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For nearly a half century, IBM came as close as any company to bearing
the torch for the American Dream.
As the world=E2=80=99s dominant technology firm, payrolls at International
Business Machines Corp. swelled to nearly a quarter-million U.S.
white-collar workers in the 1980s. Its profits helped underwrite a broad
agenda of racial equality, equal pay for women and an unbeatable offer
of great wages and something close to lifetime employment, all in return
for unswerving loyalty.
How the Crowd Led Us to Investigate IBM
But when high tech suddenly started shifting and companies went global,
IBM faced the changing landscape with a distinction most of its fiercest
competitors didn=E2=80=99t have: a large number of experienced and aging U.=
The company reacted with a strategy that, in the words of one
confidential planning document, would =E2=80=9Ccorrect seniority mix.=E2=80=
slashed IBM=E2=80=99s U.S. workforce by as much as three-quarters from its =
peak, replacing a substantial share with younger, less-experienced and
lower-paid workers and sending many positions overseas. ProPublica
estimates that in the past five years alone, IBM has eliminated more
than 20,000 American employees ages 40 and over, about 60 percent of its
estimated total U.S. job cuts during those years.
In making these cuts, IBM has flouted or outflanked U.S. laws and
regulations intended to protect later-career workers from age
discrimination, according to a ProPublica review of internal company
documents, legal filings and public records, as well as information
provided via interviews and questionnaires filled out by more than 1,000
former IBM employees.
Among ProPublica=E2=80=99s findings, IBM:
Denied older workers information the law says they need in order to
decide whether they=E2=80=99ve been victims of age bias, and required them =
sign away the right to go to court or join with others to seek redress.
Targeted people for layoffs and firings with techniques that tilted
against older workers, even when the company rated them high performers.
In some instances, the money saved from the departures went toward
hiring young replacements.
Converted job cuts into retirements and took steps to boost
resignations and firings. The moves reduced the number of employees
counted as layoffs, where high numbers can trigger public disclosure
Encouraged employees targeted for layoff to apply for other IBM
positions, while quietly advising managers not to hire them and
requiring many of the workers to train their replacements.
Told some older employees being laid off that their skills were out
of date, but then brought them back as contract workers, often for the
same work at lower pay and fewer benefits.
IBM declined requests for the numbers or age breakdown of its job cuts.
ProPublica provided the company with a 10-page summary of its findings
and the evidence on which they were based. IBM spokesman Edward Barbini
said that to respond the company needed to see copies of all documents
cited in the story, a request ProPublica could not fulfill without
breaking faith with its sources. Instead, ProPublica provided IBM with
detailed descriptions of the paperwork. Barbini declined to address the
documents or answer specific questions about the firm=E2=80=99s policies and
practices, and instead issued the following statement:
=E2=80=9CWe are proud of our company and our employees=E2=80=99 ability to =
themselves era after era, while always complying with the law. Our
ability to do this is why we are the only tech company that has not only
survived but thrived for more than 100 years.=E2=80=9D
With nearly 400,000 people worldwide, and tens of thousands still in the
U.S., IBM remains a corporate giant. How it handles the shift from its
veteran baby-boom workforce to younger generations will likely influence
what other employers do. And the way it treats its experienced workers
will eventually affect younger IBM employees as they too age.
Fifty years ago, Congress made it illegal with the Age Discrimination in
Employment Act, or ADEA, to treat older workers differently than younger
ones with only a few exceptions, such as jobs that require special
physical qualifications. And for years, judges and policymakers treated
the law as essentially on a par with prohibitions against discrimination
on the basis of race, gender, sexual orientation and other categories.
In recent decades, however, the courts have responded to corporate pleas
for greater leeway to meet global competition and satisfy investor
demands for rising profits by expanding the exceptions and shrinking the
protections against age bias.
=E2=80=9CAge discrimination is an open secret like sexual harassment was un=
recently,=E2=80=9D said Victoria Lipnic, the acting chair of the Equal
Employment Opportunity Commission, or EEOC, the independent federal
agency that administers the nation=E2=80=99s workplace anti-discrimination =
=E2=80=9CEverybody knows it=E2=80=99s happening, but often these cases are =
prove=E2=80=9D because courts have weakened the law, Lipnic said. =E2=80=9C=
remains it=E2=80=99s an unfair and illegal way to treat people that can be
Many companies have sought to take advantage of the court rulings. But
the story of IBM=E2=80=99s downsizing provides an unusually detailed portra=
how a major American corporation systematically identified employees to
coax or force out of work in their 40s, 50s and 60s, a time when many
are still productive and need a paycheck, but face huge hurdles finding
anything like comparable jobs.
The dislocation caused by IBM=E2=80=99s cuts has been especially great beca=
until recently the company encouraged its employees to think of
themselves as =E2=80=9CIBMers=E2=80=9D and many operated under the assumpti=
on that they
had career-long employment.
When the ax suddenly fell, IBM provided almost no information about why
an employee was cut or who else was departing, leaving people to piece
together what had happened through websites, listservs and Facebook
groups such as =E2=80=9CWatching IBM=E2=80=9D or =E2=80=9CGeographically Un=
Marketers,=E2=80=9D as well as informal support groups.
Marjorie Madfis, at the time 57, was a New York-based digital marketing
strategist and 17-year IBM employee when she and six other members of
her nine-person team =E2=80=94 all women in their 40s and 50s =E2=80=94 wer=
e laid off in
July 2013. The two who remained were younger men.
Since her specialty was one that IBM had said it was expanding, she
asked for a written explanation of why she was let go. The company
declined to provide it.
Marjorie Madfis was among seven women in their 40s and 50s laid off from
their IBM marketing team in White Plains, New York, in 2013. The two
members who remained were younger men. =E2=80=9CThe only explanation is our
age,=E2=80=9D says Madfis. (Demetrius Freeman for ProPublica)
=E2=80=9CThey got rid of a group of highly skilled, highly effective, highly
respected women, including me, for a reason nobody knows,=E2=80=9D Madfis s=
in an interview. =E2=80=9CThe only explanation is our age.=E2=80=9D
Brian Paulson, also 57, a senior manager with 18 years at IBM, had been
on the road for more than a year overseeing hundreds of workers across
two continents as well as hitting his sales targets for new services,
when he got a phone call in October 2015 telling him he was out. He said
the caller, an executive who was not among his immediate managers, cited
=E2=80=9Cperformance=E2=80=9D as the reason, but refused to explain what sp=
aspects of his work might have fallen short.
It took Paulson two years to land another job, even though he was
equipped with an advanced degree, continuously employed at high-level
technical jobs for more than three decades and ready to move anywhere
from his Fairview, Texas, home.
=E2=80=9CIt=E2=80=99s tough when you=E2=80=99ve worked your whole life,=E2=
=80=9D he said. =E2=80=9CThe company
doesn=E2=80=99t tell you anything. And once you get to a certain age, you d=
hear a word from the places you apply.=E2=80=9D
Paul Henry, a 61-year-old IBM sales and technical specialist who loved
being on the road, had just returned to his Columbus home from a
business trip in August 2016 when he learned he=E2=80=99d been let go. When=
asked why, he said an executive told him to =E2=80=9Ckeep your mouth shut a=
Henry was jobless more than a year, ran through much of his savings to
cover the mortgage and health insurance and applied for more than 150
jobs before he found a temporary slot.
=E2=80=9CIf you=E2=80=99re over 55, forget about preparing for retirement,=
=E2=80=9D he said in
an interview. =E2=80=9CYou have to prepare for losing your job and burning
through every cent you=E2=80=99ve saved just to get to retirement.=E2=80=9D
IBM=E2=80=99s latest actions aren=E2=80=99t anything like what most ex-empl=
whom ProPublica talked expected from their years of service, or what
today=E2=80=99s young workers think awaits them =E2=80=94 or are prepared t=
o deal with =E2=80=94
later in their careers.
=E2=80=9CIn a fast-moving economy, employers are always going to be tempted=
replace older workers with younger ones, more expensive workers with
cheaper ones, those who=E2=80=99ve performed steadily with ones who seem to=
up on the latest thing,=E2=80=9D said Joseph Seiner, an employment law prof=
at the University of South Carolina and former appellate attorney for
=E2=80=9CBut it=E2=80=99s not good for society,=E2=80=9D he added. =E2=80=
=9CWe have rules to try to
maintain some fairness in our lives, our age-discrimination laws among
them. You can=E2=80=99t just disregard them.=E2=80=9D
=E2=80=98Old Heads=E2=80=99 Needn=E2=80=99t Apply
For much of its history, IBM viewed its fate and that of its
predominantly U.S. workforce as inseparable. By the late 1960s, the
company=E2=80=99s grip on the mainframe computer business had grown so grea=
Justice Department sued it for monopolizing the industry, a case that
dragged on for years before being dropped as =E2=80=9Cwithout merit.=E2=80=
dominance convinced executives they could deliver extraordinary
workplace stability in return for loyal service.
=E2=80=9CWhen recessions occur or there is a major product shift, some comp=
handle the resulting workforce imbalances by letting people go,=E2=80=9D
explained an employee handbook of the 1980s. By contrast, IBM =E2=80=9Cretr=
reassigns and even relocates employees.=E2=80=9D
For their part, continued the handbook, employees must be =E2=80=9Cflexible,
willing to change, work overtime, and adapt to new situations quickly.=E2=
The logic behind the bargain was that =E2=80=9Cpeople are a treasured resou=
At IBM, =E2=80=9Cthey are treated like one.=E2=80=9D
But within a decade, IBM had stumbled not once but three times, in ways
that would come to cost both the company and its workers. First, it
failed to appreciate the =E2=80=9Cmajor product shift=E2=80=9D behind a new=
technology that first entered people=E2=80=99s lives as the guts of pocket
calculators and cheap digital watches and was making possible
increasingly powerful and networked personal computers that undercut the
company=E2=80=99s mainframe business. Second, it misjudged its employees=E2=
reaction to switching to a kind of pension that no longer rewarded
older, long-service workers. IBM workers responded with a lawsuit that
forced the company to settle by paying more than $300 million and
reinstating expensive traditional pensions for more than 100,000 of them.
And by the early years of the new century, IBM was falling behind again
by failing to quickly devise innovative uses for the internet like its
new rivals, Google, Facebook and Amazon. As it slipped, the company
began having second thoughts about the price of unbending loyalty to its
This excerpt from a 2006 IBM Business Consulting Services paper titled
=E2=80=9CThe Maturing Workforce=E2=80=9D refers to baby-boomer employees as=
and =E2=80=9Cold heads.=E2=80=9D Read the full report.
In a little-noticed paper issued in 2006 by the London office of one of
the company=E2=80=99s consulting arms, executives praised boomers=E2=80=99 =
but described them as =E2=80=9Cgray hairs=E2=80=9D and =E2=80=9Cold heads.=
=E2=80=9D While recognizing
that older workers were important to high-tech employers such as IBM, it
concluded that =E2=80=9Csuccessor generations =E2=80=A6 are generally much =
innovative and receptive to technology than baby boomers.=E2=80=9D
The paper was subsequently cited in an age discrimination lawsuit in
U.S. District Court in Pennsylvania. Before the complaint was settled
last year, the plaintiffs alleged in a filing: =E2=80=9CIBM=E2=80=99s Boome=
r employees =E2=80=94
being labeled by IBM=E2=80=99s own research as uncollaborative, skeptical of
leadership, technologically unsophisticated, less innovative and
generally out of touch with IBM=E2=80=99s brand, customers and objectives =
shown the door in droves.=E2=80=9D
By the time IBM=E2=80=99s current CEO, Virginia =E2=80=9CGinni=E2=80=9D Rom=
etty, took over in
2012, the company had shifted its personnel focus to millennials.
Rometty launched a major overhaul that aimed to make IBM a major player
in the emerging technologies of cloud services, big data analytics,
mobile, security and social media, or what came to be known inside as CAMS.
At the same time, she sought to sharply increase hiring of people born
=E2=80=9CCAMS are driven by Millennial Traits,=E2=80=9D declared a slide pr=
for an invitation-only IBM event in New York in December 2014. Not only
were millennials in sync with the new technologies, but they were also
attuned to the collaborative, consensus-driven modes of work these
technologies demanded, company researchers said they=E2=80=99d discovered.
Millennials =E2=80=9Care not likely to make decisions in isolation,=E2=80=
presentation said, but instead =E2=80=9Cdepend on analytic technologies to =
By contrast, people 50 or over are =E2=80=9Cmore dubious=E2=80=9D of analyt=
less stock in the advantages data offers,=E2=80=9D and are less =E2=80=9Cmo=
consult their colleagues or get their buy in =E2=80=A6 It=E2=80=99s Baby Bo=
omers who are
The message was clear. To succeed at the new technologies, the company
must, in the words of the presentation, =E2=80=9Cbecome one with the Millen=
mindset.=E2=80=9D Similar language found its way into a variety of IBM
presentations in subsequent years.
Even before the New York conference, IBM had begun a major effort to
recruit millennial employees. It launched a blog, =E2=80=9CThe Millennial
Experience,=E2=80=9D and a hashtag on Twitter, #IBMillennial.=E2=80=9D It b=
online and print advertising campaign primarily featuring young people.
It established a =E2=80=9CMillennial Corps,=E2=80=9D a network of more than=
IBMers whom Rometty and other top executives said they=E2=80=99d regularly
consult before making business decisions. And it sharply improved
benefits, like parental leave, especially important to younger employees.
Its initiatives won IBM plaudits from women=E2=80=99s groups; lesbian, gay,
bisexual and transgender organizations; human rights and disability
associations; indeed advocates for just about every class of people
protected under U.S. equal employment opportunity laws.
And the entire effort was guided by something that then-IBM brand
strategist Bill Grady told the 2014 conference: =E2=80=9CWhat=E2=80=99s goo=
Millennials is good for everyone.=E2=80=9D
As IBM trained its sights on younger workers, it also took steps to
change the way it dealt with those who=E2=80=99d spent many years on the jo=
embraced a legal strategy that made it much easier for the company to
dismiss older workers, and to do so in ways that minimized legal
consequences and largely avoided public attention.
Until 2014, IBM had provided two lists to workers getting laid off. One
showed the positions and ages, but not the names, of all the people laid
off from their business units at the same time. The other showed the
positions and ages of all those staying on. For example, Madfis, the
digital marketing strategist, got a list when she was let go in July 2013.
Such lists are common in corporate layoffs, thanks to a disclosure
requirement added to the ADEA in 1990. The reason for the new rule was
that virtually all employers had begun making severance pay and other
parting benefits contingent on a laid-off worker signing away the right
to sue the company. Congress wanted to make sure that before employees
signed such waivers they understood enough to make =E2=80=9Cknowing and
voluntary=E2=80=9D decisions about whether they might have been targeted be=
of their age.
IBM complied with the disclosure requirement for more than two decades.
As a result, even when the company stopped disclosing its U.S.
employment totals =E2=80=94 and thus its job cuts =E2=80=94 the numbers sti=
known as employees collected and tallied the number of layoffs from
lists provided to workers by various company units.
One Departure, Two Letters
Just a few months after receiving a layoff notice, the same employee
received a congratulatory letter about retiring.
So after it ran into political flak for its workforce reductions, IBM
decided to stop giving out the lists. When Diane Moos, 62, of Long
Beach, California, lost her job as a systems security specialist in May
2016, she had no way of knowing how many people had been laid off with
her, or their ages.
IBM spokesman Doug Shelton said at the time the company was acting out
of concern for its workers who had complained the disclosures =E2=80=9Cinfr=
on employee privacy=E2=80=9D =E2=80=94 even though the lists contained no n=
How did IBM get around the legal requirement for the disclosures? With a
move that even critics acknowledge is ingenious.
The company=E2=80=99s pre-2014 layoff documents required employees receiving
severance to waive all bias claims based on =E2=80=9Crace, national origin,
ancestry, color, creed, religion, sex, sexual orientation, pregnancy,
marital status, age =E2=80=A6 disability, medical condition, or veteran sta=
The new documents deleted =E2=80=9Cage=E2=80=9D from the waiver list. In fa=
specifically said employees were not waiving their right when it came to
age and could pursue age discrimination cases against the company.
But, the new documents added, employees had to waive the right to take
their age cases to court. Instead, they had to pursue them through
private arbitration. What=E2=80=99s more, they had to keep them confidentia=
pursue them alone. They couldn=E2=80=99t join with other workers to make a =
With the new documents in place, IBM was no longer asking laid-off
workers to sign away their right to complain about age bias so, the
company=E2=80=99s lawyers told the EEOC, the disclosure requirement in the =
amendments to the age act no longer applied.
Critics say the company=E2=80=99s argument is hard to square with the statu=
=E2=80=9CYou have a law that says older workers being laid off need this
information and employers are obligated to provide it. You have a
company that=E2=80=99s not providing it,=E2=80=9D said David Lopez, the for=
counsel for the EEOC. =E2=80=9CHow can this not be undercutting the intent =
In their relationships with both workers and customers, American
corporations are making increasingly heavy use of arbitration,
contending the process is fair and saves all parties time and legal
costs. The Supreme Court has repeatedly expanded the right of companies
to require that disputes be settled by arbitrators rather than judges.
When it comes to employment claims, studies have found that arbitrators
overwhelmingly favor employers. Research by Cornell University law and
labor relations specialist Alexander Colvin found that workers win only
19 percent of the time when their cases are arbitrated. By contrast,
they win 36 percent of the time when they go to federal court, and 57
percent in state courts. Average payouts when an employee wins follow a
Given those odds, and having signed away their rights to go to court,
some laid-off IBM workers have chosen the one independent forum
companies can=E2=80=99t deny them: the U.S. Equal Employment Opportunity
Commission. That=E2=80=99s where Moos, the Long Beach systems security
specialist, and several of her colleagues, turned for help when they
were laid off. In their complaints to the agency, they said they=E2=80=99d
suffered age discrimination because of the company=E2=80=99s effort to
=E2=80=9Cdrastically change the IBM employee age mix =E2=80=A6 to be seen a=
s a startup.=E2=80=9D
In its formal reply to the EEOC, IBM said that age couldn=E2=80=99t have be=
factor in their dismissals. Among the reasons it cited: The managers who
decided on the layoffs were in their 40s and therefore older too.
Tilting the Table
Whether IBM is staying within U.S. age laws as it cuts from and adds to
its workforce turns largely on how and why the company chooses
individuals to be eliminated. While executives say they never target
older workers, internal company documents and interviews suggest otherwise.
Consider, for example, a planning presentation that former IBM
executives said was drafted by heads of a business unit carved out of
IBM=E2=80=99s once-giant software group and charged with pursuing the =E2=
cloud, portion of the company=E2=80=99s CAMS strategy.
The presentation laid out plans for substantially altering the unit=E2=80=
workforce. It was shown to company leaders including Diane Gherson, the
senior vice president for human resources, and James Kavanaugh, recently
elevated to chief financial officer. Its language was couched in the
argot of =E2=80=9Cresources,=E2=80=9D IBM=E2=80=99s term for employees, and=
shorthand for early professionals or recent college graduates.
Among the goals: =E2=80=9CShift headcount mix towards greater % of Early
Among the means: =E2=80=9C[D]rive a more aggressive performance management
approach to enable us to hire and replace where needed, and fund an
influx of EPs to correct seniority mix.=E2=80=9D
Among the expected results: =E2=80=9C[A] significant reduction in our workf=
of 2,500 resources.=E2=80=9D
A slide from a similar presentation prepared last spring for the same
leaders called for =E2=80=9Cre-profiling current talent=E2=80=9D to =E2=80=
=9Ccreate room for new
talent.=E2=80=9D Presentations for 2015 and 2016 for the 50,000-employee
software group also included plans for =E2=80=9Caggressive performance
management=E2=80=9D and emphasized the need to =E2=80=9Cmaintain steady att=
IBM declined to answer questions about whether either presentation was
turned into company policy. The description of the planned moves matches
what hundreds of older ex-employees told ProPublica they believe
happened to them: They were ousted because of their age. The company
used their exits to hire replacements, many of them young; to ship their
work overseas; or to cut its overall headcount.
Ed Alpern, now 65, of Austin, started his 39-year run with IBM as a
Selectric typewriter repairman. He ended as a project manager in October
of 2016 when, he said, his manager told him he could either leave with
severance and other parting benefits or be given a bad job review =E2=80=94
something he said he=E2=80=99d never previously received =E2=80=94 and risk=
Albert Poggi, now 70, was a three-decade IBM veteran and ran the
company=E2=80=99s Palisades, New York, technical center where clients can t=
new products. When notified in November of 2016 he was losing his job to
layoff, he asked his bosses why, given what he said was a history of
high job ratings. =E2=80=9CThey told me,=E2=80=9D he said, =E2=80=9Cthey ne=
eded to fill it with
The presentations from the software group, as well as the stories of
ex-employees like Alpern and Poggi, square with internal documents from
two other major IBM business units. The documents for all three cover
some or all of the years from 2013 through the beginning of 2018 and
deal with job assessments, hiring, firing and layoffs.
The documents detail practices that appear at odds with how IBM says it
treats its employees. In many instances, the practices in effect, if not
intent, tilt against the company=E2=80=99s older U.S. workers.
For example, IBM spokespeople and lawyers have said the company never
considers a worker=E2=80=99s age in making decisions about layoffs or firin=
But one 2014 document reviewed by ProPublica includes dates of birth. An
ex-IBM employee familiar with the process said executives from one
business unit used it to decide about layoffs or other job changes for
nearly a thousand workers, almost two-thirds of them over 50.
Documents from subsequent years show that young workers are protected
from cuts for at least a limited period of time. A 2016 slide
presentation prepared by the company=E2=80=99s global technology services u=
titled =E2=80=9CU.S. Resource Action Process=E2=80=9D and used to guide man=
layoff procedures, includes bullets for categories considered
=E2=80=9Cineligible=E2=80=9D for layoff. Among them: =E2=80=9Cearly profess=
ional hires,=E2=80=9D meaning
recent college graduates.
This slide, from an invitation-only IBM conference in New York in
December 2014, suggests that the company=E2=80=99s future success in market=
emerging technologies depended on how well it understood and embraced
the generation born after 1980.
In responding to age-discrimination complaints that ex-employees file
with the EEOC, lawyers for IBM say that front-line managers make all
decisions about who gets laid off, and that their decisions are based
strictly on skills and job performance, not age.
But ProPublica reviewed spreadsheets that indicate front-line managers
hardly acted alone in making layoff calls. Former IBM managers said the
spreadsheets were prepared for upper-level executives and kept
continuously updated. They list hundreds of employees together with
codes like =E2=80=9Clift and shift,=E2=80=9D indicating that their jobs wer=
e to be
lifted from them and shifted overseas, and details such as whether IBM=E2=
clients had approved the change.
An examination of several of the spreadsheets suggests that, whatever
the criteria for assembling them, the resulting list of those marked for
layoff was skewed toward older workers. A 2016 spreadsheet listed more
than 400 full-time U.S. employees under the heading =E2=80=9CREBAL,=E2=80=
refers to =E2=80=9Crebalancing,=E2=80=9D the process that can lead to layin=
g off workers
and either replacing them or shifting the jobs overseas. Using the job
search site LinkedIn, ProPublica was able to locate about 100 of these
employees and then obtain their ages through public records. Ninety
percent of those found were 40 or older. Seventy percent were over 50.
IBM frequently cites its history of encouraging diversity in its
responses to EEOC complaints about age discrimination. =E2=80=9CIBM has bee=
leader in taking positive actions to ensure its business opportunities
are made available to individuals without regard to age, race, color,
gender, sexual orientation and other categories,=E2=80=9D a lawyer for the
company wrote in a May 2017 letter. =E2=80=9CThis policy of non-discriminat=
is reflected in all IBM business activities.=E2=80=9D
But ProPublica found at least one company business unit using a point
system that disadvantaged older workers. The system awarded points for
attributes valued by the company. The more points a person garnered,
according to the former employee, the more protected she or he was from
layoff or other negative job change; the fewer points, the more vulnerable.
The arrangement appears on its face to favor younger newcomers over
older veterans. Employees were awarded points for being relatively new
at a job level or in a particular role. Those who worked for IBM for
fewer years got more points than those who=E2=80=99d been there a long time.
The ex-employee familiar with the process said a 2014 spreadsheet from
that business unit, labeled =E2=80=9CIBM Confidential,=E2=80=9D was assembl=
ed to assess
the job prospects of more than 600 high-level employees, two-thirds of
them from the U.S. It included employees=E2=80=99 years of service with IBM,
which the former employee said was used internally as a proxy for age.
Also listed was an assessment by their bosses of their career
trajectories as measured by the highest job level they were likely to
attain if they remained at the company, as well as their point scores.
The tilt against older workers is evident when employees=E2=80=99 years of
service are compared with their point scores. Those with no points and
therefore most vulnerable to layoff had worked at IBM an average of more
than 30 years; those with a high number of points averaged half that.
Perhaps even more striking is the comparison between employees=E2=80=99 ser=
years and point scores on the one hand and their superiors=E2=80=99 assessm=
of their career trajectories on the other.
Along with many American employers, IBM has argued it needs to shed
older workers because they=E2=80=99re no longer at the top of their games or
lack =E2=80=9Ccontemporary=E2=80=9D skills.
But among those sized up in the confidential spreadsheet, fully 80
percent of older employees =E2=80=94 those with the most years of service b=
points and therefore most vulnerable to layoff =E2=80=94 were rated by supe=
as good enough to stay at their current job levels or be promoted. By
contrast, only a small percentage of younger employees with a high
number of points were similarly rated.
=E2=80=9CNo major company would use tools to conduct a layoff where a
disproportionate share of those let go were African Americans or women,=E2=
said Cathy Ventrell-Monsees, senior attorney adviser with the EEOC and
former director of age litigation for the senior lobbying giant AARP.
=E2=80=9CThere=E2=80=99s no difference if the tools result in a disproporti=
being older workers.=E2=80=9D
In addition to the point system that disadvantaged older workers in
layoffs, other documents suggest that IBM has made increasingly
aggressive use of its job-rating machinery to pave the way for
straight-out firings, or what the company calls =E2=80=9Cmanagement-initiat=
separations.=E2=80=9D Internal documents suggest that older workers were
Like in many companies, IBM employees sit down with their managers at
the start of each year and set goals for themselves. IBM graded on a
scale of 1 to 4, with 1 being top-ranked.
Eroding Protection Under the Law
Older Americans who face discrimination on the job can=E2=80=99t rely on the
courts as much as earlier generations did. Read more.
Those rated as 3 or 4 were given formal short-term goals known as
personal improvement plans, or PIPs. Historically many managers were
lenient, especially toward those with 3s whose ratings had dropped
because of forces beyond their control, such as a weakness in the
overall economy, ex-employees said.
But within the past couple of years, IBM appears to have decided the
time for leniency was over. For example, a software group planning
document for 2015 said that, over and above layoffs, the unit should
seek to fire about 3,000 of the unit=E2=80=99s 50,000-plus workers.
To make such deep cuts, the document said, executives should strike an
=E2=80=9Caggressive performance management posture.=E2=80=9D They needed to=
share of employees given low 3 and 4 ratings to at least 6.6 percent of
the division=E2=80=99s workforce. And because layoffs cost the company more=
outright dismissals or resignations, the document said, executives
should make sure that more than 80 percent of those with low ratings get
fired or forced to quit.
Finally, the 2015 document said the division should work =E2=80=9Cto attrac=
best and brightest early professionals=E2=80=9D to replace up to two-thirds=
those sent packing. A more recent planning document =E2=80=94 the presentat=
to top executives Gherson and Kavanaugh for a business unit carved out
of the software group =E2=80=94 recommended using similar techniques to fre=
money by cutting current employees to fund an =E2=80=9Cinflux=E2=80=9D of y=
In a recent interview, Poggi said he was resigned to being laid off.
=E2=80=9CEverybody at IBM has a bullet with their name on it,=E2=80=9D he s=
wasn=E2=80=99t nearly as accepting of being threatened with a poor job rati=
and then fired.
Alpern had a particular reason for wanting to stay on at IBM, at least
until the end of last year. His younger son, Justin, then a high school
senior, had been named a National Merit semifinalist. Alpern wanted him
to be able to apply for one of the company=E2=80=99s Watson scholarships. B=
IBM had recently narrowed eligibility so only the children of current
employees could apply, not also retirees as it was until 2014.
Alpern had to make it through December for his son to be eligible.
But in August, he said, his manager ordered him to retire. He sought to
buy time by appealing to superiors. But he said the manager=E2=80=99s respo=
was to threaten him with a bad job review that, he was told, would land
him on a PIP, where his work would be scrutinized weekly. If he failed
to hit his targets =E2=80=94 and his managers would be the judges of that =
be fired and lose his benefits.
Alpern couldn=E2=80=99t risk it; he retired on Oct. 31. His son, now a fres=
on the dean=E2=80=99s list at Texas A&M University, didn=E2=80=99t get to a=
=E2=80=9CI can think of only a couple regrets or disappointments over my 39
years at IBM,=E2=80=9D=E2=80=9D he said, =E2=80=9Cand that=E2=80=99s one of=
=E2=80=99Congratulations on Your Retirement!=E2=80=99
Like any company in the U.S., IBM faces few legal constraints to
reducing the size of its workforce. And with its no-disclosure strategy,
it eliminated one of the last regular sources of information about its
employment practices and the changing size of its American workforce.
But there remained the question of whether recent cutbacks were big
enough to trigger state and federal requirements for disclosure of
layoffs. And internal documents, such as a slide in a 2016 presentation
titled =E2=80=9CTransforming to Next Generation Digital Talent,=E2=80=9D su=
executives worried that =E2=80=9Cwinning the talent war=E2=80=9D for new yo=
required IBM to improve the =E2=80=9Cattractiveness of (its) culture and wo=
environment,=E2=80=9D a tall order in the face of layoffs and firings.
So the company apparently has sought to put a softer face on its
cutbacks by recasting many as voluntary rather than the result of
decisions by the firm. One way it has done this is by converting many
layoffs to retirements.
Some ex-employees told ProPublica that, faced with a layoff notice, they
were just as happy to retire. Others said they felt forced to accept a
retirement package and leave. Several actively objected to the company
treating their ouster as a retirement. The company nevertheless
processed their exits as such.
Project manager Ed Alpern=E2=80=99s departure was treated in company paperw=
as a voluntary retirement. He didn=E2=80=99t see it that way, because the
alternative he said he was offered was being fired outright.
Lorilynn King, a 55-year-old IT specialist who worked from her home in
Loveland, Colorado, had been with IBM almost as long as Alpern by May
2016 when her manager called to tell her the company was conducting a
layoff and her name was on the list.
King said the manager told her to report to a meeting in Building 1 on
IBM=E2=80=99s Boulder campus the following day. There, she said, she found
herself in a group of other older employees being told by an IBM human
resources representative that they=E2=80=99d all be retiring. =E2=80=9CI ha=
intention of retiring,=E2=80=9D she remembers responding. =E2=80=9CI=E2=80=
=99m being laid off.=E2=80=9D
ProPublica has collected documents from 15 ex-IBM employees who got
layoff notices followed by a retirement package and has talked with many
others who said they received similar paperwork. Critics say the
sequence doesn=E2=80=99t square well with the law.
=E2=80=9CThis country has banned mandatory retirement,=E2=80=9D said Seiner=
University of South Carolina law professor and former EEOC appellate
lawyer. =E2=80=9CThe law says taking a retirement package has to be volunta=
If you tell somebody =E2=80=98Retire or we=E2=80=99ll lay you off or fire y=
Until recently, the company=E2=80=99s retirement paperwork included a letter
from Rometty, the CEO, that read, in part, =E2=80=9CI wanted to take this
opportunity to wish you well on your retirement =E2=80=A6 While you may be
retiring to embark on the next phase of your personal journey, you will
always remain a valued and appreciated member of the IBM family.=E2=80=9D
Ex-employees said IBM stopped sending the letter last year.
IBM has also embraced another practice that leads workers, especially
older ones, to quit on what appears to be a voluntary basis. It
substantially reversed its pioneering support for telecommuting, telling
people who=E2=80=99ve been working from home for years to begin reporting to
certain, often distant, offices. Their other choice: Resign.
David Harlan had worked as an IBM marketing strategist from his home in
Moscow, Idaho, for 15 years when a manager told him last year of orders
to reduce the performance ratings of everybody at his pay grade. Then in
February last year, when he was 50, came an internal video from IBM=E2=80=
new senior vice president, Michelle Peluso, which announced plans to
improve the work of marketing employees by ordering them to work
=E2=80=9Cshoulder to shoulder.=E2=80=9D Those who wanted to stay on would n=
=E2=80=9Cco-locate=E2=80=9D to offices in one of six cities.
Early last year, Harlan received an email congratulating him on =E2=80=9Cthe
opportunity to join your team in Raleigh, North Carolina.=E2=80=9D He had 30
days to decide on the 2,600-mile move. He resigned in June.
David Harlan worked for IBM for 15 years from his home in Moscow, Idaho,
where he also runs a drama company. Early last year, IBM offered him a
choice: Move 2,600 miles to Raleigh-Durham to begin working at an
office, or resign. He left in June. (Rajah Bose for ProPublica)
After the Peluso video was leaked to the press, an IBM spokeswoman told
the Wall Street Journal that the =E2=80=9Cvast majority=E2=80=9D of people =
change locations and begin reporting to offices did so. IBM Vice
President Ed Barbini said in an initial email exchange with ProPublica
in July that the new policy affected only about 2,000 U.S. employees and
that =E2=80=9Cmost=E2=80=9D of those had agreed to move.
But employees across a wide range of company operations, from the
systems and technology group to analytics, told ProPublica they=E2=80=99ve =
been ordered to co-locate in recent years. Many IBMers with long service
said that they quit rather than sell their homes, pull children from
school and desert aging parents. IBM declined to say how many older
employees were swept up in the co-location initiative.
=E2=80=9CThey basically knew older employees weren=E2=80=99t going to do it=
Eileen Maroney, a 63-year-old IBM product manager from Aiken, South
Carolina, who, like Harlan, was ordered to move to Raleigh or resign.
=E2=80=9COlder people aren=E2=80=99t going to move. It just doesn=E2=80=99t=
make any sense.=E2=80=9D
Like Harlan, Maroney left IBM last June.
Having people quit rather than being laid off may help IBM avoid
disclosing how much it is shrinking its U.S. workforce and where the
reductions are occurring.
Under the federal WARN Act, adopted in the wake of huge job cuts and
factory shutdowns during the 1980s, companies laying off 50 or more
employees who constitute at least one-third of an employer=E2=80=99s workfo=
at a site have to give advance notice of layoffs to the workers, public
agencies and local elected officials.
Similar laws in some states where IBM has a substantial presence are
even stricter. California, for example, requires advanced notice for
layoffs of 50 or more employees, no matter what the share of the
workforce. New York requires notice for 25 employees who make up a third.
Because the laws were drafted to deal with abrupt job cuts at individual
plants, they can miss reductions that occur over long periods among a
workforce like IBM=E2=80=99s that was, at least until recently, widely disp=
because of the company=E2=80=99s work-from-home policy.
IBM=E2=80=99s training sessions to prepare managers for layoffs suggest the
company was aware of WARN thresholds, especially in states with strict
notification laws such as California. A 2016 document entitled =E2=80=9CEmp=
Separation Processing=E2=80=9D and labeled =E2=80=9CIBM Confidential=E2=80=
=9D cautions managers
about the =E2=80=9Cunique steps that must be taken when processing separati=
for California employees.=E2=80=9D
A ProPublica review of five years of WARN disclosures for a dozen states
where the company had large facilities that shed workers found no
disclosures in nine. In the other three, the company alerted authorities
of just under 1,000 job cuts =E2=80=94 380 in California, 369 in New York a=
200 in Minnesota. IBM=E2=80=99s reported figures are well below the actual
number of jobs the company eliminated in these states, where in recent
years it has shuttered, sold off or leveled plants that once employed
By contrast, other employers in the same 12 states reported layoffs last
year alone totaling 215,000 people. They ranged from giant Walmart to
Ostrom=E2=80=99s Mushroom Farms in Washington state.
Whether IBM operated within the rules of the WARN act, which are
notoriously fungible, could not be determined because the company
declined to provide ProPublica with details on its layoffs.
A Second Act, But Poorer
With 35 years at IBM under his belt, Ed Miyoshi had plenty of experience
being pushed to take buyouts, or early retirement packages, and refusing
them. But he hadn=E2=80=99t expected to be pushed last fall.
Miyoshi, of Hopewell Junction, New York, had some years earlier launched
a pilot program to improve IBM=E2=80=99s technical troubleshooting. With the
blessing of an IBM vice president, he was busily interviewing applicants
in India and Brazil to staff teams to roll the program out to clients
The interviews may have been why IBM mistakenly assumed Miyoshi was a
manager, and so emailed him to eliminate the one U.S.-based employee
still left in his group.
=E2=80=9CThat was me,=E2=80=9D Miyoshi realized.
In his sign-off email to colleagues shortly before Christmas 2016,
Miyoshi, then 57, wrote: =E2=80=9CI am too young and too poor to stop worki=
yet, so while this is good-bye to my IBM career, I fully expect to cross
paths with some of you very near in the future.=E2=80=9D
He did, and perhaps sooner than his colleagues had expected; he started
as a subcontractor to IBM about two weeks later, on Jan. 3.
Miyoshi is an example of older workers who=E2=80=99ve lost their regular IBM
jobs and been brought back as contractors. Some of them =E2=80=94 not Miyos=
became contract workers after IBM told them their skills were out of
date and no longer needed.
Employment law experts said that hiring ex-employees as contractors can
be legally dicey. It raises the possibility that the layoff of the
employee was not for the stated reason but perhaps because they were
targeted for their age, race or gender.
IBM appears to recognize the problem. Ex-employees say the company has
repeatedly told managers =E2=80=94 most recently earlier this year =E2=80=
=94 not to
contract with former employees or sign on with third-party contracting
firms staffed by ex-IBMers. But ProPublica turned up dozens of instances
where the company did just that.
Only two weeks after IBM laid him off in December 2016, Ed Miyoshi of
Hopewell Junction, New York, started work as a subcontractor to the
company. But he took a $20,000-a-year pay cut. =E2=80=9CI=E2=80=99m not a m=
so that=E2=80=99s a lot of money to me,=E2=80=9D he says. (Demetrius Freema=
n for ProPublica)
Responding to a question in a confidential questionnaire from
ProPublica, one 35-year company veteran from New York said he knew
exactly what happened to the job he left behind when he was laid off.
=E2=80=9CI=E2=80=99M STILL DOING IT. I got a new gig eight days after depar=
for a third-party company under contract to IBM doing the exact same thing.=
In many cases, of course, ex-employees are happy to have another job,
even if it is connected with the company that laid them off.
Henry, the Columbus-based sales and technical specialist who=E2=80=99d been=
IBM=E2=80=99s =E2=80=9Cresiliency services=E2=80=9D unit, discovered that h=
e=E2=80=99d lost his regular
IBM job because the company had purchased an Indian firm that provided
the same services. But after a year out of work, he wasn=E2=80=99t going to=
down the offer of a temporary position as a subcontractor for IBM,
relocating data centers. It got money flowing back into his household
and got him back where he liked to be, on the road traveling for business.
The compensation most ex-IBM employees make as contractors isn=E2=80=99t
comparable. While Henry said he collected the same dollar amount, it
didn=E2=80=99t include health insurance, which cost him $1,325 a month. Miy=
said his paycheck is 20 percent less than what he made as an IBM regular.
=E2=80=9CI took an over $20,000 hit by becoming a contractor. I=E2=80=99m n=
millionaire, so that=E2=80=99s a lot of money to me,=E2=80=9D Miyoshi said.
And lower pay isn=E2=80=99t the only problem ex-IBM employees-now-subcontra=
face. This year, Miyoshi=E2=80=99s payable hours have been cut by an extra =
=E2=80=9Cfurlough days.=E2=80=9D Internal documents show that IBM repeatedl=
subcontractors without pay, often for two, three or more weeks a
quarter. In some instances, the furloughs occur with little advance
notice and at financially difficult moments. In one document, for
example, it appears IBM managers, trying to cope with a cost overrun
spotted in mid-November, planned to dump dozens of subcontractors
through the end of the year, the middle of the holiday season.
Former IBM employees now on contract said the company controls costs by
notifying contractors in the midst of projects they have to take pay
cuts or lose the work. Miyoshi said that he originally started working
for his third-party contracting firm for 10 percent less than at IBM,
but ended up with an additional 10 percent cut in the middle of 2017,
when IBM notified the contractor it was slashing what it would pay.
For many ex-employees, there are few ways out. Henry, for example,
sought to improve his chances of landing a new full-time job by seeking
assistance to finish a college degree through a federal program designed
to retrain workers hurt by offshoring of jobs.
But when he contacted the Ohio state agency that administers the Trade
Adjustment Assistance, or TAA, program, which provides assistance to
workers who lose their jobs for trade-related reasons, he was told IBM
hadn=E2=80=99t submitted necessary paperwork. State officials said Henry co=
apply if he could find other IBM employees who were laid off with him,
information that the company doesn=E2=80=99t provide.
TAA is overseen by the Labor Department but is operated by states under
individual agreements with Washington, so the rules can vary from state
to state. But generally employers, unions, state agencies and groups of
employers can petition for training help and cash assistance. Labor
Department data compiled by the advocacy group Global Trade Watch shows
that employers apply in about 40 percent of cases. Some groups of IBM
workers have obtained retraining funds when they or their state have
applied, but records dating back to the early 1990s show IBM itself has
applied for and won taxpayer assistance only once, in 2008, for three
Chicago-area workers whose jobs were being moved to India.
Teasing New Jobs
As IBM eliminated thousands of jobs in 2016, David Carroll, a
52-year-old Austin software engineer, thought he was safe.
His job was in mobile development, the =E2=80=9CM=E2=80=9D in the company=
strategy. And if that didn=E2=80=99t protect him, he figured he was only fo=
months shy of qualifying for a program that gives employees who leave
within a year of their three-decade mark access to retiree medical
coverage and other benefits.
But the layoff notice Carroll received March 2 gave him three months =E2=80=
not four =E2=80=94 to come up with another job. Having been a manager, he s=
he knew the gantlet he=E2=80=99d have to run to land a new position inside =
Still, he went at it hard, applying for more than 50 IBM jobs, including
one for a job he=E2=80=99d successfully done only a few years earlier. For =
effort, he got one offer =E2=80=94 the week after he=E2=80=99d been forced =
to depart. He
got severance pay but lost access to what would have been more generous
Edward Kishkill, then 60, of Hillsdale, New Jersey, had made a similar
A senior systems engineer, Kishkill recognized the danger of layoffs,
but assumed he was immune because he was working in systems security,
the =E2=80=9CS=E2=80=9D in CAMS and another hot area at the company.
The precaution did him no more good than it had Carroll. Kishkill
received a layoff notice the same day, along with 17 of the 22 people on
his systems security team, including Diane Moos. The notice said that
Kishkill could look for other jobs internally. But if he hadn=E2=80=99t lan=
anything by the end of May, he was out.
With a daughter who was a senior in high school headed to Boston
University, he scrambled to apply, but came up dry. His last day was May
For many, the fruitless search for jobs within IBM is the last straw, a
final break with the values the company still says it embraces. Combined
with the company=E2=80=99s increasingly frequent request that departing
employees train their overseas replacements, it has left many people
bitter. Scores of ex-employees interviewed by ProPublica said that
managers with job openings told them they weren=E2=80=99t allowed to hire f=
layoff lists without getting prior, high-level clearance, something
that=E2=80=99s almost never given.
ProPublica reviewed documents that show that a substantial share of
recent IBM layoffs have involved what the company calls =E2=80=9Clift and
shift,=E2=80=9C lifting the work of specific U.S. employees and shifting it=
specific workers in countries such as India and Brazil. For example, a
document summarizing U.S. employment in part of the company=E2=80=99s global
technology services division for 2015 lists nearly a thousand people as
layoff candidates, with the jobs of almost half coded for lift and shift.
Ex-employees interviewed by ProPublica said the lift-and-shift process
required their extensive involvement. For example, shortly after being
notified she=E2=80=99d be laid off, Kishkill=E2=80=99s colleague, Moos, was=
told to help
prepare a =E2=80=9Cknowledge transfer=E2=80=9D document and begin a round o=
calls and email exchanges with two Indian IBM employees who=E2=80=99d be ta=
over her work. Moos said the interactions consumed much of her last
three months at IBM.
While IBM has managed to keep the scale and nature of its recent U.S.
employment cuts largely under the public=E2=80=99s radar, the company drew =
unwanted attention during the 2016 presidential campaign, when
then-candidate Donald Trump lambasted it for eliminating 500 jobs in
Minnesota, where the company has had a presence for a half century, and
shifting the work abroad.
The company also has caught flak =E2=80=94 in places like Buffalo, New York;
Dubuque, Iowa; Columbia, Missouri, and Baton Rouge, Louisiana =E2=80=94 for
promising jobs in return for state and local incentives, then failing to
deliver. In all, according to public officials in those and other
places, IBM promised to bring on 3,400 workers in exchange for as much
as $250 million in taxpayer financing but has hired only about half as many.
After Trump=E2=80=99s victory, Rometty, in a move at least partly aimed at
courting the president-elect, pledged to hire 25,000 new U.S. employees
by 2020. Spokesmen said the hiring would increase IBM=E2=80=99s U.S. employ=
total, although, given its continuing job cuts, the addition is unlikely
to approach the promised hiring total.
When The New York Times ran a story last fall saying IBM now has more
employees in India than the U.S., Barbini, the corporate spokesman,
rushed to declare, =E2=80=9CThe U.S. has always been and remains IBM=E2=80=
=99s center of
gravity.=E2=80=9D But his stream of accompanying tweets and graphics focuse=
much on the company=E2=80=99s record for racking up patents as hiring peopl=
IBM has long been aware of the damage its job cuts can do to people. In
a series of internal training documents to prepare managers for layoffs
in recent years, the company has included this warning: =E2=80=9CLoss of a =
often triggers a grief reaction similar to what occurs after a death.=E2=80=
Most, though not all, of the ex-IBM employees with whom ProPublica spoke
have weathered the loss and re-invented themselves.
Marjorie Madfis, the digital marketing strategist, couldn=E2=80=99t land an=
tech job after her 2013 layoff, so she headed in a different direction.
She started a nonprofit called Yes She Can Inc. that provides job skills
development for young autistic women, including her 21-year-old daughter.
After almost two years of looking and desperate for useful work, Brian
Paulson, the widely traveled IBM senior manager, applied for and landed
a position as a part-time rural letter carrier in Plano, Texas. He now
works as a contract project manager for a Las Vegas gaming and lottery firm.
Ed Alpern, who started at IBM as a Selectric typewriter repairman,
watched his son go on to become a National Merit Scholar at Texas A&M
University, but not a Watson scholarship recipient.
Lori King, the IT specialist and 33-year IBM veteran who=E2=80=99s now 56, =
in a parting shot. She added an addendum to the retirement papers the
firm gave her that read in part: =E2=80=9CIt was never my plan to retire ea=
than at least age 60 and I am not committing to retire. I have been
informed that I am impacted by a resource action effective on
2016-08-22, which is my last day at IBM, but I am NOT retiring.=E2=80=9D
King has aced more than a year of government-funded coding boot camps
and university computer courses, but has yet to land a new job.
David Harlan still lives in Moscow, Idaho, after refusing IBM=E2=80=99s
=E2=80=9Cinvitation=E2=80=9D to move to North Carolina, and is artistic dir=
ector of the
Moscow Art Theatre (Too).
Ed Miyoshi is still a technical troubleshooter working as a
subcontractor for IBM.
Ed Kishkill, the senior systems engineer, works part time at a local
tech startup, but pays his bills as an associate at a suburban New
Jersey Staples store.
This year, Paul Henry was back on the road, working as an IBM
subcontractor in Detroit, about 200 miles from where he lived in
Columbus. On Jan. 8, he put in a 14-hour day and said he planned to call
home before turning in. He died in his sleep.
Correction, March 24, 2018: Eileen Maroney lives in Aiken, South
Carolina. The name of her city was incorrect in the original version of
Do you have information about age discrimination at IBM?
Let us know.
Peter Gosselin joined ProPublica as a contributing reporter in January
2017 to cover aging. He has covered the U.S. and global economies for,
among others, the Los Angeles Times and The Boston Globe, focusing on
the lived experiences of working people. He is the author of =E2=80=9CHigh =
The Precarious Financial Lives of American Families.=E2=80=9D
Ariana Tobin is an engagement reporter at ProPublica, where she works to
cultivate communities to inform our coverage. She was previously at The
Guardian and WNYC. Ariana has also worked as digital producer for APM=E2=80=
Marketplace and contributed to outlets including The New Republic, On
Being, the St. Louis Beacon and Bustle.
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