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IBM's 'Stealth' Layoffs Show Need for More Transparency

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The list of major tech vendors making significant layoff announcements has been growing like crazy since the first of the year. The rolls include Microsoft, Cisco, AT&T, Adobe Systems, Seagate, Sun Microsystems, Motorola and Nokia. Just about the only notable exceptions are Apple and Qualcomm.

 

Then there's IBM. Big Blue is making cuts, but in an under-the-radar way that some labor experts say demonstrates the need for an overhaul of the federal WARN Act. The act requires companies to give 60 days' advance notice when they lay off large numbers of employees in a single location. But it's easy for companies with widely dispersed, white-collar work forces, to avoid disclosure by spreading their job cuts around. That's exactly what some folks are accusing IBM of doing, reports The New York Times. A scant month-and-a-half after IBM reported a surprising 12 percent gain in net income in 2008's final quarter, the company has quietly sliced some 4,600 North American jobs.

 

J. Randall MacDonald, IBM's senior vice president for human resources, called the cuts "business as usual for us," telling the Times "this business is in a constant state of transformation." Though it's not uncommon for companies to be in a state of hiring flux, adding workers in some areas even as they cut back in others, critics notes that much of IBM's growth is coming in countries with low-cost labor forces such as India and China. According to the Times, American workers made up just 29 percent of IBM's global work force at the end of 2008. Back in 2007, I wrote about IBM pumping $6 billion into its research and development facilitiies and services centers in India. Last month, Big Blue generated some controversy with a program designed to help some of its laid-off U.S. workers obtain new IBM employment in emerging markets like China, Mexico and Russia.

 

IBM's strong global presence is a popular strategy with Wall Street, since it helps the company outpace competitorswith more limited overseas operations, but it's less popular with folks on Main Street as the U.S. jobless rate hits levels not seen in years. It is also galling to some that IBM is cutting American jobs even as it lobbies for a chunk of the federal government's stimulus money.

 

At the very least, says Ross Eisenbrey, a labor researcher at the Economic Policy Institute, multinational companies like IBM should be required to be more forthcoming about where their work forces are located. He says:

 

All our multinational companies are increasingly less American, except when they are asking for tax breaks and increased government spending in their industries. Knowing where their employment really is would be useful information for policymaking.

 

I think this is a great idea. As I've found when writing about H-1B visas, there is often a dearth of this kind of data. A flurry of surveys with conflicting data published last spring seemed to indicate that few U.S. companies knew how much work they sent offshore. In a global economy, this seems like the kind of information that investors, consumers and others should be entitled to know.

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