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Reports Coming in of Big IBM Layoffs Underway in the U.S. (ieee.org)
333 points by zeveb on Mar 3, 2016 | hide | past | web | favorite | 408 comments

During the dot-com bust of the early 2000s, I was working at a super-market. One of the guys stocking shelves was a software engineer laid off by a large company after 40 years. The management at Winn Dixie put him stacking boxes in the freezer section...since they knew he needed the money and wouldn't quit.

Maybe he deserved to get fired, maybe he didn't. The lesson to me that has been reinforced over my career in the tech sector is: don't ever expect a company to value you more than the next quarters earnings reports.

After being laid off twice during my short career life (I'm only 33), I've learned one lesson loud and clear: Always be ready for a great opportunity, and when it comes, go for it.

That and always keep learning, because there's going to be some young go hard ready to come in and fuck your shit up.

That's me right now, early in my career. I'm ready to go hard and fuck your shit up. Sorry!

Haha, come at me, youth!

Seriously, though, as long as you keep up, and avoid being a curmudgeon, you're gonna be fine. The only ones who die in this industry choose to stop swimming.

Trying to work with your analogy... Does that mean H1Bs are the sharks, or the chum?

You turned this into an H1Bs thing a heartbeat... And this in a country built by and welcoming towards immigrants. Shouldn't we be discussing how to make the industry and the life of H1Bs better?

Why? That does not make any sense whatsoever. Most corporations that use H1Bs have billions sitting in cash in their bank accounts. They are more than capable of paying for local workers. There is a glut of local workers looking for jobs that can do the work that are for the most part as smart as the immigrants.

The work is highly profitable. The skills are present in the local population. Why should anyone want H1Bs in the US at all other than the investors looking for the largest returns for exploiting the poorest people in the world.

Ultimately this whole issue is an issue of exploitation at the behest of the owners of America who don't give a shit about its people. Initially they exploited slaves, then they exploited immigrants, now they want to import not even real immigrants to exploit.

What doesn't make sense is how can the corporations have billions sitting in cash per your logic. Just because they pay the H1Bs less doesn't mean that one time savings creates revenue. The H1Bs must be producing enough satisfactory work to tip the scales the corporation's way. I don't buy into your writing the current 'owners of America' are equivalent to those who 'Initially they exploited slaves'. Another view point: I am currently in Java, Indonesia, where a rice field laborer makes about $4 per day. Some leave to work in Hong Kong as domestic helpers making $20 per day and send money back home. Maybe the Hong Konger feels they are exploiting this person, but this person feels grateful to have the opportunity to earn 5x more. The downside is missing family and friends back home, and Hong Kong provides very little rights to these workers. The US is more generous in this aspect of worker's rights.

Not when we have millions of unemployed and underemployed people in this country.

There is a reason Trump's message is resonating with so many people (I'm not a supporter).

How about first improving the life of our citizens?

When exactly should people immigrate to US ?

Did you/your forefathers immigrate when all citizens had perfect life?

Why is the life of our citizens more important than the life of an immigrant? How about whoever can do the job better and more efficiently?

Why are they mutually exclusive?

They're the freezer stackers

H1Bs are our century's slaves, imported to work the tech plantations. Cheaper than locals. Fewer rights. Easier to exploit. And also make their owners a lot of money. In this case they are better off for it, that much has changed.

I'm mixed on your analogy. I would rather argue, H1Bs are the modern day SCABS (union comparison) when you consider Tata and the other body shops. They are there to be used by companies break down wages, remove workers, and ostensibly reduce costs.

Reality is, they do displace workers, but over the long terms costs go up due to lost customers and revenue and the need to replace those workers with competent unsourced individuals (happening a lot over the last 3-5 years).

This is not speaking to the general H1B individual, only those that places like Tata and IBM have been hiring to "offshore work" and "reduce costs"; and those same companies slowly lose enterprise customers fed up with the lack of quality.

HP was another company that took on contracts providing corporate IT services, outsourced them and then found customers firing them and then insourcing talent.

This is quite a harsh analysis but not too far from the truth. The limitations placed on H1Bs and the fact that you are really easier to exploit is one of the main reasons I have chosen in the past to go to a different country for work. If an H1B had the same rights as say a Tier 1 migrant in the UK you would see A LOT less abuse of this system.

A Tier 1 migrant in the UK has total freedom over who they can work for. They are not tied to a particular company and as such can leave for a better job without any administration overhead for them. They also have the ability to start their own company without any restrictions. This places them on equal footing with any local job applicants as they cannot be forced to work for lower than the industry going wage.

Tier 2 migrants are far more common in the UK and subject to similar restrictions as H1B.

Yeah, it's pretty damn far from the truth. If you know of H1B workers who were violently kidnapped in their home countries and stacked like cordwood in the holds of ships bound for slave auctions in America, I'd urge you to log off of HN and contact the appropriate authorities without further delay.

You forget that the Coolie trade of Indian indentured workers went hand in hand with the slave trade https://en.wikipedia.org/wiki/Coolie

I didn't forget, it's just equally irrelevant. Slavery and other forms of human trafficking are very real issues worldwide, even in the 21st century. It's demeaning (not to mention just plain stupid) to compare H1B workers to slaves.

And how easy is it to get Tier 1 in the UK now? As an American, say.

Tier-1 General category is now closed. https://www.gov.uk/tier-1-general/overview I moved to the UK on a Tier-1 in 2010, and it was very straight forward, points based system.

Not that easy, at least, I wasn't able to do so back around 2008 and ended up moving to Norway instead.

You rock! So is the issuing of PR permits for some countries.I have been there...

I presume you're writing another free software knockoff that solves the same problems as 40 years ago and that everyone has to "learn".

Economic downturn happens every now and again. That's expected. You cannot change it. What a software engineer should have done was to be prepared for it. I don't see any valid reasons for him to end up in a supermarket job. 2000s crisis lasted a couple of years at the most. He should have had the means to survive comfortably the temporary time period when he was without an income.

The lesson is: Be prepared as if you are going to be out of job anytime. That's a typical mistake of US based people. US is not a social country, you are on your own when shit happens, you should better be ready for the worst case scenario at all times.

Your monthly income is not for you to spend monthly. It's for today and future.

I don't see any valid reasons for him to end up in a supermarket job.

Generalize much? You know based on the fact that he "worked in software" that that he had no valid reason to need a "supermarket job"?

I hope no awful life event happens to you, but when things are going great, it's easy to say others shouldn't be struggling. Then something happens. Maybe you get sick. Or a close relative needs financial assistance. Or you get laid off. I'm fortunate enough to enjoy a comfortable living, but I've been in some really shitty situations in the past, and let me tell you- anything can happen to anybody. If you're doing well, be grateful, but don't assume everybody is in the same situation you are.

I agree, especially with regards to medical situations.

If I didn't have health insurance and had a major medical problem -- first thing I'd do would be to arrange a plane ticket to a medical tourist country. Extended diagnostics + care + treatment (especially without managed insurance prices) in thr US is ridiculously expensive.

And honestly? I'd be willing to go from 98 percentile to 9X percentile care to trim that.

For a significant fraction of medical problems, that is a great strategy. For a large fraction of medical problems, it will be a combination of friends and family close by keeping you alive, or at least, tended to well enough that you still want to live. Long term care in another country probably won't have that support, which is a really big problem long term.

That's assuming one has the ability to sock away enough savings to ease the burden of any long-term unemployment. The reality though is that millions of US citizens do not even have this option, even knowing full well that they need to be saving more. They simply cannot because the cost of living is too great and wages are too low. The fact that the US is "not a social country, you are on your own when shit happens", while correct, is big a problem for all citizens and it amazes me how pervasive this cowboy mentality has become, especially amongst the populations that are living month-to-month and which would greatly benefit from strong social contracts.

We're talking about tech jobs here, not minimum wage jobs that don't provide a living wage.

I think the point is really that most people conflate their NEEDS with their WANTS and end up living hand to mouth because of it. If you are a tech worker in the USA and you don't have extenuating circumstances that eat up large portions of your income (like child support, back taxes, massive student loan debt, etc) and cannot be avoided, then you should be able to limit your monthly expenses to be able to save money. The truth is though, that most people "need" the latest phone, the latest computer, a new car (because apparently no other cars are "reliable"), etc. In my experience just making small changes to your lifestyle can have a massive impact on your ability to save.

I can attest to that. I came to the US half a year ago on a work visa (not H1B) from an European country, with dependents in tow. Earning modest tech salary I was able to "sock away" more earnings in that time than I would be able to in my home country in three years. My observations is that people here simply live a lifestyle that matches their income.

Yeah, people always question why I'm not living bigger than I am. They don't understand putting half their income into savings instead of spending it on the now. The part that gets me is that when bad times come, people will look at my like I'm privileged and should share, forgetting that they already benefited from their extra earnings that they choose to spend instead of save. (To be clear, I'm talking about people who could've saved but didn't. I am not talking about the people who, through no fault of their own, never had a chance to save.)

I think your advice is not generalizable to "tech workers" in general, whose salary ranges, cost of living, family situations, etc. are all over the map. Come out to San Francisco and try to support a family of five on a $90K tech salary. Congratulations if your particular situation allows you to save for unforeseen events in the future, though.

Living in a high cost of living area is voluntary consumption just like leasing new cars every year.

OK, live in a low cost of living area and make a low salary. The point is, I wouldn't assume that every person with a tech job is able to save at a rate that allows them to deal with being laid off for months or years. Everyone's situation is different.

I don't know anyone who is regularly prepared to go years without income. A lot of people can't afford that.

In the fullness of time you will come to experience many surprising changes in life that come out of nowhere and are not in your control and you will have a very different view of this.

I started trying to find summer jobs while in college 1981-1983. Totally totally failed until summer of 1984. I felt like such a loser and my parents could not understand how I kept getting turned down for jobs.

I don't think the valley really recovered until 1987-1988. Part of that was because the last of the manufacturing went to Asia. And also because the Japanese were trying to keep the Yen weak and the Reagan administration was trying to keep the dollar strong. This didn't bode well for the tech industry in the Bay Area.

And learn how to job search. There's surely a better job that guy could have found.

Other people have pointed out how rough the period around 2000 was but it's also worth looking at how similar things were the previous time that'd happened in the early 90s when the defense contractors laid off a ton of engineers as the Cold War died down. That meant that you had large numbers of people with similar backgrounds all on the job market, in the same areas at the same time, competing for a sharply reduced number of jobs. Those kind of effects cascade: maybe you find a job but need to relocate, which means selling your house for a lot less than it was worth last year, or your spouse's job is also cut back because it was still linked to the local economy even if they didn't work at the same company.

I got my first tech job in 1996 doing QA for a COBOL compiler vendor in San Diego. It paid $15/hour and there were multiple applicants with physics & engineering Ph.Ds and years of experience! The detail which is more sobering the older I get is that the company figured – correctly, I'm sure – that the more experienced applicants were likely to leave as soon as they could find something better, so it didn't matter how willing anyone was to take any job available.

Sure, the market eventually recovered and some people repurposed all of that Cold War tech to make things like carbon-fiber golf clubs and bicycles commonplace but that's hardly going to help the person who went from living the American dream to struggling just to make the next mortgage payment, pay for their kid's braces or college tuition, etc. Even if they did eventually find a job, let alone one which pays comparably, it can take years to recover financially even if nothing else happens.

And that's wasn't the first Cold War related layoff period, we largely stopped fighting it in the '70s (roughly "Vietnam" through when the Soviet invasion of Afghanistan gave Carter a clue), and between that and the end of the Apollo program aerospace crashed and never returned to its old level.

My family hired an EE to do electrical engineering in ~1972 and he was thrilled to be able to get back to it after doing all sort of random service jobs including "cleaning toilets" (the latter might have been exaggerated to me to motivate working hard to get into college), I learned a whole lot from him.

My dad has a story about working for TRW in spring of 1971. One of his older wiser coworkers came into his office and said 'take a look at this', and laid down the previous three months worth of internal TRW phone books. They were rapidly getting thinner each month. My dad decided he needed to get out and get out now. Through an old work friend[1] he managed to swing a government position in the Bay Area which he kept for the next 30 years.

He said before he got that job he was thinking his retirement would be to a cardboard box.

[1] Friend pulled my dads application out of a pile of about 500 and stuck it on the top. If you ever want to know what petty corruption is, that's it.

That's not corruption, that's networking :)

Sufficiently advanced networking is indistinguishable from corruption. (Or the other way around, I don't know.)

Interesting. So this crash happened before the oil embargo (fall, 1973)?

Yes, before the oil embargo. Since the DoD and NASA/the space industry were and probably still are the biggest buyers, and US airlines were completely regulated in that period, oil, or rather, distillate prices wouldn't have had a great effect.

For that matter, certainly nowadays higher oil prices can mean more business for airplane companies as that makes buying more efficient planes more important.

Possibly a short-term uptick, but problematic longer term.

Take marine shipping as a similar case. Recent vessels were desiggned for high-cost fuel and slow sreaming, or so they tell us. But petroleum prices, and bunker fuel, have plummetted.

Hulls last 20+ years.

And shipping overall is down. Problem is demand-side.

> And shipping overall is down. Problem is demand-side.

Really ? All economic indicators (manufacturing index, employment, ...) seem to indicate otherwise. If problem is indeed demand side, wouldn't you see a serious crash right about now ?

We aren't?

Look up shipping indices. Baltic Dry Index, etc. All massively down since mid-2015.

Well sure, but equities certainly don't seem to have gotten the message.

Liquidity seeks returns.

Asset price inflation isn't economic growth.

And a strengthening labour market would see rising wages. They're rather curiously not. For some decades now.

> through when the Soviet invasion of Afghanistan gave Carter a clue)

I've not heard that before - what clue did it give him?

That his approach to the Soviets was not correct, and, say, his literal as well as figurative hugging of Brezhnev was ill advised. He made a number of replies, only two or so of which were productive:

Issued an ultimatum that we would not attend the upcoming Summer Olympics held in Moscow if they did not withdraw. That really showed them!

Grain export embargo, which only hurt us, and is generally considered to be immoral in a non-hot war context, as Reagan pointed out.

Reinstated draft registration, which did not go down well after he'd pardoned Vietnam era draft dodgers on his first day in office.

Reversed course with relations with Pakistan, which he'd previously trashed, and with it supported the Mujahideen fighting the Soviets.

In theory reversed course and started rearming, although due to the budget cycle that pretty much had to be proposals that would only be fulfilled by the next president, which of course didn't turn out to be him (note that Wikipedia's entries on him are silent on this general issue, you have to e.g. go to the B-1 bomber page to learn of his canceling it, and how difficult a decision he said it was).

A lot of people are responding with historical examples of qualified people unable to find jobs, but I think that strengthens my point. If you can do aircraft stress analysis, you're qualified to do a whole host of technical jobs with very little retraining; it's just a matter of finding those who are willing to take a chance. You don't have to wait for another stress analysis job.

No, your point is flawed and has no basis in reality. If many (read 10k-1000k order of magnitude depending on location size) skilled engineers are fired at the same time then things get really bad for engineers.

* All the companies than need any engineering based work done can take their pick of the best.

* But remember their normal recruitment channels are still open and feeding potential employees through. They may prefer to hire fresh talent rather than a 50 year old.

* And other engineering companies will be affected. If your aircraft company lays off 30% of its employees then it probably does so because it has less orders on its books. Therefore the smaller companies making parts for the aerospace industry have less orders and will be firing rather than hiring.

* Even worse large job losses tend to be correlated with a generalised or sector wide downturn. So car companies and ship companies and bridge companies may also be in a situation where there is less demand and be firing rather than hiring.

* The local economies of the places where the engineers were fired from will be affected. Skilled workers tend to support several service workers and when the skilled workers are laid off the service sectors are affected (you don't go out to a restaurant or get your house done up if you've just lost your job).

* If people move away from towns/cities due to lost work then the property prices tend to fall. A family with a mortgage may be (or feel that they are) better off holding onto their home and accepting much lower pay than accepting they have lost several $100,000 on the re-sale price of their home.

Also well worth reading about T.J Watson.

IBM was one of the few American companies that had no layoffs during the depression in the 30's.

Inventories built up. No sales. And he was almost fired.

Once the recovery started every company and govt in the world wanted a computer and the rest is history.

That was only obvious in retrospect, and has very strong survivor-bias: it might as well have sunk the company, and IBM would have been completely unknown today.

Also, things are a bit different today: IBM is largely a services company, which doesn't lend itself well to inventory building. Also, they have struggled on the merit of their offerings, not the economical climate, for a very long time. Doubling down right now is not obvisouly going to end well.

Recovery from the Depression in the USA started in the mid-late thirties. Are you saying IBM sold computers at that time? Just a matter of terminology here. I would probably not classify IBM's business machines as computers until the 1950's.

"Computers" were actually clerks in the census office that spent their days manually adding up and multiplying things. They got replaced by IBM's tabulators well before the 30's. But you are right IBM's inventory at the time was mostly tabulators.

Maybe I'm not being clear: restricting yourself to "engineering" jobs is far too narrow in the first place: it's technically harder than a lot of middle class jobs, and, in the worst case, engineers should be able to market themselves for jobs like actuary, accountant, analyst, etc. The whole problem is thinking that you can only work at jobs designated "engineering".

Disclaimer: this doesn't mean I'm better at the job search. I'm definitely not, and I'd be in the exact same position, of working bad jobs or mooching because I can't land anything between grocery store cashier and engineer. And a big part of the problem is thinking that e.g. someone capable of doing all the math involved in engineering "can't possibly" do the work of an accountant.

Yes the engineer can be an accountant but s/he needs to find someone to actually hire her/him. (I suspect you are in agreement on this point.)

If the economy is down then companies don't hire many accountants, actuaries or analysts for the same reasons as they don't hire as many engineers. They also cut down on sales, management and most white collar jobs (and blue collar). So the hypothetical engineer is competing with experienced people for too few of these jobs as well. Similarly many companies prefer to hire recent graduates in these roles for the same reasons as with engineers.

Many middle class jobs also have a qualification based barrier to entry (e.g. from your list accountants and actuaries in the UK+) that makes a career change difficult in good times let alone bad.

+ the training for both of these is usually on the job but why would you hire an ex-engineer you need to train in a job market where excellent skilled hires and fresh young graduates are plentiful.

Examples of qualified people unable to find jobs are evidence that it's easy for qualified people to find jobs? You're going to have to explain this to me.

I think wishful thinking is a much more likely explanation.

Maybe not. There is more age discrimination in software than in other areas. But around 2000, it was out of control. There were fewer jobs and everyone wanted to hire "the kids in the garage" type developers. If he was engineer-management he definitely wasnt needed because everyone was cutting down tech teams to a minimum. Many out-sourced their software jobs to India at this time. Some just got rid of those positions altogether just in case this Internet thing turned out to be a fad. It was a very confusing time. Just before the burst, kids couldnt figure out why companies wanted to hire them but dropped out of school to go for it anyway. After the burst loads of younger programmers went to law school for no reason and lots of older programmers went to work at bookstores to keep the lights on.

This is a very strong argument for developing some sort of secondary income aside from your day job. Maybe it never becomes a replacement for your day job check, but if you lose that check, an extra $1000/mo could mean a lot...

I worked at a Michaels in Plano in 2001 stocking yarn and frames with a guy that had been a systems consultant for EDS for a decade. He was in his early 30s. He got a new job after about a year of constant interviews. I use to cover for him when he'd take them.

Those were dark days, man.

I think you're forgetting what the early 2000's were like for software developers.

Had a friend that literally had no money for food in this time (2002, actually).

I entered the job market in 2002, it was absolutely brutal. It took a REALLY lucky set of circumstances to come together for me to find a job. That one job was it too. I was in Dallas while my wife was in PhD school and I had two interviews in 6 months.


What a disingenuous and snide response.

Software engineers outside the valley, especially in the late 90s and early 2000's don't make ludicrous amounts of money. Even if you live frugally and save up, being suddenly laid off will lead you to burning through savings very quickly. It's not like retiring, you don't get the time to prepare.

Lastly, lack of empathy is not a virtue.

Ever see Office Space? How much do you think those programmers made? Can't even afford a stapler on that salary.

i worked at the Open Source Development Lab 2001-2002, and left for the same reasons everyone else who had been there left - after walking out of that job, i spent 1 year unemployed in portland until taking a high level software engineering job for much less money.

would i have made the same decision? no, i wouldn't have worked at the OSDL and would have preferred to burn out at another dotcom, but it did teach me how to live very frugally, and how to set money aside for rainy days.

now i try to keep at least a year's worth of living expenses, preferably 2-3, just to make sure i can survive the next one.

I've noted one reason keeping up with and having good relations with coworkers is important. Helps you get work later. Especially true as you get older your chance of finding a job via a cold call goes way down.

But even so in a big downturn you may find all your industry contacts are in the same boat as you are. I had a lot of friends in the web industry all out of work 2001-2004. And in a fast changing field 18 months out of work is bad news because your experience rapidly becomes obsolete.

Quite hard to comment without context. This guy might have just been left behind, and was working on some soon to be obsolete language and never made any effort or interest into learning something new.

Meanwhile, IBM's CEO Ginny Rometty not only pocketed a salary of $1.6M in 2015, but also took a bonus of $4.6M. Not bad for 16 straight quarters of shrinking sales, evaporating profits and a falling stock price.


That doesn't sound like all that much for the CEO of an IBM-sized company.

17.9 million total compensation for 2014, 19.9 for 2015


Only? Poor CEO.

I could run IBM, Yahoo and Nokia to the ground for penny on the dollar that the corresponding executives made/are making.

You don't need to pay me Elop level money to destroy something like Nokia - I would happily do it for 100K per year. I may not do it as well, and could probably have the unfortunate success story here and there. But I am capable - just give me a chance.

Hey buddy - get in line. I can destroy shareholder value less rapidly than you or Ginni, and do it for less.

$6.2M sounds like a lot for any single human being.

$6.2M is not a lot for a big company if the leader can increase sales or profits by even a few percent... which does not appear to be the case here.

Well, there was some recently published research that claimed to find that most of the effect attributed to CEO performance actually can be explained by random fluctuations. Make of that what you will.

Well, there was some recently published research that claimed X actually can be explained by Y.

X and Y are arbitrary

I assume you're being down voted for being new, but I read your comment as a more verbose "citation needed"

It's not: 'citation needed' it's rather: 'research is unreliable and, one paper shows x, the next paper shows not-x'

So what, just ignore all research and go with your gut feeling?

When talking about social science you might as well

I would take one study with a grain of salt too. Even if the conclusions are correct in the setting of the study (and since most research findings are false, they probably aren't), it doesn't mean that you can extrapolate to every other setting, particularly the specific case of being the CEO of IBM. Hence "Make of that what you will."

But there could be an element of truth to it, which might warrant further research. If CEOs really do have a much more limited influence than they are given credit (or blame) for, then incentives perhaps ought to be adjusted, not just in the interest of fairness but also in the interest of finding better ways to actually improve performance.

How do companies perform with no CEO?

Regardless of the firm's performance, it's a difficult role to fill -- especially for a large, multi national conglomerate.

Or "How did companies perform when absolute and relative CEO pay was lower in general"?

If I'm not mistaken, a public corporation must have a CEO by law?

Why would you attribute an increase in sales or profits to the leader?

Just because Pharaoh decides to build a pyramid, doesn't mean it will happen, however hard they think it, without an army of people doing the actual work.

Also, after the fact, sure, you got a pyramid, but what might have happened if those people were doing something else? It is easy (and in leaders' interests) to take credit for non-negative changes, but it seems difficult to determine if there is any relationship between these changes and the actions of the leader (rather than some other effect), let alone establishing causality.

note: apologies for off-topic rant

One thing's for sure. Drops in sales aren't being attributed to Ms. Rometty. Massive, prolonged drops. Worse than for her predecessor.

September 2012 IBM stock 205.5 September 2013 IBM stock 192.75 September 2014 IBM stock 190 September 2015 IBM stock 145 March 2015 IBM stock 140

If the CEO pay logic even remotely applied this woman would never be employed by anyone again. I'd rather hire a pyromaniac that did 100 million dollar in fire damage to his last employer : it'd be far, far cheaper.

Since she led IBM the stock has lost 11% of it's value every year, but it's not an average : the loss has accelerated over time. For her fifth year she's on track to have IBM stock lose 37% of it's value (trendline Sep 2015 to today, then see where that trendline is on Sep 2016. Where will it be ? 92 dollars). In absolute value, IBM shareholders have lost 62.4 billion dollars, about 1/3 of the total market cap.

If you're right, and the CEO is responsible for this ... Just wondering: I'm not the CEO. Suppose I do something that loses my company 46% of it's total stock price, damage sufficient assets to cause 60 billion dollars in damage. What will happen to me ? 16 million dollars extra pay ? Or something else ...

I'm not sure if you meant to reply to my comment - yours sounds much more relevant to the topic at hand.

As for the content of what you've said, if it's true, then it's quite terrifying! But it hardly seems unusual [0].

[0] http://www.theguardian.com/business/2016/mar/04/bp-chief-exe...

It was certainly meant to be a reply to "why would you attribute an increase to the leader" and meant mostly to amplify the point.

I haven't even said the worst of my analysis. If I make an NPV calculation assuming the 5-year average interest rates will be 1%, IBM is currently far overvalued, essentially 100%, mostly because of too much debt compared to assets. In a firesale, IBM wouldn't fetch half it's market cap.

You can tell by the short interest in IBM that I'm not the only one who thinks so.

In fact, that's the only real quality I would ascribe to Ms. Rometty : investors in IBM should be panicking, and they're not. Since she's the main point of contact between the board and the company, she probably should get some credit for that. But in a way it's the worst kind of compliment : she has been able to push something that's either a lie or mindless optimism on a lot of investors.

Actually the pyramids were built exactly because of the pharoahs. Try building one now. You can't. Because there is no divine inspiration demanding the people do it.

After re-reading, I can see that I didn't clearly express my point of view. The first line should have said this:

"Why would you attribute an increase in sales or profits solely to the leader?"

If you meant something similar, then fine, but if not, then do you really believe that the pharaohs would have been able to build their pyramids without their work force? As for whether we could build one now, I think you might say that we just have different gods [0].

[0] https://en.wikipedia.org/wiki/Burj_Khalifa

Recent consensus among Egyptologists is that the Pyramids were constructed with paid labor rather than the stereotype of slave labor.

This is assuming those increased sales and profits are disproportionately attributable solely to the executive. In reality it is the army of sales reps and engineers which do the vast majority of this.

It's a lot when you're one of those laid off engineers with 30+ years of experience. It's an outrageous salary in general.

Perhaps he kept them from shrinking faster?

Not to nit-pick but the CEO of IBM is a woman.


Watson should take over the CEO role.

underrated comment :)

But just to really dogfood it, Watson should drive itself to work, too, not just hang out in server room :)

CEO pay is generally not correlated with performance: http://www.bloomberg.com/bw/articles/2014-07-22/for-ceos-cor... . Most likely it's based on a hodgepodge of past performance, convention, social connections, and emotional factors within the company's board.

Well, renting a place on Elysium must be pretty expensive.

Thankfully the executive health plan has 100% coverage so the dna regen and orbital massage treatments are gratis. It's the little things.

Here's what I don't get... If you have any options at all, why stay at a company with sub-par technology that abuses their workers? They've been stuck in low 3 Glassdoor [0] range for a while. It's layoff after layoff as they slowly dismantle the company. Why stay? Geographic limitations? Narrow skillsets?

[0] https://www.glassdoor.com/Reviews/IBM-Reviews-E354.htm#trend...

Among other factors mentioned: employer-specific skillsets.

Technology jobs are very highly specialised. And I'm not just speaking of computer tech.

I'm old enough to have seen several generations of obsoleted "gold tickets". Nuclear Engineering, future destroyed March 28, 1979. Freeway engineers, the freeway protests of the 1960s/1970s. Big Three auto manufacturers, dream destroyed with the first oil embargo, and sudden onslaught of more fuel efficient, less expensive, and better quality imports from Japan and Germany. Petroleum engineers, dream destroyed as the oil market collapsed in the 1980s. Aerospace engineers, dream destroyed with the fall of the Soviet Union and redundancies in the military-industrial complex throughout NATO powers.

Travel agents, newspaper journalists, and Perl hackers are only more recent victims of the same levels of specialisation.

It's not that these people are dumb, many were brilliant. But they're also laden with a tremendous amount of arcane knowledge, that, unfortunately, gets in the way of learning new skills.

It's been painfully obvious for a long time that, individual success stories notwithstanding, retraining and "reskilling" typically does very little to alleviate this.

Yes, future generations get trained into new skills, some of which may still be germaine 4-8 years after they've completed schooling. But my observation is that job and skill cycles are iterating faster.

So that's a part of it.

Yes, there are other dimensions. Obligations, family ties, social ties, fears, the fact that the most mobile do jump ship first, and more.

But really, it's quite crushing. You may not understand it now, but you almost certainly will, eventually.

Regarding skill sets. I have only been in software 12 years or so, but I noticed a type of tech 'gamble'. Basically, when you decided to learn something in tech you are basically gambling that the tech will last. In 2007 many faced a simple decision: AS3 or iOS. Supposed you chose AS3. Then, worked on it from 2009-2012, quite profitably. Currently the AS3 job outlook is horrific, and all that knowledge is a waste. Now, iOS people are skilled, wanted and are taking lead roles. (Oh yeah, now you are old). Want to learn GO? Be careful.

There are gambles, yes, but they are microscopic compared to retraining from one kind of engineer to another.

If you have n years of AS3 experience (n=7? Or what happened between 2012 and now?) and find yourself unable to compete with people with the same n years of iOS experience, I humbly submit that something else is wrong. Never mind that AS3 is a dialect of ECMAScript, which I hear is still used in a few remote pockets of the web, that hard things about programming isn't about the language and the framework, it's managing complexity. I struggle to see how retraining to iOS is going to take more than a few weeks of systematic reading and practising (possibly taken on your own time), and little more than a few months on the job to be on par with people who have several years of experience.

But more important is all the stuff that isn't about programming at all: Being good at organising your work, communicating well, testing, making sure you understand the entirety requirements as they are intended and that your delivery fully satisfies the requirement etc etc. Someone with n years of programming experience should master those things, and these count very heavily when picking people for lead roles.

Anyway, bottom line: the difficulty of switching from AS3 to iOS doesn't map to the difficulty of switching from nuclear engineering to environmental engineering.

Quite. I like the "Tech Gamble" concept. May well borrow that.

This also reminds me of a back-rationalisation I've seen for Linux adopting the penguin as mascot -- not the Australian zoo killer penguin story.

Antarctic penguins, when deciding where and when to enter the water mill about on the edge of the ice. The problem is that the first one in is taking a significant risk -- leopard seals, which eat penguins, may be lurking.

But once the brave pioneer takes the plunge (or rather more likely, is pushed, jostled, or slips in), the rest of the flock follows. There's safety in numbers ... and fish to eat.

I see parallels with techies choosing skillsets.

I chose the things I learn not by what I think might be most profitable, but what I feel is most fun. If I wanted a job with boring but profitable technology I'd learn COBOL or MUMPS.

I agree that switching from nuclear scientist to something else might be hard but with programming languages after a certain amount of years the gamble is gone.

The core concepts of every language are the same. If you acquired a certain amount of experience, switching is just looking for best practices in your new language. Of course it will take some time to ramp up but within a month you are somewhat productive within 3 months no one will see the difference.

Its all about problem solving.

In up markets it's easy to say, "I'm a mobile developer" but in a down market, only iOS will do. You're right there are gambles.

I see 4 ways to mitigate this:

1 - Live somewhere that has many companies or be prepared to move.

2 - Keep in contact periodically with everyone who respects your work. (Don't make the "Hey it's been 5 years" call one where you're asking for a favor)

3 - Always keep learning.

4 - Communicate in your customer's language. If you are strictly an ActionScript expert, you are very narrowly pegged if you haven't learned iOS on the side. But if the buyers of technology view you as "A mobile expert who makes brands come alive across many devices" then you can survive technology switches.

4.5 - Help others before you need help.

In the grand scheme it's still better to be a laid off technology worker than a laid off steelworker. I still feel their pain though - it sucks to lose your job, especially if family is involved.

There's a professor, Economics at Harvard IIRC, who points out some telling characteristics of cities in this regard. Those with large numbers of smaller firms are far more creative in the long run than those with small numbers of large ones. Specific contrast were NYC and its garment district vs. the large industrial cities of Pittsburgh (steel) and Detroit (autos). Ironically, it's the cities which most successfully employ division of labour and assembly-line techniques which are penalised most harshly.

Link in a sec....

Benjamin Chintz came up with the theory. Edward Glaeser is the lecturer.



Yep. Mid-to-late 1990s. Delphi vs Java. :)

Now there is a term I've not seen for a while.

Why GO? (out of curiosity, because doing some production things in Go already and successfully)

I suspect it's just mentioned as flavour-of-the-day. Though a flavour with a talented and proven chef.

Could as well be Haskell or ... honestly, I'm not keeping track so much any more.

Perhaps IBM has more workers that are like the workers at AT&T than we would have expected. AT&T is in a difficult position as its extremely large workforce is being attacked into irrelevance by new technology upstarts.

> To Mr. Stephenson, it should be an easy choice for most workers: Learn new skills or find your career choices are very limited.

“There is a need to retool yourself, and you should not expect to stop,” he said in a recent interview at AT&T’s Dallas headquarters. People who do not spend five to 10 hours a week in online learning, he added, “will obsolete themselves with the technology.”...

By 2020, Mr. Stephenson hopes AT&T will be well into its transformation into a computing company that manages all sorts of digital things: phones, satellite television and huge volumes of data, all sorted through software managed in the cloud.

That can’t happen unless at least some of his work force is retrained to deal with the technology. It’s not a young group:

The average tenure at AT&T is 12 years, or 22 years if you don’t count the people working in call centers. And many employees don’t have experience writing open-source software or casually analyzing terabytes of customer data."


That's a great top-down message from the AT&T CEO.

But the bottom-up reality is that people coming into work at AT&T pushing open source, cloud, or data science agendas are perceived as threats, and are managed out.

It is a really nice thing that they are taking the right steps, but personally, I am very very pessimistic. Just encouraging people to take classes is one thing, but them actually applying those skills to solve the problems that at&t faces...that is a different question.

I really really do hope that it works out though; my rational mind believes it otherwise.

"Technology jobs are very highly specialised. And I'm not just speaking of computer tech."

I would argue that computer tech is kind of an exception.

I can see a Nuclear or Aerospace Engineer having trouble adapting his knowledge and skills to other professions, since that knowledge is deeply tied to the domain, but a Perl (or C++/Java or whatever) hacker should't really have too many problems in transitioning to another language.

That they would find difficulties in finding a new job because dumb HR recruiters see 10 years of Perl experience in the resume as opposed to the "10 years of Swift" (sic) they are looking for is another matter...

Yes and no.

Yes, there's a fair bit of specific domain knowledge, but it's also built on top of a bunch of common foundations: physics, calculus, chemistry, differential equations.

And the tools in much of technical work have been converging for years -- technical and scientific computing require rudiments of programming (Fortran, still, or more modern languages), source code management, project management, and a heavy helping of sociological people understanding (look up Charles Perrow's books). That can transfer, at least in theory.

Whether or not it does, of course, and whether or not firms, organisations, or government sector are interested in hiring is a whole 'nother question.

I'm reminded of a video on the old Soviet rocket motors with boosted performance (the fuel pump turbine exhaust was vented into the rocket combustion chamber rather than offboard, for another 10% or so gain in thrust) -- though attempted use resulted in an explosion only a few seconds after takeoff and loss of the mission.

In the video, however, several former Soviet rocket scientists talk about their experience after the Soviet space program was shut down. Rocket scientists, literally, with no place to turn for employment. That's where you start thinking about inefficiencies in usefully allocating talent. Neither the Soviet nor American economic systems seem to have a particularly good answer for that. Though in the US, Wall Street seems to have a capacity for sponging up some of the potential. I don't find that particularly useful.

The Egyptians built pyramids. I wonder if that wasn't in part a large skills-retention and problem-solving exercise.

I agree. Actually it's interesting to see how IBM is trying very hard to stay relevant as far as programming languages in their products. If you look at the video in this "API Connect" demo, you can see support for microservices in Ruby, Python, PHP, Java, Node.js, Go, and Swift. As an old time C/C++ guy it's difficult to determine which of these are fads. Also no C# support, but maybe this will change with the opening of .net.


>It's not that these people are dumb, many were brilliant. But they're also laden with a tremendous amount of arcane knowledge, that, unfortunately, gets in the way of learning new skills.

I don't use the term "brilliant" for anyone who can't learn outside their narrow specialty.

There's a middle ground to what he's saying. Once you MASTER something that all your life has been in demand and incredibly lucrative, it becomes hard to believe that completely pivoting away from that knowledge is your best course of action. I believe in most cases these down turns seem temporarily, a short storm to weather with a small reduction in pay until things get going again (see Big 3 auto). Unfortunately things just keep spiraling downwards and by the time you realize it, it is too late.

Definitely such short sightedness and stubbornness can be associated with brilliance.

It's not a matter of not being able to learn. Of course they can learn. It's a matter of not being able to instantly re-specialize in the next "in demand" skill.

You don't have to completely re-specialize to avoid severe underemployment.

Two points:

1. The opportunity costs for switching away are high. I suspect this comes into play in many areas -- say, emigrants to a new country who never develop a high functioning level of language skill (something I'll add applies just as much to English speakers abroad as those moving to English-speaking countries, if not more). And yes, there absolutely are exceptions, often many.

You're highly effective in using one language. You operate functionally at the level of a young child in another. Cross training to the new language is a massive investment of effort. Adult minds lose plasticity present in children, so the task is inherently harder. Plus you've got to do everything else necessary to keep going. It's a Red Queen's race.

Shifting tracks requires a very real sacrifice both in increased effort and reduced reward. It can be short-term satisficing to continue stretching out the lucrative current skill so long as possible. Situational awareness of that dead end may not dawn until late in the game as well.

2. Some skills are synergetic -- knowing one thing makes learning another easier. And yes, I see this all the time, particularly in metaphorical spaces. Thinking is I strongly suspect very much a matter of analogs, and collecting and applying appropriate analogs helps.

But ingrained knowledge is ... quite different. Changing handedness, or quitting habitual behavior (drugs, smoking, alcohol, gambling) is exceptionally difficult.

YouTube's "Smarter Every Day" has a great segement on learning to ride a backwards-engineered bicycle headset. Using gearing, the response of handlebars and wheels is reversed. It's all but impossible to ride this bike if you know how to ride a regular one, though you can learn, with sufficient time.

But: learning to ride the backwards bike makes riding a normal bike impossible. Until you've learned to context-switch between the two.

Fascinating bit of applied psychology.


I've been simultaneously waiting for and dreading the same future for rails engineers, since so many are under the belief that web development is the ticket...

Yeah, I've started seeing occasional queries on HN about what the Next Big Thing will be. Which raises another challenge: chasing the tech curve. It's one thing to have found the right tech, another to correctly anticipate the market's next move.

The worse when you realise everything that's up-and-coming is recapitulating all the mistakes you recognised from the last time.

The demand for Rails engineers is tied to the startup bubble. As soon as the latter pops (well, it already is), so will the former.

This is why I think learning new marketable skills should be everyone's hobby. Also, in our field or any professional field, you really should be very financially secure after 50 so that a job loss doesn't hurt you.

The problem is learning new skills is kind of a catch-22. After you've been doing something for a few years, assuming you're reasonably intelligent, you get to be an expert and command expert wages. Your employer is paying for an expert. He doesn't want to pay you expert wages to learn a a new, marketable skill. He can hire someone who already knows it. Or he can hire a new college grad for a fraction of what you make.

So you learn on your own time. But since you're doing tutorials and what not, and your time isn't infinite, when you actually apply for a job with this new skill your potential employer is going to wonder why he should pay you expert wages for a skill with which you still have effectively no professional experience.

So you take a pay cut and work your way back up. Maybe go from $120k+ to $70k. The sky is not falling...

You can, but only if someone's willing to hire you. Employers are leery of hiring you for substantially less money than you made in the last job. The fear is you're still looking, and a few months down the road (before you've really accomplished anything) you'll quit.

There is no need to tell an employer your previous salary.

You don't think it affects your job prospects when you refuse?

If they won't hire you because you won't disclose your salary, you don't want to work for that company anyway.

Problem: cannot find jobs.

Solution: don't want to work for them anyway.

I think a much more likely scenario is that you won't get an interview at all. An employer is unlikely to consider you for a junior role that requires < 5 years of experience when you've had > 10 years experience in another field.

Well in India recruiters ask for the current salary & expected salary by default. If you don't provide this info, your resume heads to the trash.

Software is highly unusual in that you can learn marketable skills as a hobby. It's not like a chemical engineer can learn marketable skills in civil engineering on the side. And not everyone can do software for a living.

There is that advantage, though some skills are harder to pick up (stuff relating to hardware, commercial software packages, etc.). This also means more competition as there are fewer barriers to entry.

But generally, I see it as an advantage.

That's a nice dream but most people are probably too busy staying relevant in their current profession to be concentrating on learning skills for another career that may never happen.

Exactly. Or there's no time. I get up at 6:30AM to work and get home around 8:30PM exhausted. Maybe get an hour or two to play with the kid, then it's off to bed for all of us. When I do actually have a weekend, it's spent taking care of all the shit that didn't get done during the week. Exactly when do I sit down to learn AngularJS?

Easier said than done if you have kids.

Except that the rate of change is picking up so the likelihood that the value of new skills is diminishing as quickly as you learn them. We need to refocus society on providing a minimal viable income.

Perl hackers? Booking.com will actually pay you to learn perl :)

Frequently a negative sign.

Up-and-coming tech frequently has a flood of talent. Dying: companies with vested systems (say, Cobol, or Solaris) are catching the tail-end of the curve. The truly good programmers have gotten out, or switched skills, or transferred to management.

Hopping on a sinking ship usually doesn't last long.

(Nothing against Perl. It's just a seriously fading language at this point.)

I bet there's a ton of legacy Perl out there. Someone has to maintain it.

I'm sure they said the same thing 10 years ago.

Aerospace engineers, dream destroyed with the fall of the Soviet Union and redundancies in the military-industrial complex throughout NATO powers.

Although they should have had warning because a worse crash of aerospace happened in the early '70s, see my earlier response: https://news.ycombinator.com/edit?id=11222148

This is a very interesting angle of discussion, really

But I think this is partially their fault as well

A Nuclear plant engineer, while specialized in some element of that plant (and there are many elements, in civil, mechanical, chemical engineering) has knowledge that's applicable in a lot of different situations

Were the Automobile engineers content of designing more of the same poorly constructed vehicles? While the ICE is old technology I can't imagine the things that could come out of it if they really invested in rethinking it (also other parts like the drivetrain)

> But they're also laden with a tremendous amount of arcane knowledge, that, unfortunately, gets in the way of learning new skills.

That's true. But I think it's also a matter of attitude

You know, I can be the best specialist in some technology, let's say: installing Oracle, or even better, let's say I'm a top notch Golang programmer today

Tomorrow Golang won't exist, or won't be relevant. I am SURE of this

> But really, it's quite crushing. You may not understand it now, but you almost certainly will, eventually.

Yeah, I agree

> Aerospace engineers, dream destroyed with the fall of the Soviet Union and redundancies in the military-industrial complex throughout NATO powers.

Should've seen the writing on the wall when it fell.

Hindsight, 20/20, and all that.

It's really, really easy to think you're one of God's Chosen (or Allahs, or Jehovas, or Buddha's, or ...) when you're at the top of the world, you've got a multi-trillion-dollar wind in your sails, you went to the best schools, and you make titanium and airaluminium dance on the wind and all that.

1980s aerospace engineers weren't the first to take that tumble. They won't be the last.

> It's really, really easy to think you're one of God's Chosen (or Allahs, or Jehovas, or Buddha's, or ...) when you're at the top of the world, you've got a multi-trillion-dollar wind in your sails, you went to the best schools, and you make titanium and airaluminium dance on the wind and all that.

Fortunately nobody posting on Hacker News threads like these are relatively new engineers who think they're God's gift!

We should count our blessings!

Too late by then.

There's a good documentary about this period called Falling Down, by the way.

Say you're a support person working at IBM in Dubuque, Iowa, where local and state taxpayers spent $50M to lure IBM in a delusion of becoming a tech hub. [1] You specialize in Lotus Notes support for local businesses like Hormel. Last year, IBM laid off 2/3 of their Dubuque workforce, 700 people, in a city of 60,000. More than 1% of the population. Your only skill is Notes, same as dozens of other people that were laid off. The nearest cities of any note are Cedar Rapids and Madison, both more than an hour away. You know you need to get out, but where and how?

[1] http://www.bloomberg.com/news/articles/2015-05-19/iowa-spent...

Very good point - the human toll is tough. Did Dubuque get anything in writing about the jobs to be provided? $50M in tax breaks to support 1000 jobs is very expensive!

This might be a case of (X-50 Million) (X being the taxes on 1000 jobs) is bigger than 0 (amount of taxes collected on non-existent IBM office)

Let's do some math from a source [0]

Sounds like 1300 jobs paying 46K, double the local average, over the course of 6 years.

From a "paying taxes to buy higher salaries" point of view this is 1300 * (0.5 * 46K) * 6 ~= $180M. Sounds like a positive NPV transaction. But... How much of the increase does the city and state actually capture in Taxes? Let's call it 15% between city, state, local and sales. (This is very fuzzy math) Then you get 180M * 0.15 ~= 27M.

In the end it sounds like the city and state of Dubuque did a wealth transfer from taxpayers to a subset of local employees, many of whom are now jobless and will need to go back to $23K jobs or move.

These types of arrangements frequently end poorly. If the local market won't bear a certain wage rate, it's hard for one-off tax rebates to fix things. You need to go deeper - change the entire tax regime, improve the education system, etc.

Cringely [1] opines on this too.

[0] http://www.bloomberg.com/news/articles/2015-05-19/iowa-spent...

[1] http://www.cringely.com/2012/04/18/somethings-rotten-in-dubu...

But you're not factoring in the cost of the services for that office and the people who work there.

A gentle point - Here is the value of statying in a large city like NYC. Despite its downfalls, and there are many of those, one thing it does not lack is a spectrum of jobs.

But you take that risk moving to a no-tech area. The best solution is to not put yourself in a position you need to get out of.

And if that means the next Dubuque company needs to be offering million dollar salaries to engineers to get commit themselves out there - since there would be no other opportunities and you would be stuck, so you better have a massive nest egg after five years - then so be it.

Or reverse it, what if you're a blue collard worker in a disadvantaged community that IBM just moved into, they lure you into training at IBM in a narrow skill set with the promise of becoming white collard.

Can't blame someone for taking that risk.

But there are many situations what you get yourself into that seem like a good idea at the time. It's impossible to make predictions about future events. The IBM employees getting laid off here are not responsible for the corporate decisions to outsource their jobs, and don't deserve the blame.

Decentralized economy is good on a macro level but bad for people who live outside the biggest most diversified cities.

Geographic limitations are a big deal. I'm in the same sort of position as the IBM'ers, in that my company is slowly farming out what used to be internal apps to SaaS companies and moving the remaining jobs to a contractor in India.

My family is local, and as I get older that's more and more important. If I have to leave town it's going to have a big impact on my happiness. So much so, in fact, that I may take a huge pay cut and work at, I dunno, Starbucks or something so I can stay local.

And before someone suggests moving to silly valley, consider doing so requires accepting a 98%+ chance you will never own a home unless you're willing to put up with a horrific commute. In most of sf/peninsula detached homes cost $1.5m+. And even a condo is difficult to afford on the salaries available. Home ownership for most of us requires a startup win giving you at least $0.5m after taxes plus you and your spouse both having good incomes.

I like living in cities, but I can understand it's not everyone's cup of tea, particularly if you or your upstairs neighbors have kids. And all my friends with kids say the secret to happiness is having local grandparents. Or an au pair.

Further, if you live in an economically depressed area, there's no guarantee you can easily or quickly sell your home. Family in CT a little over 2 hours outside of nyc had a house on the market for 8 months before it sold.

Plus there's no guarantee that moving to the Bay Area will prevent similar problems.

There's a boatload of reckless spending on developers and engineers right now. It's only a matter of time before financiers start pushing for headcount reductions.

I'll just leave this [1] here..

[1]: https://pbs.twimg.com/media/CcBl4edUMAASf7X.jpg:large

> I may take a huge pay cut and work at, I dunno, Starbucks or something so I can stay local.

This was a quick read, pretty illuminating to see how well the "family" at Starbucks treated a downsized mid-level exec and helped him.


Fear of the unknown? Atrophy of key interviewing skills? Comfort with their position? There are a lot of reasons that people stay, even when a position or company is not optimal.

Also: Social-anxiety, insecurity/impostor-syndrome.

Fear guides all of us in some way, and striving to live means taking chances. The myth of the 'stable big company' that you can work at, and get your kid a job at after college, is past history. The U.S. changed directions when they closed a lot of the vocational schools, and the luxury afforded by being the first world economy, drove low to mid-level wages up. Dinosaurs like IBM cannot feed the machine. Manufacturing, though a different industry from IBM, disappeared, although it is making somewhat of a small team, or maker comeback. I've always struck out on my own. Getting laid off sucks, but I think most of them are just unhappy about the compensation, and most people I know who have 'overstayed' their usefulness at big corporations, usually own up and admit they weren't happy there, and they were not producing. I've been on both ends, and it never feels right, but change drives the world and life. The myth of stasis is one most humans embrace illogically. This dialogue will manifest itself in the reincarnation of xenophobia - 'Foreigners taking U.S. jobs!' - wait for Trump to chime in...

Sure, sure, but mortgages and kids' needs tend to get in the way of philosophical and strategic thinking.

People with mortgages and kids don't move to new places where there's more, or at least more immediate, economic opportunity?

Why not?

Kids are mobile. Mortgages can be covered by tenants or by selling the property (usually).

I only have kid (singular) and lack a mortgage, but I'd definitely move my family to a place with more opportunity if the well ran dry where we're at now. I wouldn't even hesitate or think twice about it. The temporary pain of transition is going to be a lot easier than the long-tail of fruitless toiling and economic decay.

> Kids are mobile

I was a spoiled kid, I admit, but I remember that back when I was 9 or 10 and my parents asked me if I'd be ok with us moving 4 or 5 blocks down the street, in a better area, my answer was a loud "no way!", because that meant losing my play-mates and God knows what else. We ended up not moving. I know it's anecdotal, but looking at what Hollywood is feeding us (with the latest example being the excellent animation "Inside Out") I get the feeling that is actually hard for kids being "mobile". Parents ignore that at their own risk.

Kids are hardly mobile. Remember that they're kids and may not be capable of coping fully with losing their friends and familiar surroundings to a different place with no guarantee of things being better for them. Minor anecdote, when I moved from Canada to USA in my childhood, my little brother who was 12 at the time tried to run away to avoid losing all his friends he had made.

A kid living in a household where neither parent can adequately provide for them because the economic opportunities are shrinking and offering no signs of ever improving, which often results in other toxic environmental conditions (stress about money, substance abuse, divorce, etc.), seems to me to be almost always worse than relocating to a new place in the long-term.

That's an adult view of things, not a kid's view. Most kids would rather stay and be a little poorer. What kids don't know is how bad things could get. They have no idea yet what it's like to live without safety nets.

Yes, and I'm an adult making decisions as an adult, not making decisions like a child would.

Otherwise my family would just burn through all our money and assets to pay for eating ice cream three meals a day. And we'd end up diabetic, broke, and probably soon dead once we exhausted our resources.

When you're dealing with difficult economic realities that include supporting your family and paying your mortgage, do you deal with them by thinking like a kid? What would be the point of that?

It's important to have the necessary empathy to make the disruption as minimal as possible, but also to have the maturity and forsight to make the decision to move out of whatever soon-to-be ghost town you're living in. Or so I would think.

I don't see how this relates to my point in that children are not necessarily mobile (interpreted as moving easily with minimal stress or effort) because of the scope of thinking a child trends to be limited to.

let me tell you, moving away from all friends can be tough for a kid. some cope with it well, some not at all, most are somewhere in the middle. I know I didn't enjoy my experience to say at least...

Same here. We moved when I was 6, 10, 12, and 16. A shy, introverted geek in the 70s and early 80s had it hard enough without that.

Satisfying mortgage/kid constraints actually works better if planned and executed in light of the truth of the situation; the lack of stasis. Skipping the philosophy leads to pleasant fantasies and irrational decisionmaking and planning that only hinders the ability to fulfill them.

Maybe it's the weak job market? It's not like it's 1999 out there.

Some of these locations don't have any other companies in the area.


You're 22, straight out of college, you take a job at IBM in Poughkeepsie, NY because it was a great fit for you and you liked the area. You raise a family there, get friends there, establish a lot of roots over 10+ years. Now IBM is "transforming", what are you going to do? There are no other companies in the area

You can commute to NYC. It's a 1 hour ride on the Metro-North. It's not ideal but when times are hard you survive by any means necessary. It's also quite enjoyable. I get so much reading and personal time commuting on the train.

People do commute to NYC; but it sucks from Poughkeepsie. The train is not 1 hour, it is 1 hour 45 minutes. You need to drive to the station and park, figure at least 15 minutes. That also assumes you're going to be working very close to 42nd street. Otherwise add another 20 minutes for the subway/walking.

You're lucky if this is going to be less than 2.5 hours each way.

I live 38 miles north of the city; Poughkeepsie is 73.5. It takes me about an hour and 45 minutes door-to-door to get to work at 22nd street. 10-15 minutes to the train station, probably about 5 minutes of waiting [because if you miss one train, you have to wait 20-30 minutes or so for another depending on the time of morning], 60 minutes on the train, then about another 25 minutes of walking (or alternatively 5 minutes to get to the subway, 2-5 minutes to wait for it, then 5 minutes on the subway, and another 5 minutes of walking).

some time ago I read a study (sorry no links around) that people get used to almost anything, positive or negative, over time. With 2 clear exceptions:

- pets like dogs/cats always tend to raise happiness levels - daily long commutes to work tend to make people more unhappy (and of course it helps if you have the time for yourself and are nto constantly stuck at traffic jam)

It's about an hour and 45 minutes to Grand Central, not an hour. I live near there and have taken both the Metro North and the Amtrak (from Rhinecliff) many times.

At least the trains have internet (or at least Amtrak does). If you can spin "they have wifi so they'll be part of my work day" into your job and work a virtually eight hour day including the commute as part of your time, that could be doable. If you have to commute on top of a normal eight hours, that's a non-starter.

Most IBMers get great benefits (great 401K plan, great health insurance, etc), and the running joke was to rather wait and get laid off to receive the generous severance package (which used to be 6 month's salary plus 12 months continued health insurance).

However, given the new severance only being 1 month's salary leaves them with less incentive to wait. Of course, the really good ones have already left anyway (money isn't the prime motivation there), but the folks remaining there, especially the ones who will have to pick up the slack (more work, same pay) will have much less incentive then previously.

As someone who works at IBM currently: because they have the best technology in my area of expertise. Some of their tech in dying industries is sub-par, sure, but you're hard pressed to find a better security appliance than QRadar. Couple that with the many, many security acquisitions they've made over the last year or so, and it's easy to see why someone would go there and stay there for a few years. It's hard to say no when your coworker is Bruce Schneier, for example.


If you're working in startups, you're used to expecting everyone to do a bit of everything. In large companies, however, you're expected to specialize within a specific area. The problem is, even if you're spending a few hours a week outside of work learning new things, you're not likely to have many opportunities to show off your other skills, which makes it harder and harder to move not only within the company, but to other companies.

> If you have any options at all, why stay at a company with sub-par technology that abuses their workers?

I used to work there, and I can say that it's a lot like an abusive marriage: IBM is really, really good at convincing one that the IT job market is a tough place (!), that one got really lucky getting a job with IBM, and that one could never find another job anywhere else (!), and that $70,000 is a great salary for a world-class technical talent (!!!).

The sad thing is that there are so many smart, good people there, absolutely wasted in their positions. IBM could be an amazing, powerful company if it actually knew how to release the energy of its employees.

Probably also a lot of people who have been with the company for decades and expected to retire from there as well.

I needed a job. You make it sounds incredibly easy to find work. I have less than 2 years experience in the industry. After getting fired from a startup, I was desperate to get my foot in the door anywhere. I was also desperate to pay my rent. IBM have filled both those needs.

Narrow skillsets?

Purely anecdotal, but what I've heard is that chip jobs at IBM (and at Intel FWIW) are very narrow and silo-ed.

Good for the company in two ways:

1) employee gets really good at that particular job

2) IBM internal tools and procedures are different than general practice. Other companies that are looking for X don't want to hire an employee who has only done Y, even though X and Y aren't too different, and even though any smart person can quickly pick up X. Consequently, employee can't easily go elsewhere.

Because H1B.

That is a good sign. It means the ship is slowly turning around. It sucks for the employees being laid off, no doubt. However they have to do this. There is no other way. They bet big on support and services in early 2000s. So they have lots of those employees. Could they all start to learn new things adapt to the new environment, yeah, some will but not everyone will.

Heck, if they didn't lay off people, they'd still have punch-card machine cleaners and even cheese slicer designers (they used to sell those way back in the day).

See, these types of comments are (again) why people have negative opinions towards silicon valley types.

You may be right, but a good sign for whom, exactly? For the people who lost their jobs? For shareholders? For fans of IBM the company?

Sure, yes, I agree that IBM probably has to shed people in order to stay competitive. However, it's not the fault of the people who are being affected by this, as by and large they were not responsible for IBM's decision to get more and more into support and services.

(an aside: it's not clear those are the people being affected, I'm just responding to the parent comment)

Instead, I would say a better discussion is: why is it that when IBM made a bet that did not play out, that they have cut people's severance benefits signifcantly? Why is it that we treat this as a necessary evil, instead of something to be disappointed about? Why are we not holding IBM up to be responsible for the well-being of their workers?

I'm not arguing that this isn't something that IBM should have done. I am arguing that we shouldn't talk about layoffs as a "good sign", and I think we should try to keep in mind the lives of the people affected.

> You may be right, but a good sign for whom, exactly? For the people who lost their jobs? For shareholders? For fans of IBM the company?

For IBM. For shareholders. For people who are not laid off and still work there.

> it's not the fault of the people who are being affected by this, as by and large they were not responsible for IBM's decision to get more and more into support and services.

Is it surprising that IBM is not a flat organization / meritocracy where regular employees get to vote on corporate strategy. Yes it is not their fault. So what should IBM do? They can provide severance packages, extra benefits maybe. Try to re-train some people perhaps. But can't keep everyone till retirement just to provide jobs (That is what Uncle Sam does).

> Why is it that when IBM made a bet that did not play out, that they have cut people's severance benefits signifcantly?

But it did play out. Services was bringing a huge amount of money during late 90s early to mid 2000s. It just doesn't anymore

> Why are we not holding IBM up to be responsible for the well-being of their workers?

We are posting on HN right. This startup land. Every 9 out of 10 startups will die. Are you holding them just as responsible? Or is there some implicit assumption that if you work for IBM then you'll be good till retirement.

> I am arguing that we shouldn't talk about layoffs as a "good sign",

I still argue it is a good sign. It is good for some parties (I enumerated a few above) and it really sucks for those getting laid off. No denying that. Hopefully they could have extra time, severance packages and so on to help.

How about this, what would you do if you ran IBM and you ended up with 50000 employees trained to do something that just doesn't bring profit anymore?

>How about this, what would you do if you ran IBM and you ended up with 50000 employees trained to do something that just doesn't bring profit anymore?

Apparently, if you are IBM, you fire them and hire H1Bs


A company is it's employees. If IBM still has cheese slicer designers in 2016, it's because they failed to train them. The discussion we're having here is because there seem to be no repercussions to their failure.

No, actually a company is its shareholders. Literally. Employees are the hired help.

shareholder capitalism is a noxious falsehood that has very unfortunately been enshrined in our current interpretation of the law.

this should not be regarded as a baseline truth nor a desirable transitional state. it is a bad idea that we must not succumb to.

companies are multi-faceted entities with many different stakeholders. the workers are a 100% necessary stakeholder and the company cannot operate without them.

And... so what? Sure, the company needs employees, but it doesn't need the people who are there.

What's noxious is the whole idea of "stakeholders", as if working somewhere gives you some kind of ownership. If you want to own your job you need to be self employed.

If I hire someone to cut my grass is he now a "stakeholder" who needs to be consulted when I sell my house?

your house is not a company. your lawnmower is not an employee, he's a vendor.

I own my house, the same way I would own a company. And I pay the lawn guy to do a job. I don't see the big difference.

its really kind mind blowing to me that you don't see a difference but I'll spell it out for you.

a company is an organization of humans. a house is an object.

You purchase a service from the lawn care vendor. You are their customer. You are not the employer of the guy who mows the lawn. That guy is either self-employed or he might be the employee of a lawncare company.

>its really kind mind blowing to me that you don't see a difference but I'll spell it out for you..

Oh, THANK YOU for the scraps of information you're about to impart.

>a company is an organization of humans.

No it isn't. A company (or corporation) is a legal fiction in which the owners are pooling resources to make money. It may do nothing and have no full-time employees. It may own other companies who do nothing and have no full-time employees.

The "organization of humans" isn't the company. Those people are employees who work for the company. I know it's in fashion for CEOs to say "we are the company", but that's a polite fiction you tell people to motivate them. If you have any doubt this is true, watch what happens when the company doesn't need them any more.

>You purchase a service from the lawn care vendor. You are their customer. You are not the employer of the guy who mows the lawn. That guy is either self-employed or he might be the employee of a lawncare company.

While that's true from a legal perspective, it's a meaningless distinction. I'm paying the guy to do a job. If I stop paying him to do a job, it has an impact on his life. In leftist parlance that makes him a "stakeholder", by which they mean he ought to have some input into the decisions I make as the owner.

> > a company is an organization of humans.

> No it isn't. A company (or corporation) is a legal fiction in which the owners are pooling resources to make money.

A company is a generic term in English for any (particularly business) organization. It includes things that do not have distinct legal identity from the persons comprising the organization.

A corporation is specifically a particular form of company, distinguished by distinct legal personhood and other particular legal treatments.

Common usage for the word "company" isn't really relevant to this discussion.

That's not just common usage, it's the technical difference between "company" and "corporation".

But "company" includes partnerships and sole proprietorships without any resort to common usage.

Many factories are completely or almost automated now, especially in Japan. This trend will only grow larger in the future as robotics improves. Even the repair and maintenance of the robots will soon be done by other robots.

AI is already doing the same thing for many white collar jobs.

The company of the future will indeed operate without workers.

>The discussion we're having here is because there seem to be no repercussions to their failure.

What do you mean? There are massive layoffs, a falling share price and lots of bad press. What other "repercussions" should there be? Should the government come in and shut the place down? Should it force IBM to keep all employees?

Again, what sort of "repercussions" should a company have when they make bad business decisions? The shareholders and employees have suffered, that's the punishment.

> A company is it's employees

But they are not the same group of employees though ;-) that's the point.

> The discussion we're having here is because there seem to be no repercussions to their failure.

Ok and how should we punishing all the failed startups though? Who is holding them responsible for their failure?

> it's because they failed to train them

We should try. But in general this is like the idea of "Why don't we just retrain all the coal miners to write web apps?" The reality is that you can't retrain everyone.

Some of the programming stuff seems easy to programmers for example, because well, we forgot the time when we didn't know it yet. But it is not something you can take a few night classes and read a book or two and get to writing back-end services.

When a startup fails, the management are generally out of work as well.

Not sure if that brings any comfort to the workers. They still lost their job. Most owners just turn around and do another startup and so on. Should they be punished and held responsible for it somehow. For hiring and then making bad decisions and failing.

Oookay, so to dig into it:

> They can provide severance packages, extra benefits maybe. Try to re-train some people perhaps. But can't keep everyone till retirement just to provide jobs (That is what Uncle Sam does).

Right, but they cut their severance packages. So clearly they're trying to contain costs. So yes, that's also a good sign for IBM the corporation, less good for their employees.

> Services was bringing a huge amount of money during late 90s early to mid 2000s. It just doesn't anymore

Now we have to step into the realm of the possible. Would it have been possible for IBM to look at their services backlog and contract timeframes, churn/retention rates and a few years ago say, "Shit, these contracts don't work out from an economic perspective, and maybe we should start to attrition out these deals because they're not going to work out long term?"

Maybe someone did (in fact, I'm almost certain someone did somewhere). But I'd also bet that some execs somewhere decided to keep going, keep signing money-losing contracts, that everyone started to live a lie so that they can get promoted, keep their bonuses, etc.

And now that they've now decided it was a mistake- the company doesn't pay the price (reduced severance), it's the workers who do.

> We are posting on HN right. This startup land. Every 9 out of 10 startups will die. Are you holding them just as responsible? Or is there some implicit assumption that if you work for IBM then you'll be good till retirement.

So, I've had to lay people off at a startup. It's terrible. We went out of our way to take care of them, including offering long severance packages, and cutting salaries and bonuses at an exec level to mitigate the layoffs. It sucks, but that was our obligation.

And I do hold startups somewhat responsible, but its also a different scenario - early stage startups are a known risk.

The big point I want to highlight is that I believe employers have an obligation to look after their employees, and when as a corporation they made a bet that didnt' work out, or had a profitable business that is no longer profitable, the ethical obligation is on them to look after those employees.

> How about this, what would you do if you ran IBM and you ended up with 50000 employees trained to do something that just doesn't bring profit anymore?

Treat them with dignity. Pay them a lot of money based on their time of service. Recognize that we should see this as a failure as an organization. Never refer to it as a "good thing"

EDIT: I also would have tried to "get out in front of it" - 50,000 people's jobs don't become redundant overnight other than through wishful thinking on leadership's part.

> But I'd also bet that some execs somewhere decided to keep going, keep signing money-losing contracts, that everyone started to live a lie so that they can get promoted, keep their bonuses, etc.

You are probably right about that.

> the company doesn't pay the price (reduced severance), it's the workers who do.

Well it did didn't it? You mean shareholders? The stock went down for a few years in a row.

> or had a profitable business that is no longer profitable, the ethical obligation is on them to look after those employees.

> How about this, what would you do if you ran IBM and you ended up with 50000 employees trained to do something that just doesn't bring profit anymore?

Because it was "looking after them" for a while perhaps? The age of large service consultancies maybe over. But they still have those people getting IBM salaries. Those are not Facebook salaries probably but they are not puny either. At some point it would have to start laying people off. And it was laying them off and also hiring new ones. That is why it looked flat. But now it probably hired enough new people and stopped. While is still has to lay off others.

> Treat them with dignity. Pay them a lot of money based on their time of service.

I agree with that. Hopefully they do. I don't know if they will.

> Never refer to it as a "good thing"

The "good thing" for not for the employees, it is for the companies and for those that work there, for shareholders. That is a lot of parties for which it is a benefit.

Managers shouldn't sit down with those getting laid of and say "I have good news". That is not what I trying to say.

EDIT: I also would have tried to "get out in front of it" - 50,000 people's jobs don't become redundant overnight other than through wishful thinking on leadership's part.

Everything you said was good, but this was what I liked the most.

Management lives in the la-la land of denial for years and years. And then BOOM! Like a bolt out of the blue.

That's management failure, they should have seen it coming, and reacted to it, years ago. It's one of the most important aspects of their job.

The ongoing reaction would have been letting people go earlier as they stopped pursuing unworkable businesses sooner. Is that what you had in mind?

Massive layoffs are not good for the people who remain at the company. It is a major drag on overall morale, and how does one who survives round one of layoffs ever have any piece of mind that s/he won't be next?

Executive pay doesn’t seem to follow the high-risk-high-reward scenario; they keep the “high reward” but see apparently none of the “high risk”.

A much more balanced system would be something like, for each executive:

- Your base pay is $51 million.

- If you FAIL at your task, YOU OWE THE COMPANY $50 million.

- If you succeed, you receive an extra $20 million. If you choose to split $15 million of this reward with employees in terms of stock however, your portion of the stock will be doubled.

That would put some skin in the game. And if a failing executive is forking over most of his millions back to the company, they could probably avoid quite a few layoffs. And if the executive doesn’t fail and has a direct incentive to share success with employees, the workers would be even more loyal to the cause.

- If you FAIL at your task, YOU OWE THE COMPANY $50 million.

No sane person would take a CEO job with that type of compensation clause. While the CEO bears responsibility, the world doesn't make it easy.

1. Today's stock market doesn't reward long-term disruptive thinking that isn't guaranteed to be a sure bet. Heck, and there are no sure bets anyway. The stock market rewards profits here and now that also extrapolate to good future profit trends. Why screw up a good thing to grab something unproven? That's why BlackBerry's stock was so high as the iPhone was coming out. CEOs are indirectly pressured to not take risks. If they do and they fail, they deserve to pay a huge penalty? Exactly what could Blockbuster have done with all of its investments into real estate and retail employees to win against the Internet? There is no scenario where they could have won without decimating everything the company used to do.

2. Black swan events are extremely unpredictable precisely because * nobody* sees them coming. If I ran an ice harvesting business, how could I have predicted the invention of freon? Once I learned about freon, how should I have responded with all of my investments made into labour and equipment for sawing ice out of frozen lakes? There aren't many situations where a win is easy if an entire industry gets destroyed because of some black swan event.

3. All of the above goes double when the new CEO is supposed to lead a turnaround. They negotiate their parachutes first so that they can focus 100% of their energy on saving the company instead of worrying about themselves. It's why on airplanes they explain to you to put your own oxygen mask on first and then help others. You can't help others if you yourself are in trouble. Not to mention, turnarounds are not fun. They're also paid for stress and the need to make often uncomfortable decisions where they must play the villain.

> No sane person would take a CEO job with that type of compensation clause. While the CEO bears responsibility, the world doesn't make it easy.

Wait, what? $51M salary, if I fail I give back $50M? I pocket at least $1M risk-free. Sign me up. That's more than most people make total throughout their entire lives.

Well, first, guess let's assume that's after-tax money. If that's before-tax, you end up losing money. Secondly, let's be honest. That's not really a $51M base salary. That's a $1M base salary with a $50M signing bonus that you can't spend. Because if it goes south and you need to pay the $50M back, you better not have spent it buying some nice house and other stuff. What sane person would risk the chance of going bankrupt to pay back a salary after they received the money? The smart decision is to just not touch the money until the clause is up. So put into perspective, it's not a $51M base salary at all.

Besides that, the issue is that these decisions aren't made in a vacuum, and the rewards are too short-term to make it really viable. The CEO will consider the offer and compare it to other opportunities out there. Free agents always have options if they're that good. It happens in sports, and it happens in business. So you have candidates comparing options, and those options drive up the price. If the price is driven up because options exist, any sane person would be a fool to not take the best price if the opportunity also fits right. "Sorry, your offer is the best offer, but I'm going to turn it down because this other company wants me to give back 98% of my salary if I fail. That's more my cup of tea." I don't deny there can be non-monetary factors that may be more important than money in these decisions. But I'm talking about an all-else-equal decision. Especially when it's a turnaround situation. Nobody wants a turnaround job unless they enjoy pain. The money is to compensate for that pain. Nortel had a really tough time finding its last couple of CEOs. In Canada, it was known as the CEO job that nobody wanted. How do you attract someone for that kind of job unless you guarantee them nice money?

Finally, the market does reward for the short-term. When IBM made the big switch to go all-in into services with the purchase of PwC Consulting, mass global hiring for labour-intensive work, and so on, they opened up a huge profit tap. Palmisano was hugely rewarded for growing this decade-long windfall. He parachuted into retirement with a very nice package. Never mind that the strategy worked for only a decade and created a big mess of financial misallocation that his successor would need to clean up. Should he have been able to predict that IT was changing and that this huge IT services workforce that he had hired would turn into a huge albatross that Rometty would need to slay in order to ensure IBM remains a relevant company? Maybe. Is it fair that Rometty is left dealing with the albatross while Palmisano is happily and richly retired? Yeah, Rometty was part of executing that services strategy as a senior executive before she became CEO (in fact, she was apparently the one responsible for integrating the PwC acquisition), but the question stands. Under the proposed scheme, why is Palmisano rewarded and Rometty not? Rometty is dealing with the fallout of a changing industry overshadowing what made perfect sense to Palmisano at the time. They were hit by technological trends that they didn't predict well.

Compensation is a complex subject, especially at the executive level.

That's a lot of words, but at the end of the day, if you offer me $1 million a year regardless of whether I succeed or fail, I'll be your CEO. IBM, please hit me up on LinkedIn. I'll save you a bundle.

I do agree with the point that the executives often don't appear to suffer the pain of failure, but if the layoffs are of the scope mentioned, the number of jobs that could be saved with $50,000,000 is somewhere on the order of a rounding error.

Per executive. Assuming a generous $100k cost per employee, that’s still 500 jobs.

And really, I think saving 10 jobs or 5 jobs is still fine, if that were the number.

No single person can be so good at a job that it warrants sending hundreds more out the door. Any company that thinks this should try an experiment: fire the executive, ask any employee at all in the company to take over the job for 1/20th the salary and see if the outcome is measurably worse.

That's not that far from how it works except for the last part. Many executive have a low base pay but a very high bonus component especially CEO's it's usually not 50 to 1 (unless they take a "symbolic" salary when it ends up being usually millions to one) but it's quite high.

Now granted it's not if you fail at your task you owe a company money but you don't get it, the owe a company money could happen it's usually common in some countries (UK for example) where the CEO gets a "loan" for X amount which is spread out over some years, it's again not usually to put skin in the game but to lock a CEO to the company, the CEO change at Sage about a year ago had a loan component to it.

These loans are later often forgiven.

They are always forgiven after a certain time period thats what they are used for to lock the CEO into the company for X amount of years.

Every sane CEO realizes that even if they're really good there's still an element of chance.

At the very least, you'd have to make the expected value of their compensation greater than it is today. So if they succeed they get an extra $60 million but if they fail they lose $50 million (with a baseline of $51 million). Then you would incentivize risk-taking CEOs.

Of course, that's not actually far off from what we have today: CEOs receive a majority of the compensation in stock, which does have risk. Maybe it would make sense to set the strike prices much more aggressively instead though.

Isn't the point of compensation being mainly in stock options part of having "skin in the game"?

If I was granted 100k shares at $10/share, even if market values it higher, it costs me something to excercise them up front, right?

>You may be right, but a good sign for whom, exactly?

The economy, so everybody. You're asking the wrong question, it isn't "Why is it a good sign that IBM has begun layoffs?" The question is "Why is it a good sign that IBM, a poor performer that is popularly believed to have misallocated resources, has begun layoffs?" It isn't a choice between IBM doing great, or doing layoffs; it is a choice between IBM continuing to do poorly and eventually imploding spectacularly, or doing layoffs. Of course layoffs don't mean a certain turn around for them, but the consequences for inaction are pretty certain.

As far as the fate of the individual employees: in the long run the vast majority will be better off. Either IBM didn't efficiently translate those employee's skills to profit, or there is inadequate demand for the skills and the employees have been shielded from that harsh reality. In the case of inefficiency (the most common case): if another company can derive more profit from the same skill - then they can also pay more. In the case of obsolete skills: unless IBM can, with a certainty, provide employment until the employee dies - they are assisting the employee in a game of retirement savings Russian roulette.

So that is the economics 101 explanation, but I've found it to be true. I've been through this twice, and in both cases I've come out the other side much better off.

>However, it's not the fault of the people who are being affected by this

So, are the worker bees accountable for the success of a company, or are they merely anonymous cogs? HN seems to like it both ways; when some executive or manager gets acclaim, we're quick to point that it's the regular employees doing the "real work" in the company. But when it goes south, we question what part they played in the thing, and point the blame elsewhere.

It isn't merely incompetent management that are responsible. And there's also a lot of bad luck involved. A plan was implemented, it didn't work; should the 10's of thousands of remaining workers suffer?

>Why is it that we treat this as a necessary evil, instead of something to be disappointed about?

It's both.

> You may be right, but a good sign for whom, exactly? For the people who lost their jobs? For shareholders? For fans of IBM the company?

For IBM. It's good when you consider the alternative where a great company is slowly destroyed and everyone loses their jobs.

I'm finding it hard to understand how the current situation differs from that situation.

Like so many other big corps, IBM did some questionable things because of bad management and got into avoidable trouble.

Now the innocent employees - the ones who didn't get a chance to steer the ship - are being thrown into the ocean.

In a sane world, those employees would sue the board for some of its decisions. Those decisions may have been good for the short term interests of the shareholders, but clearly they weren't good for the long term interests of the company, or of patient shareholders who took the long view.

Bad management is a plague in tech. We've seen a long succession of big corps make the most incredibly surreal, bizarre, dysfunctional decisions, and then show wide-eyed "Who? Us?" surprise when layoffs become necessary because the corps crash into the rocks.

The usual justification that "shareholders win" is bullshit. They don't. No one does, except sometimes - in the short term only - the bad management itself.

> those employees would sue the board for some of its decisions.

How does that even work? I understand if there is discrimination, or they didn't get paid for their work but sue them for betting on services for such a long time? Yeah, I don't see how that works. Moreover, didn't most of those employees make the same bet by getting hired to provide consulting services.

Besides, employees are not the owners of the company (unless they are also major share holders). Shareholders can potentially sue, no doubt. But not sure about employees.

When you're at will, it doesn't.

When you are covered by a collective bargaining agreement and contract, it happens all of the time. In my city, when the administration introduced unsafe conditions and unpopular schedule changes the firefighters union picketed the home of the mayor and fire chief, and successfully sued.

A friend worked for a manufacturing company where the Union sued over chronic and egregious mismanagement. Unfortunately, the management wanted the company to fail and dragged things out until bankruptcy.

Wonder why more software jobs are not unionized? Hollywood and move industry has some of that. Teacher, pilots, firefighters do it.

There are downsides too. Some perceived, some real.

Unions are all about tenure. When the shit hits the fan, the young people lose. Pay scale is generally based on tenure as well.

This industry is full of libertarians, full-bore objectivists, "fuck you, got mine"-ists, and scads of people who think they're 10x engineers and don't want to be compared to the plebs.

You've posted many unsubstantive and/or inflammatory comments to HN. That's not what this site is for, so please stop doing it.

It seems to me like IBM is in perpetual layoff mode. It's not that the ship is turning around - it's that it's grinding down into irrelevance. In a sense IBM is doing it the right way - returning the capital (via dividends and buybacks) and people (unfortunately via layoffs) back to the market to work on productive things in configurations that add value. Better to do this than to waste everyone's time and money. (But yes - it's painful!)

IBM's strategy for some years now can be more or less summarized as "offshoring". That's one reason the layoffs are only going a little at a time in waves, because you can't offshore the whole company in one fell swoop. Instead they're trying to do a ship-of-Theseus type thing where they piece-by-piece replace all the American staff with cheaper offshore staff, hoping they can pull it off while the ownership and business stays (mostly) in place.

They are putting themselves right into complete irrelevancy while they are at it. IBM sales and services is a scourge - never have I seen such incompetence on such a wide scale.

If you are an independent software vendor who gets roped into part of an IBM deal, the first thing you should do is get them out of the loop and make contact with the real technical staff at the customer. Beats the hell out of playing telephone.

The same anecdotal story can be said for any services company. IBM, though, usually delivers above and beyond which is why they're the go to firm for services and are usually called in to mop up messes made by competitors.

I agree, IBM's revenues are down down down every year, and they "make up for it" by replacing long-term their first-world workforce with a cheaper offshore workforce (showing more profit on less revenue).

This is all financial engineering and next year---I predict---their revenue will be down again, but they will show still more profit.

Except that's not exactly what they're doing. They're laying off US workers and replacing them with cheap employee's from BRIC countries. This isn't about turning around the ship, it's about replacing the ship's crew with a foreign crew that will gladly accept a 1/3 of the wage.

I respectfully disagree. I've been observing IBM expand in a couple of thriving sectors (e.g. infosec, cloud computing, healthcare, analytics) and grow by making smart purchases. At the same time, Warren Buffett has reportedly increased his IBM stake. If these are any indicators, they are actually becoming very relevant.

IBM is playing catch-up to all of these services mentioned as they continue to buy companies giving the impression of growth and sector leaders. They should ask there Watson computer how to be a competitive business.

Buffet buying IBM goes completely against his philosophy buying tech so he'll sugar coat it not to look completely stupid.

> It seems to me like IBM is in perpetual layoff mode.

Any large technology company has to be.

> It's that it's grinding down into irrelevance

Maybe? Who knows. They hung for 100 some years. As an entity they've done some things right for that to happen.

Do large tech companies need to be perpetually laying people off because various bets don't work? Or that they necessarily increase productivity so much faster than revenue? (What's unique about tech here?)

I'm curious, not accusatory.

Do you have any information about the company's position and needs? About what options they have? About the ranges of outcomes of the various options? About the decision making process and politics that lead to this option?

Otherwise, it's just a very speculative assumption, repeated by many, that firing people must be good. Management must be acting in the company's best interests - they couldn't be biased or selfish or just making a mistake - and employees are generally a burden and a commodity.

I'd like to repost something maceo posted last year, that I saved:


Human labor is not a commodity.

This was the common sense amongst all working people for most of the 20th century. Samuel Gompers, maybe the most conservative labor leader of his time, said "You cannot weigh the human soul on the same scales as piece of pork." And working people, along with the management class for the most part, understood this to be an undeniable truth. In fact, this piece of common sense was enshrined into US law with the Clayton Act of 1914, which stated "The labor of a human being is not a commodity or article of commerce." But in the last 20 years, as capital has gained the firm upper hand, the common sense understanding has shifted towards the idea that labor is in fact a commodity.

The ideas behind the so-called "on-demand workforce" further solidify the notion that labor is a commodity. After all, you can order an uber ride just as easily as you can order vitamins online.

It's so pervasive that even I, someone born into a union family and a firm believer in the idea of worker solidarity, have to force myself to believe that labor is not a commodity. Why? The business class treated labor as expendable in 1915, just as they do in 2015. Why did working people understand this truth in 1915 but not today? I don't know.

I read a recently released sociology book earlier this year (going crazy looking for the title/author, can't find it), that posits millennials are far more likely than any recent generation to blame themselves for the problems they face. It's part of the reason that the self-help industry is bigger business than it's ever been. It's not always your fault. Our modern economy is built on rotten ideas like labor = commodity. If we want to do something about inequality, it's time that we subject fundamentally unjust ideas like these to a serious critique.

> Why did working people understand this truth in 1915 but not today?

My cynical view (as another 'born into a union family' etc etc) is that, back then, enraged human souls could take out their anger on the material interests and personal safety of capital owners. A factory would burn, stock would get ruined, people would get physically threatened. That empowered workers and did a lot in making owners understand that humans are not tools that you can just put down when not needed.

Nowadays what you gonna do, burn a few laptops? Smash a few desks? Big deal. The owner or CEO responsible for directives is probably in another continent, essential business interests are in datacentres across the world. Unless you are an uber-skilled security professional, you simply have no significant recourse. You could lynch the redundancy managers sent to deal with you (as they are starting to do in France), but the owners will just hire a few more.

What this means is that, behind all our philosophy about Sharing Economies, Clouds and so on, the new model of work is really the Mechanical Turk: machine-mediated work distribution across an atomized workforce. Until we stop loving the machine, we will not stop this trend.

This is generationally very hard, because we have grown with these machines and we've seen them shape our world and our professions - how can we not like them? There is still so much to do, so many opportunities... We are going through an industrial revolution the likes of which had not been seen since the early 1800s, and we know those were not easy years for the common folk. It will take a few more generations to stabilize and get to grip with new social realities; it will take people who were born after machines stopped being novel, people who can consciously refuse and refute the model pushed upon them by networks, computers and centralized capital. It will probably not be millennials, but maybe their kids will be desperate enough to start considering real changes.

I've seen executive disconnect work the other way too. I'm currently sitting in an empty room because the rest of my team resigned in the last 5 months thanks to a short-sighted executive directive.

I've made similar comments. That statement is in the International Labour Organization's founding documents, and it almost made it into the UN Charter. The US forced it into Germany's postwar law. Here's a summary of worker's rights in Germany.[1]

[1] https://www.wilmerhale.com/pages/publicationsandNewsDetail.a...

> That is a good sign. It means the ship is slowly turning around.

That's what it could mean, if this were some other company. You're right in saying that sometimes layoffs are an unpleasant but necessary part of some larger plan to refocus and turn the company around. But this is IBM we're talking about: there is no plan. There's not the slightest shred of evidence that there's a real mission underway to make them relevant again, a la "the new Microsoft". It's just an endless cycle of layoffs and stock buybacks until the whole thing winds up and just goes poof in a handful of dust. It'll take a while because IBM is still huge, but 2025 is my estimated date for when it's no more.

> But this is IBM we're talking about: there is no plan

I would believe if you this was some newish 10-20 year old company. But they've been around for 100+ years. Some of it was luck, definitely, but I don't think it hung around on sheer luck for 100 years without a plan.

The only good sign for corporations is organic growth. Amazon has it right.

Can you define what you mean by organic growth in this context?

non-acquisition/merger growth.

Spoken like a 20 year old.

"Hope I die before I get old."

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