood Hotels, Matt Ouimet, doesn't have to worry about the trend.

The hotel chain has given Ouimet $1.5 million in airfare for his first year on the job. Ouimet was hired away from Walt Disney (DIS, news, msgs) earlier this summer by Starwood, which manages Sheraton Hotels & Resorts and W Hotels, among others.

Starwood Hotels says it gave Ouimet the airfare to help him commute from his home in California to offices in White Plains, N.Y., and to Starwood hotels around the world while his son finishes high school.

Given his pay package, you might think Ouimet could pick up the tab -- at least for the commute to White Plains. He'll get $4 million in his first year, including salary, signing bonus, restricted stock and options. In his second year, he will make at least $3.2 million. Starwood Hotels will also pay the taxes on the airfare perk, which will probably cost shareholders another $500,000.

"That's outrageous," says Pedrotty. "First class isn't the worst way to travel, and I am sure it would cost less than $1.5 million." In fact, round-trip, first-class airfare from Los Angeles to White Plains is $1,554 on United Airlines. So a year's worth of weekly trips to New York -- assuming he takes two weeks of vacation -- would set Ouimet back $78,000, or 2% of his first year's pay.

Starwood Hotels spokeswoman K.C. Kavanagh says the airfare subsidy "will allow him to personally visit many more of our properties during his first year than would be physically possible with commercial air travel." The subsidy will also allow him to "spend weekends with his family during his son's final year of high school. This is a cost of doing business to recruit a unique talent," says Kavanagh.

Rising rates? Not for some

 

bulletLoans are getting more expensive for most people, but Fedders (FJC, news, msgs) Executive Chairman Sal Giordano doesn't have to worry about interest rates. The chairman has a $6 million interest-free loan from Fedders that he won't have to pay off as long as he works for the company.

 

Under the terms of a recently inked employment contract for his position as chairman, after his first year on the job his annual contract simply rolls over every day. So his obligation to pay back the loan just keeps getting pushed back, as well. "That's a perk that just keeps giving," says Collins.

Giordano was recently promoted to executive chairman so his son Michael Giordano can take over his position as CEO in October. It's hard to make the case that the loans have helped shareholders. Since early 2004, Fedders stock has slipped to $1.25 from $8. The company declined to comment on the loan arrangement.

bulletFor at least three years, Atari (ATAR, news, msgs) has covered the rent at a Manhattan apartment for Chief Executive Bruno Bonnell. This year, the rent subsidy was upped to $12,200 a month. The rent subsidy doesn't seem to have helped shareholders. They have been on a ride nearly as scary as Atari's new video-game release: RollerCoaster Tycoon 3. Since early 2005, Atari stock has fallen to 65 cents a share from above $3. Atari declined comment.

 

Paid well for quitting

 

bulletExecutives at two companies this year nabbed multimillion-dollar severance packages for quitting -- even though each worked for about a year.

 

Gary Bloom signed an employment agreement with the security software company Symantec (SYMC, news, msgs) in December 2004 as Symantec announced the purchase of a company he headed called Veritas. Bloom officially joined in July 2005 when Symantec finalized the purchase. He promptly quit last March.

His brief stay at Symantec allowed him to qualify for a $1.6 million signing bonus, and he also got $3.5 million in severance pay. His total take for 15 months on the job: $5.1 million.

James Daley joined Commercial Capital Bancorp (CCBI, news, msgs) as a vice president in charge of commercial banking last July. Earlier this summer, Daley lost his job because his bank is being bought by Washington Mutual (WM, news, msgs). On his way out the door -- after about a year at Commercial Capital -- Daley collected severance pay, retirement and insurance benefits worth over $5.5 million.

"This is why we have been pushing for shareholder approval of golden parachutes if they are worth more than three times base salary," says Pedrotty. "Shareholder money is being given away."

Both Symantec and Commercial Capital declined comment.

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NLRB Cases Put Millions at Risk of Losing Union Rights

 

Union members turned out in force across the country this week to draw attention to three pending National Labor Relations Board cases that could leave millions of workers without union rights by redefining who can be labeled a "supervisor" in a workplace.

In Washington, D.C., area CWA members were among hundreds of union activists who rallied Thursday in front of NLRB headquarters. Rallies also took place this week in Nashville, Portland, Ore., Phoenix, Chicago, Milwaukee, Albuquerque and other locations.

The NLRB cases, known collectively as the "Kentucky River" cases, began with groups of nurses trying to organize in Kentucky. Management has tried to claim they are supervisors and therefore ineligible for union rights.

In 2001, the Supreme Court sent their case back to the NLRB, telling the board to clarify which workers should be considered supervisors. The board, with its anti-labor majority appointed by President Bush, could issue a ruling this summer. The U.S. Chamber of Commerce and other employer groups are eagerly anticipating a victory for their side.

The Economic Policy Institute, in a new report titled, "Supervisor in Name Only," has identified 35 occupations in each of which 50,000 workers or more could lose their union rights. Totaling more than 8 million workers across the country, they include 843,000 registered nurses, 152,000 electricians, 77,000 mechanics and 70,000 pharmacists.

"Skilled and experienced workers such as registered nurses, who give instructions to co-workers about how and when to perform certain tasks, are particularly vulnerable to reclassification as supervisors under this push for a broader reinterpretation of the term," EPI says. "For example, nurses who tell orderlies or nurse aides to do certain things for particular patients are at high risk of reclassification, as are journeymen construction workers who guide other workers on a crew."

Despite requests from unions, the NLRB has refused to hear oral arguments on the cases. At a protest in Nashville, AFL-CIO Organizing Director Steward Acuff said it is "outrageous that the NLRB would consider deciding to disenfranchise millions of people and not hear from the workers most affected."

The Washington, D.C., rally drew a crowd that included NLRB member Wilma Liebman, one of two Democrats on the five-member board.

For more details about the cases and rallies, go to www.alfcio.org.  To read the EPI report, go to www.epinet.org.

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CWA Fighting for H1-B Visa Limits to Save American Jobs

As businesses lobby to bring more high-tech workers into the United States through the H1-B visa program, CWA and the AFL-CIO are fighting for American jobs by supporting a bill to cap the number visas at the current limit of 65,000.

The Defend the American Dream Act, H.R. 4378, is sponsored by Rep. Bill Pascrell (D-N.J.) and would further reform the program by adding reporting requirements for companies that hire foreign workers with H1-B visas.

Pascrell said his bill, "would provide relief to the thousands of Americans who have high-tech degrees in one hand and pink slips in the other."

From Bill Gates on down, employers are clamoring to expand the limit. This week, the Senate Judiciary Committee voted to raise the allowable number of H1-B visas to 115,000 as part of an immigration bill that will now go to the full Senate.

WashTech-CWA President Marcus Courtney, whose members are aggressively fighting a higher cap, believes the Pascrell reforms can prevail, even if it takes time and new blood in Congress. "This is the strongest H1-B reform bill ever introduced," he said. "If we work hard there's no reason we can't have 150 or 200 co-sponsors behind this bill in the next six months, but only if enough people talk to their Congress members about this." WashTech sent an e-mail alert to thousands of tech workers on CWA's TechsUnite.org network urging them to contact members of Congress in support of the bill.

CWA Legislative Director Lou Gerber said Pascrell's bill would reform the visa program in several important ways, including a provision for paying prevailing wages, similar to the 1931 Davis-Bacon Act. That way, he said, "the allure to high-tech companies of cheap wages is diminished. "Though Gerber says the legislation won't advance while the Republicans control Congress, "Representative Pascrell has laid down an important marker aimed at preventing abuse of the H1-B program and reining in globalization gone wild."

Members from Seattle-based WashTech were in Washington, D.C., for CWA's legislative conference earlier this month and met with members of Congress about the effects of H1-B visas on American jobs. The same week, Gates was visiting the city to lobby for expanding the program.

Courtney said he found that few people understand the facts. "Is there really a worker shortage? That argument works because the high-tech industry, in the person of Bill Gates, runs around saying it," he said. "So Congress now thinks this is true. But they don't have any basis for this, no numbers, no facts. " He noted that several studies have shown that H1-B visa workers — who are allowed to work in the U.S. for up to six years — earn substantially less than American tech workers; and further, the program has caused an increase in employment among American workers.

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Lobbying Against America

There's no denying political parties in Congress are now owned lock, stock and barrel by corporate interests. Our nation's elected officials in Washington have formed a partnership with the corporate supremacists and special interest groups in an effort to drive profits to the bottom line of U.S. multinationals at the expense of hard-working Americans.

Congress over the past few months has all-too-willingly approved corporate-friendly -- and often corporate-written -- transportation and energy bills, as well as so-called bankruptcy reform that further rents the middle class' social safety net. And not surprisingly, there's a serious correlation between the dramatic increase in money spent by special interest groups on lobbying and corporate America's taking over the deed to Capitol Hill.

Let's be clear about this: Calling these greedy people "lobbyists" simply because they convene in the hallowed lobbies of Washington is akin to calling parasites "bodyists" or viruses "blood-streamers." What they're really doing is selling out American workers and hastening the decline in our nation's standard of living and quality of life.

Corporations, entire industries and other special interest groups spent a record $2.14 billion on lobbying members of Congress and 220 other federal agencies last year, according to Political MoneyLine, a nonpartisan research service that tracks campaign contributions. That figure represents a 7 percent increase over 2003 and an astonishing 34 percent jump from the amount of money spent on lobbying in 2001.

Interestingly, while many major news stories tend to focus on campaign finance reform, twice as much money has been spent on lobbying Congress than on federal elections since 1998. All told, corporations and special interests have spent more than $12 billion on lobbying efforts over that time, according to the Center for Public Integrity.

Congressmen Rahm Emanuel of Illinois and Marty Meehan of Massachusetts have introduced legislation that would, among other things, strengthen lobbying disclosure requirements, slow the "revolving door" between public service and lobbying and make it easier for Americans to learn about who is lobbying members of Congress. Sen. Russ Feingold of Wisconsin has introduced a similar version in the Senate.

But Congressman Emanuel says he thinks the leaders of Congress aren't interested in changing the way it operates, or even the way lobbyists operate.

"When the Speaker's gavel comes down, it's intended to open the People's House, and lately it's looking like the Auction House," says Rep. Emanuel, "Whether it's an energy bill that gives more $8 billion to the oil and gas interests while oil's at $64 a barrel, whether it's a corporate tax bill solving a $5 billion problem with a $150 billion solution, whether it's a pharmaceutical, prescription drug bill where the industry gave $132 million and walked away with $135 billion in additional profits."

The corporate lobby has become more effective recently because it's hiring more experienced players, in effect creating a "revolving door" between Capitol Hill and K Street. In fact, 43 percent of the eligible congressional members who departed government during that time have become lobbyists, while half of all eligible departing senators have become lobbyists. Nearly 250 former members of Congress and federal agency chiefs have become lobbyists since 1998, while more than 2,200 former federal employees have registered as federal lobbyists.

The striking rise in money spent on lobbying also increases the chances for abuse. Lobbyists are required to report who pays them and how much they're paid, but nearly 85 percent of the top 250 lobbying firms have failed to file one or more required forms, according to the Center for Public Integrity. The biggest abuses, however, stem from lobbyists' paying for politicians' dinners, trips, golf outings and more. Members of Congress over the past five years have received more than $18 million to travel the world at the expense of private organizations, PoliticalMoneyLine reports. Those expenses include 6,242 trips for 628 lawmakers from both political parties.

Alex Knott, LobbyWatch project manager at the Center for Public Integrity, calls this process buying a consensus. "I think where a lot of people find problems is that a special interest ... has a greater ability to influence members of Congress and agencies than average American citizens do," he says. "They will send them on these huge golf trips and these expensive dinners, and they will have their ear right before they go and vote because they will catch them in the hallways just before a major vote happens. And this makes it almost impossible for the individual's voice to penetrate the loud buzz that comes from lobbyists."

Americans also want to see changes in Washington: More than four in five Americans believe it would be a "very serious" or "moderately serious" ethical breach if their member of Congress took a trip paid for by a lobbyist, according to a recent USAToday/CNN/Gallup poll.

Lobbyists aren't the only ones to blame for the current business-first environment in Washington, but they're enabling those corporate interests to cozy up to our nation's elected officials. We must take action to return Congress to the business of the American citizenry, not the business of the corporate supremacists.

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Health Care Reform Could Save Money and Insure All

Reforming the nation's badly broken health care system would generate savings of at least $320 billion within 10 years and possibly more than $1 trillion, according to proposals being put forth by the broad-based National Coalition on Health Care Reform.

CWA and other unions are among members of the non-partisan coalition, which also includes large and small businesses, consumer, religious and primary care provider groups, and the country's largest health and pension funds.

Laying out four scenarios for change at a recent press briefing in Washington, D.C., Coalition President Henry Simmons said the findings are "unambiguous" in showing enormous cost savings while improving health care and providing coverage for all Americans.

"In short, health care reform is a good investment, a crucial investment, for our nation and our people," said Simmons, a medical doctor who served various posts in the Nixon, Ford and Reagan administrations.

The proposals for change include requiring employers to provide health care coverage, expanding public health insurance programs, creating new public programs and establishing a universal publicly financed system.

In all cases, independent analyses by a researcher specializing in health care financing showed billions in savings through cost management and covering the uninsured, with the universal system providing the largest savings, an estimated $1.136 trillion by 2015. The analyses used conservative fiscal assumptions and Congressional Budget Office methodology, the coalition said.

Without changes researcher Kenneth Thorpe, head of the Department of Health Policy and Management at Emory University in Atlanta, said not only will costs continue to skyrocket but also the number of uninsured Americans will rise by at least another 8 million within 10 years, to more than 54 million.

CWA President Morton Bahr urged union families to put pressure on government leaders to review the proposals and begin taking action. "The health care crisis is one of the gravest threats to our country," Bahr said. "It affects not only the physical health of our citizens, but the fiscal health of our states, communities, schools and households. Unless we get the costs under control soon and ensure that everyone has medical coverage, our standard of living is destined to decline."

Robert Ray, coalition co-chair and former Republican governor of Iowa, agreed. "The materials released today make a strong case that for serious economic, as well as health, reasons, we - as a nation - must act on health care reform now," Ray said.

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“RELENTLESS AND UNLAWFUL CAMPAIGN TO OUST THE UNION” EXPOSED IN MALPRACTICE SUIT AGAINST UNIONBUSTER JACKSON LEWIS

Hired guns make millions attacking workers who stand up for themselves, says American Rights at Work

***INTERVIEWS AVAILABLE WITH EXPERTS, ATTORNEYS AND WORKERS***

WASHINGTON, DC—The ongoing discovery phase of a malpractice case against workplace law giant Jackson Lewis offers an extraordinary inside look at a well-financed and all-too-common attack against workers who attempt to form unions.

Industrial battery manufacturer EnerSys is suing its former legal counsel to recoup costs associated with an eight-year campaign to oppose and dismantle the union formed by employees at its now-closed plant in Sumter, South Carolina.  In the complaint filed with the South Carolina state court on April 23, 2004, EnerSys claims that from 1994 through October 2003 the company “relied exclusively” on Jackson Lewis “for all legal dealings with the Union and employees at the Sumter plant.”  In January 2004, EnerSys paid $7.75 million to its former employees in settlement of numerous lawsuits and labor law violations incurred during its unionbusting efforts.  In addition to that settlement, EnerSys allegedly paid Jackson Lewis $2.7 million in fees for services that included what EnerSys characterized as “a relentless and unlawful campaign to oust the union.”

“Hired guns make millions attacking workers when they try to stand up for themselves,” says David Bonior, Board Chair of American Rights at Work, the new workers’ rights advocacy organization that surfaced the case and is continuing its efforts to uncover the pattern of unionbusting occurrences across the country. The New York Times published a feature story on the lawsuit today (see "How Do You Drive Out a Union? South Carolina Factory Provides a Textbook Case").  “Unions aren’t declining because workers no longer want them. Union membership is down because employers will spare no expense to keep them out.”

According to research by Cornell University’s Kate Bronfrenbrenner, 75 percent of employers faced with union organizing campaigns hire union avoidance consultants like Jackson Lewis. Additionally, 25 percent of employers illegally fire pro-union employees during organizing campaigns; and 51 percent illegally threaten to close down worksites if employees choose to form a union. When workers beat the odds and form unions despite these obstacles, union avoidance firms often counsel employers on avoiding contract negotiations.

“What makes this case so unusual is the public exposure by an employer of the strategies often used to crush unions or prevent their formation,” says Fred Feinstein, former General Counsel of the National Labor Relations Board (NLRB), the federal agency mandated to protect workers from violations of U.S. labor law.  “There are serious concerns about the failure of the law to adequately protect the important right of workers to organize.”

According to Jackson Lewis’ website, the law firm has placed “a high premium on preventive strategies and positive solutions in the practice of workplace law” for over 45 years. The firm also claims to have “assisted many employers in winning NLRB elections or in avoiding union elections altogether.”

Court documents from the malpractice case reveal anti-union activity including:

•  Manipulating the contract to workers’ detriment:  In February 1999, an arbitrator ruled that EnerSys illegally implemented a gainsharing plan in the union contract that resulted in a 16% pay reduction.

•  Firing employees for union activity: The NLRB issued an Unfair Labor Practice complaint that alleged that EnerSys illegally fired seven union leaders related to union organizing between 2000 and 2002.

•  Hiring human resources staff to implement unionbusting strategies:  Former EnerSys Human Resources Manager Choice Phillips testified in the gainsharing arbitration that he was fired by EnerSys in February 2000 for failing to execute unlawful anti-union strategies the company ordered him to implement.

•  Actively participating in the union decertification drive: Tom Brown, former EnerSys worker and leader of the campaign to decertify the union, testified that he was receiving “under the table” cash payments for his work to promote the decertification campaign.

•  Illegally withdrawing union recognition: EnerSys contends that it relied on Jackson Lewis’ advice to withdraw recognition from the union in June 2001, without an official NLRB decertification election.

“The settlement to former EnerSys workers does not begin to adequately compensate them for what they’ve been through,” says Stephen Koslow, the IUE-CWA attorney who represented the EnerSys workers in the legal proceedings.

Former quality control inspector Vince Gaillard, who was illegally fired in 2001 after 26 years at the Sumter plant, believes that the company’s anti-union campaign was designed to send a clear message, “you have to stay in your place and no place else.”

American Rights at Work continues to monitor the assault on workers and the inadequacy of current labor law to protect them.  The group currently is collecting stories from across the country where workers face anti-union campaigns involving Jackson Lewis. Next year, American Rights at Work will release reports on the anti-union industry and unionbusting activity at major corporations like Wal-Mart. “This case is just the tip of the iceberg,” says Bonior.

For additional information: Visit the American Rights at Work website (www.americanrightsatwork.org) for addition information on the case. To arrange interviews, contact Kim Freeman at 202.822.2127 ext. 111 or kfreeman@americanrightsatwork.org.

 

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Bureau of Labor Statistics grossly underestimates U.S. jobs lost to outsourcing, report from Cornell and U. Mass. labor experts suggests

Contact: Linda Myers
Office: 607-255-9735
E-Mail: lbm3@cornell.edu

ITHACA, N.Y. -- A just-released report to a bipartisan Congressional commission documented 48,417 U.S. jobs outsourced to other countries or publicly announced as being scheduled for outsourcing, from January through March 2004. The U.S. Bureau of Labor Statistics had reported that only 4,633 private-sector jobs in companies with more than 50 employees were lost during that time period, a gross underestimation, warn the report's authors.

The new report is from two labor experts at Cornell University and the University of Massachusetts-Amherst, who obtained their information through online tracking of media reports, corporate research and the creation of a database of information on all production shifts announced or confirmed in the media. Their report was commissioned by the U.S.-China Economic and Security Review Commission, which sought the information because there is no government-mandated reporting system to track production shifts from the United States to other countries.

The authors believe their methodology only captures one-third of all production shifts in most cases, which, if true, would bring the actual number of jobs lost to outsourcing in 2004 to 406,000 by year's end, compared with 204,000 in 2001. "We know we're not capturing all the numbers because companies are wary about the negative publicity and often don't share it fully with reporters," said Kate Bronfenbrenner, director of Labor Education Research at Cornell's School of Industrial and Labor Relations and co-author of the study, along with Stephanie Luce, research director and assistant professor at U.Mass.-Amherst.

Click here for the complete report

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The Greedy Dozen

12 reasons why it's not in the Republican Party's best interest to stop the outsourcing of jobs.

Jobs are leaving America at an alarming rate. But rather than try to put a stop to the outsourcing, our current administration encourages it by giving tax incentives to companies that ship jobs to other countries - and Americans are left training the workers that will replace them.

Who are the worst, unpatriotic, un-American perpetrators? We bring you the GREEDY DOZEN - the twelve worst outsourcers in America. Take notice of where their campaign contributions are going...

 

- 1 -

KEN "BANK ON OUTSOURCING" LEWIS AKA Ken "You Shouldn't Be Allowed to Have 'America' in the Name of Your Company" Lewis

Name: Kenneth D. Lewis
Company: Bank of America
Title: CEO
Crime Against America: Bank of America has eliminated nearly 5,000 jobs, while outsourcing 1,250 jobs to India. In July 2004 the firm announced it will cut an additional 12,500 jobs in the next two years. As at several other firms, employees are given severance pay on the condition they help train their replacements. Meanwhile, the firm is set to open a new facility in the Indian city of Hyderabad that will handle support and transactions for most of the bank's major divisions.
Partner in Crime: James H. Hance, Vice Chairman of Bank of America is a 2004 Bush Ranger (meaning he's raised at least $200,000 for the Bush campaign), has contributed $25,000 to the Republican National Committee and has contributed the full $2,000 to Bush. Lewis himself has given the full $2,000 to the Bush campaign.
 


 

- 2 -

DARWIN "SURVIVAL OF THE RICHEST" DEASON

Name: Darwin Deason
Company: Affiliated Computer Services
Title: Chairman and Company Director
Crime Against America: Affiliated Computer Services provides business processing and information technology outsourcing services for commercial clients and government agencies around the world. The company has outsourced about 1,300 jobs to India over the past three years. The outsourced jobs have primarily been data processing and technical support positions.
Partner in Crime: Darwin Deason is a $25,000 contributor to the Republican National Committee. The company's CEO, Jeffrey Rich, also contributed $25,000 to the RNC.
 


 

- 3 -

GEORGE "THE RANGER" DAVID

Name: George David
Company: United Technologies
Title: Chairman and CEO
Crime Against America: United Technologies has software development centers in Pune and Bangalore, India. The company is also in the process of shipping 80 percent of its software application development and support to India.
Partner in Crime: David is a 2004 Bush Ranger. He has contributed $25,000 to the Republican National Committee and $2,000 to the Bush campaign during the 2004 election cycle. Stephen Page, Former Vice Chairman and CFO (retired April 2004) is a $2,000 contributor to the Bush campaign.
 


 

- 4 -

JEFFREY IMMELT - THE FOUNDING FATHER OF OUTSOURCING

Name: Jeffrey R. Immelt
Company: General Electric
Title: Chairman and CEO
Crime Against America: General Electric is widely recognized as one of the founders of the trend to outsource to India. The company employs 12,000 people in India who perform a variety of tasks, including answering calls about consumer credit cards, giving IT technical assistance, and handling network security
Partners in Crime: Three leading executives of General Electric, Immelt, Dennis D. Dammerman, Vice Chairman and Benjamin W. Heineman, Senior V.P. General Counsel, have earned handsome compensations from the company and each have each maxed out with $2,000 donations to the Bush campaign.
 


 

- 5 -

DICK "OFF-SHORE SCORE" CHENEY

Name: Dick Cheney
Company: Haliburton
Title: Former CEO
Crime Against America: Not only does Halliburton have forty-four subsidiaries in offshore tax havens, but with Cheney in the CEO's seat, Halliburton, through its foreign subsidiaries, helped Iraq reconstruct its war-torn oil industry in the nineties with $73 million worth of equipment and services -- becoming Baghdad's biggest such supplier. Kinda nice how that worked out for the vice president, really: oversee the destruction of an industry, then profit from rebuilding it.
Partner in Crime: Became VP of the United States of America. So Cheney is actually the main partner in crime to the Bush administration. And the perfect tie between business corruption and the Bush Administration. Became VP of the United States of America.
 


 

- 6 -

THOMAS "PIONEERING THE LOSS OF AMERICAN JOBS" RENYI

Name: Thomas Renyi
Company: Bank of New York
Title: Chairman and CEO
Crime Against America: Bank of New York announced in March 2003 that it was sending an additional 250 computer software jobs to Mumbai, where it already employed 670 workers. The firm also announced plans in 2003 to open a software development center in the Philippines.
Partner in Crime: Renyi is a Bush Pioneer and has raised over $100,000 for the Bush campaign.
 


 

- 7 -

CHARLES "PINKSLIP" BETTY

Name: Charles Betty
Company: Earthlink
Title: Director and CEO
Crime Against America: At the start of this year Earthlink was the country's third-largest Internet service provider, behind AOL and MSN, with about 5 million subscribers. The company off-shored approximately 1,300 jobs to the Philippines. These job cuts mostly affected people who worked billing questions, technical questions, or questions from people who want to upgrade to broadband. The job cuts affect workers in EarthLink's contact center operations in Atlanta, Harrisburg, Pa., and three locations in California: Roseville, San Jose and Pasadena.
Partner in Crime: Betty has contributed $2,750 to the Bush campaign over the past two years and another $1,000 to the Republican National Committee.
 


 

- 8 -

JOHN "CALCUTTA OR BUST" CHAMBERS

Name: John Chambers
Company: Cisco Systems
Title: President and CEO
Crime Against America: TechsUnite is a project of the Communications Workers of America, the AFL-CIO, and several other groups concerned about the outsourcing of information technology jobs to India and other countries outside the U.S. This organization reported that Cisco has outsourced 2,300 software and web development jobs to India and other foreign locations over the course of the past few years.
Partners in Crime: John Chambers is a $2,000 contributor to the Bush campaign and a $10,000 contributor to California Republican Party. The company's Senior Vice President of worldwide field operations, Richard Justice, also contributed $2,000 to the Bush campaign and $10,000 the California Republican Party, as did too Randy Pond, Cisco's senior vice president of operations, systems, and processes. Dennis Powell, company CFO, made a $20,000 donation to the California Republican Party.
 


 

- 9 -

DAVID "SHOWING THEM THE DOOR" DORMAN

Name: David Dorman
Company: A T & T
Title: Chairman and CEO
Crime Against America: The Communication Workers of America has reported that AT&T outsourced nearly 500 customer service jobs to India in 2003.
Partner in Crime: Dorman has contributed $2,000 to the Bush campaign and $15,000 to the Republican National Committee. A T & T Wireless Services Chairman, President and CEO is not only a Bush contributor -- he's contributed to the lost of nearly 3,000 to India.
 


 

- 10 -

MICHAEL "DUDE, YOU GOT OUTSOURCED!" DELL

Name: Michael S. Dell
Company: Dell Computers
Title: Chairman and Former CEO (Chairman and CEO until July, 2004)
Crime Against America: Dell's Bangalore and Hyderabad, India, facilities employ close to 3,000 people.
Partner in Crime: Dell has contributed $3,000 to the Bush campaign in 2003 and 2004, plus an additional $25,000 the Republican National Committee, and $10,000 to the National Republican Congressional Committee. Dell CFO James M. Schneider is a $25,000 contributor to the RNC.
 


 

- 11 -

CHRISTOPHER "GALVANIZING PROFITS" GALVIN

Name: Christopher B. Galvin
Company: Motorola
Title: Former CEO
Crime Against America: Christopher Galvin is the recently departed CEO of the company. Motorola has outsourced design engineering and research and development jobs to India, resulting in a loss of approximately 1,000 U.S. jobs. Overall, Motorola has about 1,500 jobs in India.
Partner in Crime: Galvin contributed $5,000 to the Republican National Committee and $2,000 to the Bush campaign. Gregory Brown, a company executive vice president, contributed $25,000 to the Republican National Committee and $2,000 to the Bush campaign.
 


 

- 12 -

GARY "'CELL'-ING OUT AMERICA" FORSEE

Name: Gary D. Forsee
Company: Sprint
Title: Chairman & CEO
Crime Against America: 21,000 job cuts were made between late 2001 and 2003. While Sprint's outsourcing activities have been difficult to track jobs have without a doubt been sent overseas. In fact, at the same time that a company memo said that the plans to offshore would likely affect only "several hundred" jobs, a company memo to potential vendors that was leaked to the press.
Partner in Crime: Forsee and Len J. Lauer, company President and COO, have both maxed out at the full $2,000 for the Bush campaign.

 

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Unless New Jersey Takes Action
Treasury Takes Big Hit from Federal Policies
Estate Tax, Business Depreciation Changes Would Take $1.3 Billion Toll

 

Sometimes, doing nothing can be costly. New Jersey finds itself in such a situation in relation to two actions by the federal government that will not only reduce US taxes on the estates of wealthy people and for businesses, but also cost the state treasury dearly.

Unless New Jersey takes legislative action to disassociate state rules from these federal policy decisions-"de-couple" is the commonly used term - the state treasury stands to lose nearly $1.3 billion over the next five years.

The loss of funds stems from provisions in federal and state law that link New Jersey (and most other states) to federal laws and regulations with regard to the estate tax and business depreciation rules. The details and impact of these two federal actions are explained in two reports by New Jersey Policy Perspective: Don't Go There: This Business Break is No Bonus for New Jersey's Budget, released today; and Burying Inheritance Tax Puts New Jersey in the Hole, released in February.

BONUS DEPRECIATION

In March, President Bush signed a federal economic stimulus package that makes the rules for depreciation more generous. Depreciation is a concept representing the degree of lost value of such tangible items as machines and equipment. When used for tax purposes depreciation allows businesses to decrease their yearly reported income, and in so doing reduce their taxes, by an amount reflecting the fact that depreciable items are another year older and closer to being unusable.

The Job Creation and Worker Assistance Act of 2002 introduces what is called "bonus depreciation." This allows many businesses to claim an immediate, additional tax deduction of up to 30 percent of the cost of certain new equipment purchases, instead of having to follow the standard accounting practice of depreciating the full cost gradually over several years.

The implications of bonus depreciation go deeper than what it will cost the federal treasury. Because of the way state tax laws are written, it will also cost state treasuries, and New Jersey is among the states that stand to lose the most. Nationally, it has been estimated that states would lose in the vicinity of $14 billion from now until the provision expires in two and a half years.

According to research by the Washington-based Center on Budget and Policy Priorities, New Jersey would lose $586 million, the sixth highest loss of any state. The estimate is based on New Jersey tax collections for 2000 and 2001.

ESTATE TAX

Legislation enacted in 2001 phases out the federal estate tax to a point where it is slated to disappear in 2010. As is the case with bonus depreciation, this federal policy will cost states a lot of money. That's because, in varying degrees, every state ties its own taxation of inherited wealth to the federal estate tax.

Indeed, the federal law was written in such a way that states actually will see the portion of their estate and inheritance taxes that are tied to the federal system evaporate even sooner than the federal tax phases out.

The state-federal linkage dates to 1926, when the federal estate tax was adopted. At first, states objected to the tax because they feared it would infringe upon their own inheritance tax systems. A compromise was worked out, under which the federal estate tax would include a state credit. It works like this: taxpayers get a dollar-for-dollar credit against any federal estate tax liability for state estate or inheritance taxes they pay, up to a certain amount. The maximum credit depends on the size of an estate. For example, an estate in New Jersey that owes $108,000 in federal estate taxes actually would pay $98,250 of that total to the federal government and $9,750 to New Jersey.

The phase out of this credit occurs as follows: it falls by 50 percent in 2003; 75 percent in 2004; and is entirely eliminated in 2005. During the span from 2003 to 2007, the Center on Budget and Policy Priorities has projected that New Jersey would lose $699 million because of this change in federal law.

DE-COUPLING

It is not especially difficult for a state to avoid taking the budgetary hits these federal policies would otherwise cause.

With regard to bonus depreciation, New Jersey is among the states where the federal rules apply automatically unless state action to de-couple is taken. One way to de-couple is through legislation that sets a "date certain" reference prior to the September 11, 2001 effective date of the new provision. Simply put, the state would rewrite its rules so that the applicable reference linking the state code to the federal code is a date that reflects the federal code as it existed before bonus depreciation. Another option is to require that businesses add back to their state taxable income the additional depreciation that the federal government allowed, and then subtract the federal depreciation deduction.

It should be pointed out that there is ample precedent for states' depreciation rules to differ from the federal rules. About half the states, including New Jersey, de-coupled from federal business tax provisions enacted in 1981. And New Jersey was among several states that required depreciation schedules that differed from the federal schedule for at least some industries into the early 1990s. Additionally, California has since the 1970s operated under completely different depreciation rules from the federal system.

De-coupling from the estate tax repeal is accomplished in a manner similar to that of bonus depreciation. One way is to amend the wording of state tax law to insert a provision saying the tax is based on the credit that would have been available under federal law as it stood in 2001, before the repeal began to take effect. A second option is to tie New Jersey to the 2001 federal tax law, but still exempt from state estate tax any estate that in future years would be exempt from federal estate tax. The first option would save New Jersey the entire $699 million. The second option would protect about 85 percent of the revenue.

Several states have either de-coupled from either or both of these federal provisions or have begun the process of doing so. Maryland acted is an especially expedient manner, de-coupling from the estate tax and bonus depreciation with one piece of legislation.

THE RATIONALE FOR ACTING

These federal policy shifts come at a time when New Jersey and other states face dramatic declines in tax revenues stemming from current economic conditions. New Jersey has a responsibility to its residents-children, seniors, parents, workers-to offer state services in health care, education, transportation and many other areas. The budget cuts that would be required if the loss of money from the estate tax and bonus depreciation was allowed to stand, would make matters significantly worse.

Losing the revenue that comes from taxing estates of the wealthiest among us would be a high price to pay, especially in view of the fact that only about 2 percent of estates in the United States are large enough to be required to pay any estate tax in the first place. So the number of New Jerseyans who would continue to pay the state credit is a relative handful of people.

The bonus depreciation rules come against a background of steadily declining corporate tax obligations in New Jersey. As a share of total state revenues, corporate taxes were 24 percent less in 2001 than 10 years ago. The reduction came from a variety of changes in state policy, including increasing the number of business tax credits, changing the taxation formula applied to large businesses to reduce their tax liability and reducing the tax rate applied to small businesses. As New Jersey goes about restructuring the corporate tax system to require businesses to pay more of their fair share, the impact of bonus depreciation would be a step in the opposite direction.

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STUDY: WAL-MART’S U.S. EXPANSION HAS BENEFITED FROM MORE THAN $1 BILLION IN ECONOMIC DEVELOPMENT SUBSIDIES

Washington, DC, May 24, 2004--Wal-Mart Stores Inc., the world’s largest retailer, has benefited from more than $1 billion in economic development subsidies from state and local governments across the United States, according to a new study by Good Jobs First, a Washington, DC-based research group (the study, SHOPPING FOR SUBSIDIES, is available online at www.goodjobsfirst.org. “Wal-Mart presents itself as an entrepreneurial success story, yet it has made extensive use of tax breaks, free land, cash grants and other forms of public assistance,” said Philip Mattera, research director of Good Jobs First and principal author of the study.

The study, the first comprehensive national examination of subsidies received by the giant retailer, found more than 240 cases in which the construction of new Wal-Mart facilities was assisted by public resources. In addition to 160 retail outlets, the study found subsidies at 84 of Wal-Mart’s distribution centers, representing more than 90 percent of the network of huge warehouses the company has built to facilitate its rapid expansion. The publicly evident value of subsidy deals for individual distribution centers ranged as high as $48 million (with an average of $7.4 million), while for retail outlets the largest was $12 million (with an average of $2.8 million). Wal-Mart subsidy deals were found in 35 states, with the largest number in California, Illinois, Missouri, Texas and Mississippi. In total dollar terms, Louisiana, Florida and New York also ranked high. Although comparative data are not available, the study says it is likely that Wal-Mart, given the extent of its operations, receives state and local subsidies from more jurisdictions than any other corporation in the United States. “That a company with $9 billion in profits can wrest job subsidies from state and local governments shows that the candy store game has gotten out of control,” said Greg LeRoy, executive director of Good Jobs First. “The subsidies to Wal-Mart are particularly troubling, given that the company uses taxpayer dollars to create jobs that tend to be poverty-wage, parttime and lacking in adequate healthcare benefits.”

Mattera stressed that the $1 billion figure is an understatement, since disclosure of economic development subsidies is poor in most states. “We had to track down subsidy deals using sources such as archives of local newspapers,” Mattera said. “Then we had to interview hundreds of public officials to confirm the facts and seek additional details, which sometimes were not available.” Mattera continued: “While it was not practical to contact officials in all of the more than 3,000 U.S. communities in which Wal-Mart has stores, we did contact officials in every one of the 91 places in which the company has its distribution centers. The fact that we found subsidies in more than 90 percent of the distribution centers suggests that the true extent of subsidies for stores is much higher than the rate we could find with our indirect methods.”

The types of subsidies given to Wal-Mart projects included the following:
bullet

• Free or reduced-price land;

bullet

• Infrastructure assistance, including access roads and water/sewer lines;

bullet

• Tax increment financing, a diversion of property (and/or sales) tax generated by a new

bullet

development;

bullet

• Property tax abatements;

bullet

• State corporate income tax credits;

bullet

• Sales tax rebates or exemptions;

bullet

• Enterprise zone status, which typically provides for a menu of subsidies such as property

bullet

tax abatements, state tax credits, sales tax exemptions and reduced utility rates;

bullet

• Job training and worker recruitment funds;

bullet

• Tax-exempt bond financing; and

bullet

• General grants, including outright cash payments to the company.

While all of the distribution center subsidies went directly to Wal-Mart, some of the public assistance for retail projects was given through the developers of shopping centers in which Wal- Mart stores serve as anchors. The study regards these as, in effect, subsidies to Wal-Mart, since they helped make possible the company’s expansion. Moreover, by reducing land acquisition and site preparation costs for developers, the subsidies presumably led to lower rents for Wal-Mart. In addition to documenting subsidies actually awarded to Wal-Mart projects, the study describes those situations in which local citizen groups successfully opposed plans for public assistance to the company. “The fact that Wal-Mart often proceeded with such projects without subsidies suggests that the company did not seek the assistance out of financial need,” Mattera said. The study concludes by addressing public policy issues. “Given the poor quality of the jobs that tend to be created and the role that big-box stores play in contributing to sprawl, we suggest that states prohibit subsidies to retailers such as Wal-Mart unless strict conditions are met,” LeRoy said. “First, the subsidies should be available only in economically distressed areas that are demonstrably underserved by retail outlets for necessities such as food. Second, any retailer receiving subsidies should be required to pay its employees a living wage.”

The study was funded in part by the United Food & Commercial Workers International Union, but the UFCW played no role in the research or analysis. Good Jobs First is a non-profit research center promoting corporate and government accountability in economic development.

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CWA Mourns Its Own on Workers Memorial Day,
Decries Indifference of Bush Administration

CWA members joined unionists around the country on April 28 to remember thousands of workers who have died on the job and to call attention to the Bush administration's poor record on workplace safety. And for some who participated, the rallies, candlelight vigils or other Workers' Memorial Day activities orchestrated by AFL-CIO central labor bodies brought back painful memories of colleagues lost or injured.

William McFadden of Local 9410 in San Francisco, an SBC technician, died Jan. 18 while on loan to the Redding, Calif., area for storm trouble. A12-kilovolt power conductor fell on him.

Another Local 9410 member, Henry Velasquez, was electrocuted in December 2002. It took a year for him to recover sufficiently from his burns to return to work at SBC. His vision is impaired, also a result of the accident according to local Vice President Gayle Crawley.

The company is denying his workers' compensation claim, "but he's going to walk our picket line," Crawley said. "He's an amazing man."

Last year, a member of the local's safety committee, Jim Grahame, died of mesothelioma, a cancer caused by exposure to asbestos. An auto mechanic for SBC, he worked with asbestos brake shoes. Grahame was 52.

"A week before he died, he attended a safety committee meeting for the purpose of having SBC place labels on asbestos hazards in their buildings," said Local 9410 Safety Committee Chair Dave Hurlburt. "We are still fighting to get this done."

Hurlburt brought his local's stories to light as a guest on a local radio talk show.

In Cincinnati, Local 4400 Local President Tim Donoghue attended a memorial service for Charles Woeste, a lineman for Cincinnati Bell killed on the job Aug. 20, 2003, and other workers who lost their lives on the job.

Woest had 34 years of service with the company. He was 52. He was decapitated when his lanyard became entangled in the motorized cable take-up reel on his bucket truck. Donoghue said the company has been cited for two major safety violations.

"Even one senseless death because of inadequate worker protections is too many," said CWA Executive Vice President Larry Cohen, who leads the union's safety and health efforts.

He pointed out that, while Congress passed the Occupational Safety and Health Act 34 years ago, saving hundreds of thousands of lives and preventing millions of workplace injuries, "Regrettably, the Bush administration has turned its back on workers and workplace safety."

The administration has favored voluntary safety and health programs over enforcement of the law by the Occupational Safety and Health Administration. It also repealed the ergonomics standard and employer record-keeping requirements for ergonomic injuries, noted CWA OSH Director Dave LeGrande.

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Who's Reading Your X-Ray?

By ANDREW POLLACK
If you think the only jobs headed overseas are in the manufacturing sector think again. The following article appeared in the New York Times business section on Sunday 11/16/03.  It is a cold reminder of how the free trade agreements with foreign nations are destroying jobs and careers for ALL American workers.


 

SANJAY SAINI was not prepared for the hate mail. A radiologist at Massachusetts General Hospital, Dr. Saini thought he had found a clever way to relieve an acute shortage of specialists who could read X-rays and M.R.I. scans. The hospital would beam images electronically from some scans to India, to be worked on by radiologists there.

But the arrangement, made late last year with a company in India, has touched off a minor furor. It turns out that even American radiologists, with their years of training and annual salaries of $250,000 or more, worry about their jobs moving to countries with lower wages, in much the same way that garment knitters, blast-furnace operators and data-entry clerks do.

Since the news got out, Dr. Saini has received a flurry of angry e-mail messages, most of them anonymous, urging him to stop. The American College of Radiology, the professional group for the country's 30,000 radiologists, has set up a task force to look at the offshore transfer of radiology services. And the online discussion groups of AuntMinnie.com, a Web site for radiologists, have been buzzing with debate about the prospects for competition from "radiology sweatshops" abroad.

"This teleradiology thing is another nail in the coffin of the job market," wrote someone on the Web site who identified himself as a radiologist. "Who needs to pay us $350,000/yr if they can get a cheap Indian radiologist for $25,000/yr."

Daniel Courneya, a radiologist in Hibbing, Minn., fumed on the site that Massachusetts General, a Harvard teaching hospital known to its admirers as "Man's Greatest Hospital," should instead be called "Money Grubbing Hospital," another play on its initials.

On the surface, the controversy may seem a bit odd. Experts say that the number of X-rays from the United States now being read in India is minuscule and that regulatory restrictions are likely to keep it from growing rapidly. Moreover, most hospital jobs, unlike those in radiology, require close patient contact, so there is a limit to how much offshore outsourcing can be done.

Besides, employment in American health care has been growing. In the 12 months ended in August, the category added about 250,000 jobs while overall nonfarm payroll jobs shrank by nearly 500,000. Hospitals alone added about 70,000 jobs in that period.

Still, Dr. Saini's plan shows that even medical care, the most intimate and localized of services, is grappling with the globalization that has moved many jobs - first in manufacturing and more recently in white-collar work - across the ocean. And in health care, of course, there is more at stake than jobs. Dr. Courneya and other critics worry that radiologists outside the United States may not be trained properly, endangering patients' safety.

Dr. Saini says that the furor is much ado about nothing, that people are reacting based on emotion, not fact. A native of India who has lived in the United States since he was in high school, he said that any Indian radiologist reading scans from Massachusetts General would have to be licensed in that state and be certified by the hospital, so patient care would not suffer.

At the moment, he said, there are no such qualified radiologists at the outpost in India, so actual diagnoses are not being made there. Rather, the radiologists in India are converting two-dimensional images from scans into three-dimensional pictures that are more understandable to surgeons; that job is usually done by technicians in the United States.

RADIOLOGY is not the only medical service that may someday be performed for Americans by people in other countries. Other candidates are the analysis of tissue samples, the reading of electrocardiograms, the monitoring of intensive care units and even robotic surgery.

Back-office medical work has been moving offshore for several years now, particularly to India, which has a large number of educated English-speaking people. Though the number of affected jobs is only a small fraction of the total, many experts say the share is growing as hospitals face pressure to cut costs.

For example, when doctors at Children's Hospital of Wisconsin in Milwaukee dictate information about a patient's condition, their words are sometimes whisked electronically to India, where trained medical transcriptionists type them and send them back, to be incorporated into the patient's medical record.

Then there is Botsford General Hospital in Farmington Hills, Mich., which uses a company with operations in India to help collect unpaid bills. "They came in with a rate that is less than half of what a U.S.-based collection agency would charge me," said Luke Meert, corporate director for accounts receivable at Botsford Health Care Continuum, the parent company.

Coding - the assignment of numbers for medical procedures to bills - is also heading offshore. The American Academy of Professional Coders now has chapters in India. Some insurance-claims processing is moving, too: Aetna Inc., the health insurance giant, has 400 people in that country.

Bob Burleigh, the president of Alpha Thought Global, a medical billing company in Chicago that has operations in India, said he had witnessed an incident in which a worker in Chennai, India, handling the billing for an American medical practice, needed to check on the status of an insurance claim. When he called the American insurance company's "800" number, the phone was answered by someone else in Chennai.

Companies have sprung up to offer services like billing and transcription in India. For example, Ajuba International Inc., based in Novi, Mich., does the billing follow-up for Botsford Hospital. And Manor Care Inc., an operator of nursing homes, owns the majority of Heartland Information Services of Toledo, Ohio, which does the transcription in India for the Children's Hospital of Wisconsin.

The movement of back-office jobs offshore has raised some concerns about privacy, in that foreign workers could not be easily prosecuted under American laws governing confidentiality of American records.

But the outsourcing of radiology overseas raises more issues. Unlike back-office functions, radiology is performed by doctors and is directly related to patient care. A mistake could conceivably cost a patient his or her life.

Massachusetts General is not the only place where controversy has arisen. Yale-New Haven Hospital ended a program in which a doctor was reading X-rays in India.

The doctor, Arjun Kalyanpur, had been on the staff at the hospital and on the faculty of Yale but decided to move back to his native India for family reasons. "It was not that I was taking a job away from anybody," he said. "I was taking my own job with me." After a trial run, he and some Yale colleagues even published a paper showing that interpretations from India were as accurate as those done in New Haven.

But Yale stopped the program, apparently because of internal complaints. "I think Yale was not ready for it yet," Dr. Kalyanpur said.

A spokeswoman for Yale said that communications with the doctor in India were too costly and that the hospital had no need for such a program because an attending radiologist was always on call.

So far, Teleradiology Solutions, which is Dr. Kalyanpur's company, and Wipro Ltd., the one working with Massachusetts General, appear to be the main providers of radiology services in India for American hospitals.

Dr. Kalyanpur and a partner read about 100 scans a day in their office in Bangalore, a high-tech center in India. He said the scans come from more than 30 hospitals in the United States, including several community hospitals in Pennsylvania.

Wipro is one of India's largest companies, with nearly $1 billion in annual sales, mainly from handling computer programming jobs for American and other foreign companies. To the company, the outsourcing of health care jobs is a new opportunity.

Wipro now has about 12 radiologists in India and counts four American hospitals or radiology practices as clients, said T. K. Kurien, its chief executive for health sciences. He said he could not name the clients because of the sensitivity surrounding the issue. Even Massachusetts General has now prohibited Wipro from discussing its relationship with that hospital.

Marketing is difficult, he said, because the idea of patient X-rays being analyzed in a third-world country does not sound so appealing to Americans. "Wouldn't you be scared to death if it was being done in India?" he said. "That's the real issue for us." When the company takes on a client, he said, "we know the person at the other end is going to get a lot of flak."

Yet both Wipro and Teleradiology Solutions are simply responding to a widely acknowledged shortage of radiologists in the United States.

"It's almost in crisis proportions," said E. Stephen Amis Jr., chairman of the board of chancellors at the American College of Radiology and chairman of radiology at Albert Einstein College of Medicine in the Bronx. "Demand for radiologists is growing at twice the rate that we're turning out the radiologists who have the ability to read them."

Radiologists who are willing to work nights are in particularly short supply. The need for such specialists in the evening has grown because patients coming into hospital emergency rooms are often given scans to help diagnose their conditions. A radiologist on call may be awakened several times a night.

One solution, made possible by electronic transmission of images, has been so-called nighthawk services. These are companies or individual radiologists, often working from home, who handle the nighttime loads of several hospitals at once.

It didn't take long for some nighthawk companies to use radiologists stationed overseas, in places where it is day during America's night. One company, Nighthawk Radiology Services, has stationed 15 American radiologists in a building near the Sydney Opera House in Australia. A few radiology practices in the United States have bought houses in Europe, and their members take turns living there.

From nighthawk services, it was just another step to put the night readers in countries with lower costs. Besides the two companies in India, Infinity Radiology, based in Dallas, is using some radiologists in South Korea.

A big obstacle to such services' growth is the requirement of most American states that radiologists be licensed in order to analyze scans of patients treated in those states. Moreover, radiologists need to have credentials at each hospital where they practice. As a result, it takes time and administrative work to set up each new account.

THERE are other complications. Medicare does not pay for services performed out of the country. So, in most cases, the doctors overseas do a preliminary reading, which nonetheless is used to guide treatment of the patient at night. The next morning, a local staff radiologist performs the final reading and bills Medicare.

The training of overseas radiologists can vary. Both Dr. Kalyanpur and his partner are board-certified radiologists, the highest standard in the United States, and some customers say that this presents no issues.

Dr. Thomas A. Manning, a staff radiologist at Centre Community Hospital in State College, Pa., which uses Dr. Kalyanpur, said it was better to have nighttime images read by a qualified radiologist overseas than by a resident still in training, the practice at some teaching hospitals. Dr. Manning said he was pleased with the hospital's nighthawk service and did not even know where Dr. Kalyanpur worked. "Is he actually in India?" he said. "I'm unaware of it."

Wipro's radiologists are not licensed in any state or approved by any hospital, Mr. Kurien said. That makes them ineligible, by themselves, to do even preliminary readings for American hospitals. Instead, he said, they receive scans electronically and provide interpretations to Wipro-employed licensed radiologists in the United States, who in turn consult with the client radiologist.

This roundabout method, he conceded, was developed after Wipro found that it could not find licensed radiologists to directly interpret images for American doctors. He said the business would not grow unless he could use more radiologists trained in India. "That is the end state because getting U.S.-trained radiologists in huge numbers is not something we can get in India," he said.

Mr. Kurien said he pays the radiologists in India $30,000 to $100,000 a year, depending on their training. That is more than Indian radiologists working for Indian hospitals make, but still low enough to allow Wipro to interpret images for about half the cost in the United States, he said.

RADIOLOGY may be just the start of patient care performed overseas. Next may be pathology. It is now possible to transmit images of tissue samples for remote diagnosis. There are also robotic microscopes that can be operated remotely, allowing a doctor at a different site to move a slide and focus the image.

As technology improves, "it would be possible for a small hospital in the United States to digitize an image, put in on their server and have a pathologist anywhere in the world, such as in India, provide a diagnosis," said Ronald S. Weinstein, professor and head of pathology at the University of Arizona College of Medicine in Tucson and director of the Arizona Telemedicine Program. He said he had heard of a pathologist in Poland who was planning an international pathology service.

Other services can also be performed remotely. Some hospitals are starting to monitor intensive care units in part from remote sites, with readings from electronic monitoring devices and video cameras sent electronically. That is not yet done across borders, but could be.

Someday, said Dr. Weinstein, who is also president of the American Telemedicine Association, a professional society, there may be virtual universities that can train doctors in foreign countries to meet American requirements. "The concept of boundary-limited medical education and licensure will fade in time," he said.

Still, what goes one way could also flow the other. Dr. Weinstein said telemedicine might provide a net gain to the United States because of the expertise here to provide diagnoses for patients in other countries.

"I think the opportunities for U.S. health care internationally probably are very large," Dr. Weinstein said. The University of Arizona plans to market its pathology services around the world, he said.

Leading American medical centers already market themselves abroad to recruit foreign patients to travel for operations. Some hospitals are setting up outposts overseas.

The University of Pittsburgh Medical Center essentially manages a transplant hospital in Italy, performing some pathology from Pittsburgh. The Armed Forces Institute of Pathology in Washington, part of the Walter Reed Army Medical Center, provides second opinions on about 60,000 cases a year, for Americans and foreigners. Most of the time, slides and tissue samples are sent in by mail, but about 300 to 500 a year are analyzed by using telepathology.

Eventually, there may be a division of labor, with high-end services performed in the United States and more routine services done in countries with lower wages. And radiologists may even come to appreciate having offshore help.

"People want to protect their turf," Dr. Saini of Massachusetts General said. "But it's very interesting that that turf battle stops at 5 p.m. on Friday. How many people say they want to do this thing on Saturday and Sunday?"

Indeed, not every posting on the radiology Web site has criticized Dr. Saini. Some favored using foreign radiologists. "If we don't hire them, we'll be working longer hours for the same pay," one person wrote. "So everyone please shut up about this."

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The State of Working America  

The following is an excerpt from "The State of Working America 2002/2003" By Lawrence Mishel, Jared Bernstein, and Heather Boushey  It is a comprehensive study of working America and is a wealth of knowledge and information regarding our economy and the forces that drive it. If you want to know what happened to the economic well-being of the average American in the past decade or so, this is the book for you. It should be required reading for Americans of all political persuasions.


Paper: ISBN 0-8014-8803-6 $24.95
Cloth: ISBN 0-8014-4064-5 $59.95
From Cornell University Press, January 2003.

Executive Summary
 What kind of recovery?

 

Executive Summary

A comprehensive review of the state of working America reveals three important developments.

First, the U.S. labor market has moved into a recession for the first time in a decade. The downturn has been underway in manufacturing since 2000, and, as of June 2002, unemployment remained high. The terrorist attacks of September 11, 2001 meant that, unlike in previous recessions, the services industry has experienced little or no employment growth, and transportation, retail trade, and wholesale trade are experiencing unusual weakness. So far (through June 2002), the unemployment levels are below those of the early 1990s, but job losses have been steep nevertheless. The percentage decline in private-sector employment is greater than that seen in the early 1990s, and the employment decline for women is double what it was then. Higher unemployment is beginning to take a toll on wage growth, which has begun to slow, and there are indications of an expansion in earnings inequality.

Second, this recession comes after years of persistently low unemployment. Although structural problems remained-the long-term decline in job quality and unionization, the deregulation of key industries, and the persistence of imbalanced trade and the ensuing loss of a manufacturing base-low unemployment brought rapid wage and income growth to families across the income distribution. Most notably, middle- and lower-income families, whose economic fortunes had stagnated in prior years, saw real income gains over the late 1990s. African American and Hispanic families also disproportionately benefited in terms of low unemployment and fast earnings growth during those years.

Third, the long-term trend of increased hours of paid work by America's families continued through the late 1990s. The pace slowed, however, because, as wages were rising, families could work the same hours while bringing home more income. In any case, more time at work, a reduction in paid vacation and holiday time, and the lack of legislated paid family leave mean that families are under increasing time stress.

The living standards of most American families are determined by opportunities in the labor market. The majority of family income derives from earnings, and the loss of a job poses real hardship. In this regard, the recent recession and the ensuing slow-growth recovery are serious problems that have been underappreciated by many commentators who have judged the downturn to be mild based on macroeconomic measures such as overall growth in gross domestic product. Although production has begun to increase and the recession in output may have passed, unemployment continues to rise. As in the early 1990s recession, the United States appears to be in yet another "jobless recovery." The lack of job growth during this recession is compounded by the fact that the traditional reliance on services to pull up employment has not been effective during this recession.

The data described in the following chapters provide a thorough examination of the trends affecting workers and their families over the post-World War II period. This history-in-numbers shows that falling unemployment in the late 1990s was critical for workers for two reasons. First, it provided workers with the foundations upon which to bargain with their employers over wages and working conditions. Second, it provided a counterpoint to structural changes in the U.S. economy-the long-term decline in unions, industry deregulation, and continued declines in manufacturing-that had been undermining the security and bargaining power of workers for the past two decades. The low unemployment of the late 1990s was also important because it demonstrated that the economy could reach 4% unemployment without generating inflation, contrary to the long-held wisdom of the economics profession.

Family income: full employment reverses historic stagnation

The full-employment economy of the late 1990s made a large and positive difference in the growth of real income for low- and middle-income families. Whereas real median family income grew 2.8% annually between 1947 and 1973, growth slowed to 0.4% between 1973 and 1995. Between 1995 and 2000, though, growth accelerated to 2.2% per year. The least advantaged-younger families, minority families, and families headed by single mothers-benefited most from the tight labor markets that prevailed in the latter half of the 1990s. For example, between 1995 and 2000, the real median family income of African American and Hispanic families grew 17% and 27%, respectively, compared to 11% for white families.

The larger gains by lower-income families also meant that inequality grew more slowly in the 1990s. Inequality did not, however, stop growing, nor did it reverse course. The richest families continued to pull away from the pack over the decade: the income of the top 1% of taxpayers (including their realized capital gains) grew by 59% from 1995 to 1999 (the most recent available data of this type) while that of the bottom half grew by 9%. Thus, while full employment gave low- and middle-wage workers the bargaining power that was missing over prior decades of stagnant growth, it did not correct structural inequities that persist in the economy.

While these recent developments have lifted family incomes throughout the income scale, longer-term stagnation among low- and middle-income families led to large increases in the amount of time families spend at work. Over the last 30 years, workers in middle-income married-couple families with children have added an average of 20 weeks at work, the equivalent of five more months. Most of the increase comes from working wives, many more of whom entered the labor market over this period, adding more weeks per year and more hours per week. In fact, middle-income wives added close to 500 hours of work per year between 1979 and 2000, the equivalent of more than 12 weeks of full-time work.

Increases in family hours have been equally as large among families headed by high school graduates or minorities as they have been for high-income, highly educated families. On average, between 1979 and 2000, increases in annual hours worked were slightly greater for minorities than for white families: 14.7% and 14.4% for black and Hispanic families, respectively, compared to 11.7% for white families. Middle-income African American and Hispanic families worked significantly more hours than did white families in order to reach the same income levels (given the existing racial wage gaps, this is to be expected). By 2000, middle-income black families worked the equivalent of 12 full-time weeks more than white families.

Wages: broad-based gains in late 1990s

Wages make up the majority of income for most American families. Over the late 1990s, low unemployment played a critical role in boosting wage growth overall, but particularly at the bottom, by strengthening workers' bargaining power with respect to their employers. Jobs were relatively easy to find, and many employers had to compete for workers. This in turn spurred strong wage and income gains over the latter half of the 1990s economic boom.

The era of stagnant and falling wages from the early 1970s to 1995 gave way to one of strong wage growth after 1995 as wages changed course, rising strongly in response to persistent low unemployment and the faster productivity growth relative to the 1973-95 period. However, despite the strong wage improvements in recent years, it was not until 1998 that the wage level for middle-wage workers (the median hourly wage) jumped above its 1979 level. The median male wage in 2000 was still below its 1979 level, even though productivity was 44.5% higher in 2000 than in 1979. One reason for this divergence is increased corporate profitability, which drove a wedge between productivity and compensation growth.

The trends in average wage growth-the slowdown in the 1970s and the pick-up in the mid-1990s-can be partly attributed to corresponding changes in productivity growth, as well as to changing macroeconomic conditions. Productivity accelerated in the late 1990s, and its growth continued into the current recession, helping to spur strong growth in average wages. Even so, the benefits of the faster productivity growth went disproportionately to capital, as income shifted from labor to capital in the 1995-2000 period.

Over the late 1990s, the pattern of wage growth shifted and growth in inequality decelerated, although it did not change course. In the 1980s, wage inequality widened dramatically and, coupled with stagnant average wages, brought about widespread erosion of real wages. Wage inequality continued to grow in the 1990s but took a different shape: a continued growth in the wage gap between top and middle earners-the 90/50 gap between high-wage workers at the 90th percentile and middle-wage workers at the median-but a shrinking wage gap between middle and low earners-the 50/10 gap. The positive trend in the 50/10 wage gap over the 1990s owes much to several increases in the minimum wage, low unemployment, and the slight, relative contraction in low-paying retail jobs in the late 1990s. Slower growth in wage inequality at the top, relative to the 1980s, was the result of the continuing influence of globalization, deunionization, and the shift to lower-paying service industries ("industry shifts").

Explaining the shifts in wage inequality requires attention to several factors that affect low-, middle-, and high-wage workers differently. Low unemployment benefits workers, especially low-wage earners. Correspondingly, the high levels of unemployment in the early and mid-1980s disempowered wage earners and provided the context in which other forces-specifically, a weakening of labor market institutions and globalization-could drive up wage inequality. Significant shifts in the labor market, such as the severe drop in the minimum wage and deunionization, can explain one-third of the growing wage inequality in the 1980s. Similarly, the increasing globalization of the economy-immigration, trade, and capital mobility-and the employment shift toward lower-paying service industries (such as retail trade) and away from manufacturing can explain, in combination, another third of the total growth in wage inequality.

One explanation that does not hold up is that the growth of wage inequality reflects primarily a technology-driven increase in demand for "educated" or "skilled" workers. Economists have found that the overall impact of technology on the wage and employment structure was no greater in the 1980s or 1990s than in the 1970s. Moreover, skill demand and technology have little relationship to the growth of wage inequality within the same group (i.e., for workers with similar levels of experience and education), and this within-group inequality was responsible for half of the overall growth of wage inequality in the 1980s and 1990s. Technology has been and continues to be an important force, but there was no "technology shock" in the 1980s or 1990s and no ensuing demand for "skill" that was not satisfied by the continuing expansion of the educational attainment of the workforce.

Among other noteworthy trends in wages:
bulletThe long-term convergence of wages for men and women stalled, and the gap between men's and women's wages was about a wide at the end of the 1990s as at the beginning.

 
bulletBenefits declined in the late 1990s. Although health insurance coverage increased after falling for more than a decade, employer costs for health insurance dropped in the 1990s. Employer pension contributions also fell. Since 2000, the amount of money that employers have spent on benefits has grown, as health care costs began to rise again.

 
bulletAs wages fell for the typical worker, executive pay soared. From 1989 to 2000, the wage of the typical (i.e., median) chief executive officer grew 79.0%, and average compensation grew 342%. In 1965, CEOs made 26 times more than a typical worker; this ratio had risen to 72-to-1 by 1989 and to 310-to-1 by 2000. U.S. CEOs make about three times as much as their counterparts abroad.

 
bulletUnionization provides an 11.5% wage advantage to workers. However, the union edge is even greater for benefits, with union workers far more likely than non-union workers to receive health insurance and pension coverage from their employers. Moreover, union workers have better health plans with lower deductibles and less cost sharing, and are provided more paid time off, including three more days of vacation.

Jobs: recession leads to employment losses

Rapid economic growth combined with unemployment averaging below 5% improved the job prospects of American workers in the late 1990s. Employment opportunities expanded considerably, especially for traditionally disadvantaged groups such as women, African Americans, and Hispanics. However, the recession threatens to erode these gains. Unemployment began to rise in October 2000 and, through June 2002, it had risen by 2.0 percentage points, up to 5.9%. Both the percentage-point increase and the level of unemployment are smaller than during the recession of the early 1990s, when unemployment increased by 2.6 percentage points to 7.8%. However, the employment losses (in percentage terms) have been greater.

Typically, men's unemployment increases are larger than women's, but during this recession women and men have experienced a similar rise in unemployment. Although the total employment loss for men remains higher than for women, women's employment losses have been twice as large as their losses during the early 1990s recession. Higher job losses for women are a result of the change in the industrial composition of job losses during this recession. Usually, the employment in the service sector (employing about one-third of all workers-two out of five women but only one out of four men) rises over recessions. During the 2000-02 recession, however, services rose only slightly. The terrorist attacks of September 11, 2001 appear to have played a large role in the composition of industries that lost employment over this recession, as transportation and retail trade saw major job losses after September 11.

Jobs losses have been spread fairly equally across educational groups, but not so among racial groups. African American workers have experienced nearly twice as large an increase in unemployment as have white workers; the increase among Hispanic workers is a third larger than among white.

Nonstandard work arrangements-part-time or contingent employment- remain widespread after the 1990s boom, even though this work is generally substandard. Compared to regular full-time work, nonstandard arrangements pay less for comparable work, are much less likely to provide health or pension benefits and, almost by definition, provide far less job security. Over the 1980s and 1990s, temporary work doubled each decade, even though it remains a small proportion of nonstandard work overall. As the economy moved toward full employment in the late 1990s, the share of nonstandard workers reporting that they would rather have full-time work fell, presumably the result of dissatisfied contingent workers finding full-time regular employment.

Job security fell in the 1980s and 1990s as workers began spending less time with one employer. The long-term trend in job stability is disconcerting for a number of reasons. First, workers who are displaced from their jobs often find new ones that pay less and are less likely to offer benefits. Further, many employee benefits, such as health insurance and pensions, are tied to employers. Workers who switch jobs not only tend to start at the firm's minimal number of vacation weeks, but they may have to go through waiting periods for employer-provided health insurance or vesting of pensions. Since many employers use health maintenance organizations, job switching may also entail changing doctors. However, over the late 1990s, employment retention-whether or not a worker was able to maintain consistent employment over time-increased slightly. Thus, even though workers were switching jobs more rapidly, some of these changes may have been voluntary responses to more rewarding economic conditions.

Low unemployment was insufficient to reverse the long-term trend toward fewer fringe benefits. In 2002, workers were less likely to have employer-provided health insurance than they were 30 years ago, and those who have it pay more. Further, there has been little progress in expanding job flexibility and paid time off-vacations, holidays, and family and medical leave. Heightened job insecurity left over from the recession of the early 1990s along with lower rates of unionization may have limited workers' capacity to bargain for on-the-job benefits, even when labor was scarce.

Wealth: deeper in debt

Like wages and incomes, wealth is a vital component of a family's standard of living. Several key features about American wealth stand out. First, wealth distribution is highly unequal. The wealthiest 1% of all households control about 38% of national wealth, while the bottom 80% of households hold only 17%. The ownership of stocks is particularly unequal. The top 1% of stock owners hold almost half (47.7%) of all stocks, by value, while the bottom 80% own just 4.1% of total stock holdings.

Second, the total wealth of the typical American household improved only marginally during the 1990s. The net worth of the average household in the middle 20% of the wealth distribution rose about $2,200 in the 1990s-from $58,800 in 1989 to $61,000 in 1998. On the asset side over the same period, the value of the stock holdings of this typical household grew $5,500, and the value of non-stock assets increased $8,500. Home ownership-the most important asset for most American families-rose over the late 1990s, especially among non-white households. Meanwhile, on the liabilities side, typical household debt rose $11,800. The relatively modest gains in stock and non-stock