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Time for IT to Organize?

By Oldefar ·
I have stated from time to time that perhaps it is time for IT workers to think about organizing. I ran across this link in the Dallas Morning News today - http://tinyurl.com/ixhg.

The link is for US workers and is sponsored by the CWA, a US union. However, anyone working in IT who feels they are being exploited should look at this site.

So what is the answer? Is it time for IT workers to look to unionization? Is there an alternative approach such as cross company and cross border trade guilds that work on behalf of all IT workers? Or do we all simply press on looking out for number one?

Personally I think the issues go beyond single companies and single countries. The Indian developer pulling work away from the first world developer today will see the Chinese developer pull it from him tomorrow. Work will move tomorrow even easier than today. Call centers, NOCs, data centers, and all aspects of engineering and production are no longer tied by geographic constraints.

I see no incentive for company management, rewarded by short term profit margins, to take a broader or long term perspective. However, the same technology that makes my job so portable makes every IT worker my peer and coworker. In the end, we are talking about how we, the global IT worker community, makes our livelihoods. That is a sizable community if we make it one.

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Time for new Unions?

by TheChas In reply to Problem with Unions

Looking at what is going on in the US corporate world, I am starting to believe that it is time for some new strong unions.

The first step in the revolution is to cap the pay for corporate offices to a reasonable multiple of the lowest paid workers wages.

The current average of several 1000 times the average workers salary is obscene!

Next, we need to reduce mergers.
I have yet to see a merger that has in the end helped the average worker or consumer.

Corporations are taking on far to much debt to take over their competitors.
The end result of each merger is fewer choices for consumers, higher prices, and fewer jobs.

My career has been in the electronics industry.

At every company, labor was a minor factor of the total manufacturing cost. Usually less than 10 percent, often less than 1 percent.

At all these firms, managements ongoing cry was to reduce labor costs.

The problem here is out-dated accounting where over-head is charged based on labor cost.
With 200 to 500 percent overhead charges, the effective cost of labor could equal other costs.

The funny thing here, is when production is shipped of-shore, there is no longer any means to charge the overhead costs. Design and support become cost centers and are eliminated.

In the current business climate, the average worker and consumer need some protection from the greed of the corporate boards.

Chas

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Questions:

by maxwell edison In reply to Time for new Unions?

Who's going to be the grand master of the plan, and decide how much or how little a corporate officer can make? And who will define who is or is not part of that corporate elite? And who will get to decide what an obscene salary is? (Sorry Charlie, I decided that you just can't make that much money.) And who decides how much debt is too much debt? And what happens when incentive to grow and prosper and get better is taken away? And what happens to the values of the stock markets - and the tens of millions 401(k) accounts - when corporate profit is "fairly" distributed to every employee of the corporation instead of to all those greedy stock holders? (Oh yea, that social security "trust fund" that we can all rely on.) And who decides what is "fairly distributed"? And if an employee knows that: 1. His job is secure because of union protection, and 2. His salary is secure because of the forced distribution of wealth, what incentive does he have to be profitable and productive? And what happens when a company wants to move out of California, for example, and go some place else where the environment if more friendly towards business, Texas or Colorado, for example? (Sorry, you can't move your business.) And who gets to make that decision?

When does your business become someone else's business?

Let's just put the government in charge of all businesses in America so they (businesses) can be forced to do the right thing. And of course, we all know that polititians and government bureaucrats always do the right thing.

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My proposal

by TheChas In reply to Questions:

Max, I want companies to grow and prosper.
However, I want them to grow the old fashioned way, by being the best at what they do, and providing products that are a reasonable value to the consumer.

Company growth by buying out the competition simply leads to the stagnation of innovation and increased opportunity for foreign competition.

On to my proposal:

Change the tax code for people in upper management positions.
After their compensation exceeds 500 times the minimum salary of the lowest paid regular or contracted employee, the income tax rises from 38 percent to 90 percent.
(perhaps on a sliding scale from 500 to 1000 times)
Further, if payroll is cut by either layoffs, or pay cuts, the CEO and related managers MUST receive the same percentage reduction in compensation.

Merger debt load from the acquisition of competitors (horizontal integration) must not exceed 20 percent of the combined value of the firms.
Further, employees that are let go as a result of the merger must receive a generous compensation package. Perhaps 1 year of continued health insurance and supplemental pay so that when combined with unemployment they have 75 percent of their former pay.
The insurance and compensation would end when the employee finds a new job.
If nothing else, this would provide incentives for a company to provide decent out-placement services to get former employees back into the work-force.

Vertical integration and mergers that expand the company into new markets would NOT be subject to the above.

Discontinued products that may result from a merger MUST receive FULL support for a minimum of 7 years after the last manufacturing run.
(This is actually part of some consumer protection laws, and has been followed by the appliance industry for years.)

Chas

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agree with premise not the solution

by maxwell edison In reply to My proposal

Chas, I agree with your premise, but not your solution. I too want to see businesses grow and prosper, as you so eloquently stated, but I cringe at the thought of even more government control of private (or personal) business. And the tax code is the method most used to exercise that control. The government is too involved in our business and private lives already, and any more government intervention is just too much for me to accept. The current tax code, for example, is 17,000 pages long. In 1**3 the whole thing was only 14 pages - 14 pages TOTAL. The current tax code has 2.8 million words. No, I don't think we need any more. Let's start taking them out. And there are some serious problems buried in those words. Why on earth would we want to add more fuel to the fire - no, make that an inferno? The government is oppressive enough already. It's time we start removing some of these laws and rules- the barriers to freedom - and start repealing these laws instead of creating new ones.

Every time I turn around there's a law against this or that. I can't start a business without spending tens of thousands of dollars to lawyers and accountants to sort out the myriad of rules and regulations. And even then, I'll probably be audited, or penalized, or sued by someone or some group, maybe because I didn't put a stupid ramp at the front door. I say enough already. And this doesn't even touch on the fact that it smacks in the face of the whole concept of a free society and free enterprise.

Here's a challenge for you - or anyone else, for that matter. The next time you state a problem, before you propose a solution, try to come up with a solution that does not involve government. Too many people run to the government as the first and only solution to solve every little (or big) problem they face. Problems can be solved without government, you know. You should try it.

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For you to ponder

by TheChas In reply to agree with premise not th ...

Without government controls, how do we prevent the next World Com or Enron?

Now, I do agree that many laws are much too complex and difficult to implement.

That comes from the 512 or so lawyers and the multitude of lobbyists involved in the process.

If you remove the special sections of the tax code and most laws that were placed to help a business in each Congressman's district, the law would be a lot simpler.

We need to get back to a government of by and for the people.
Not of by and for business.

Term limits don't work.

Campaign finance reform does not work.

So far, the best situation in Washington is a divided legislature.
When 1 of the 3 (House, Senate, President) is firmly in control by a different party, the only laws that get through are the ones that are truly needed.

When either the Democrats or Republicans are in charge of all 3, we get a mess of laws that cause more problems than they fix.

Chas

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Don't misunderstand

by maxwell edison In reply to For you to ponder

I'm not suggesting no government controls, but fewer of them - and ones that are less intrusive to free enterprise. Market forces, when allowed to work unencumbered, are powerful forces indeed - and usually result in growth, prosperity, and lower prices because of increased competition. And you have to realize that WorldCom and Enron are the exceptions, not the rule. They broke existing laws, and the people responsible should be held accountable. But it doesn't mean we need more laws - just enforce the ones in place already in cases like Enron.

I agree, we need to make sure that government remains one of the people, by the people, for the people (and shall not perish from the earth.) However, I don't see things in an us (the people) versus them (business) perspective. As Calvin Coolidge once said, the business of America is business, and I agree. We're in this together, and one cannot survive and prosper without the other.

So the way it should be is this: Business will look out for the best interest of the people, and the people will look out for the best interest of business. It's the only way our free market society can survive and prosper. I hate to see the dialogue fall into an us versus them argument.

P.S.

And I agree, term limits and campaign finance restrictions, don't work - and it restricts free choice and free speech. (And yes, gridlock is a good thing.)

A Calvin Coolidge story: Calvin was not known for being much of a talker. In fact, he was known to be a man of very few words - rare indeed for a politician. At a Washington social event, a reporter approached President Coolidge and said, "I made a wager with a friend that I could get you to say more than three words." Calvin's reply was, "You lose."

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pay capping

by john_wills In reply to Time for new Unions?

Capping of bosses' pay at a multiple of that of the peons has been tried in various U.S. firms. What happens is that the most competent managers choose to work for firms which do not have such a rule. I think there have been other problems too. But it is really the shareholders, those who most want the firm to increase in value, who should decide this: if they want to pay the CEO a certain salary my opinion in the matter is purely advisory. And jealousy is a vice.

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Really?

by Oldefar In reply to pay capping

While I have heard this comment at various times over the past 30 years, I have never seen a single specific instance referenced. To say it has been tried and failed without pointing to a case makes any meaningful analysis of the argument impossible.

Now as for a case where it has worked, I point to the US military pay scale. What is more interesting is that the compensation at all levels has consistently lagged behind the private sector and yet has managed to retain some extremely competent personnel.

As for shareholder value, I agree. This is an area where a collective effort can have significant impact. As employees, the workers typically lack the capital to own a sufficient amount of stock to influence management. Even the limited stock owned by employees is not a voting block. An association could leverage employee owned stock into a block, and could add additional leverage by selective purchase of stock from a broader base. For example, the CWA could purchase stock as a national effort to gain a significant say in how IBM or Verizon is managed. This targeted ownership could float by selling that stock and buying another as change is implemented.

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Ben and Jerry's

by TheChas In reply to Really?

I agree that self imposed limits will not work.

Any limits need to be industry if not nation / world-wide.

It is NOT the share-holders, but the corporate boards that determine executive compensation.
(Share-holders MAY get a chance to rubber stamp the boards decision.)
Since most of the members of corporate boards are other CEO's, there is a built-in incentive to boost compensation.

When Ben and Jerry decided that their ice cream business had grown to large for them to continue to manage, they were forced to abandon their self imposed compensation cap in order to find ANY qualified candidates.

Chas

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Thanks for the reference

by Oldefar In reply to Ben and Jerry's

I will defer comment until I have had a chance to look into it. :)

The board of directors faces pressure from stockholders. When a sufficiently large block begins applying pressure to change behavior, change occurs. Not unlike the knee jerk reactions of governments to 9-11 or the series of mega failures going back to prehistory.

Even China's government has moved under pressure from the Chinese people. Perhaps not as rapidly as some would like, but never the less they have moved.

If there is one lesson we can learn from Iraq, it is that a small minority controls the majority by keeping that majority as a large pool of individuals. As individuals, each of us is always outnumbered by whoever has power.

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