Author: Site Staff

After weeks of delay, a Senate committee quickly approved the nomination of Rep. Hilda Solis, D-California, as the next secretary of labor on Wednesday, February 11.

The Senate Health, Education, Labor and Pensions Committee gathered for a two-minute meeting off the Senate floor during a break in other business to OK Solis by a voice vote, according to the Associated Press. Two Republicans on the panel voted against Solis.

Her nomination now heads for a vote by the full Senate, which could come this week.

Solis had her hearing on January 9. Since then, the process has been stalled. Last week, a committee vote was abruptly canceled when it was revealed that Solis’ husband had just paid $6,400 in tax liens against his auto repair business the previous day.

Tax problems dogged Treasury Secretary Timothy Geithner before he was confirmed, and they sank the nomination of former Sen. Tom Daschle, D-South Dakota, as health and human services secretary.

Solis faced other challenges from Republicans. After her hearing, they submitted written questions regarding her position on a bill that would make it easier for workers to form unions and her service as the unpaid treasurer of American Rights at Work, an advocacy organization. The GOP said that she failed to address those and other issues in her testimony.

Sen. Edward Kennedy, D-Massachusetts and chairman of the HELP Committee, said Solis, the daughter of immigrants who also were union members, would respond to the challenges facing the U.S. workforce during the recession.

“Hilda Solis comes from a working family herself, so she understands how the troubled economy is hurting average Americans,” Kennedy said in a statement. “American workers deserve to have her voice and her leadership as their secretary of labor, and I’m pleased that our committee approved her.”

Once Solis is put before the whole Senate, any member could prevent a vote by placing a “hold” on it. Her nomination would almost certainly prevail in a roll-call vote. Democrats hold a 58-41 majority, with a disputed Minnesota race still pending.

A White House spokesman said Wednesday that he anticipates Senate approval.

“I think that process will hopefully conclude quickly,” said Robert Gibbs, White House press secretary. “The president has confidence in her ability to continue the department’s mission.”

One of the stumbling blocks for Solis centers on a union measure, the Employee Free Choice Act. It would allow a union to form when a majority of workers sign authorization cards and prevent companies from requiring a secret-ballot election supervised by the National Labor Relations Board.

Organized labor’s top legislative priority, the legislation is fiercely opposed by Republicans and business interests. Solis’ sentiment is no mystery. She is a co-sponsor of the bill, as was President Barack Obama when he was in the Senate.

Unions want Congress to act quickly on the measure, which could sharply increase the number of workers covered by collective bargaining units. Currently, about 7 percent of private-sector employees and 12 percent of the overall workforce belong to a union.

—Mark Schoeff Jr.

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Rising health care costs “represent the single greatest challenge to balancing the federal budget” in the long term, Congressional Budget Office director Douglas Elmendorf has told the Senate Budget Committee.

In written testimony, Elmendorf said federal health care spending would likely climb—even with cost-control efforts—under proposals to substantially expand coverage.

Costs vary by the number and size of premium subsidies considered under some policy proposals. Federal spending accounts for one-third of annual per capita health expenses, which will climb to roughly $13,000 by 2017 from $8,300 this year, he said.

Household income is expected to continue to lag behind health care inflation, pushing the number of uninsured to 54 million in a decade, an estimate that does not reflect the jobs and coverage lost in the recession.

Filed by Melanie Evans of Modern Healthcare, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Information technology company Unisys Corp. has suspended its 401(k) plan match.

Before the suspension, which began on January 1, Unisys matched 100 percent of employees’ salary deferrals, up to 6 percent of pay. In 2007, Blue Bell, Pennsylvania-based Unisys froze its defined-benefit pension plan.

Company officials say the suspension of the 401(k) plan match is part of a broader effort to reduce costs.

In 2008, Unisys, which has about 12,500 U.S. employees, reported a net loss of $130.1 million, up sharply from a net loss of $79.1 million in 2007, while revenue slipped 7.4 percent to $5.23 billion. The company has reported a net loss in four consecutive years.

(To read about other companies that have suspended their 401(k) matches and related stories, click here.)

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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In an effort to build on recent agreements in New York state that bar several insurers from using flawed data in determining how doctors and patients will be reimbursed for out-of-network care, the American Medical Association filed two federal suits in New Jersey on February 9.

In class-action suits filed in federal court in Newark, New Jersey, against Aetna Health and Cigna Corp., the AMA was joined by the medical societies of New York, New Jersey, Connecticut, North Carolina and Texas.

Both suits also seek restitution for what the medical groups charge has been the insurers’ routine use of data that underestimated regional “usual, customary and reasonable” medical charges.

That data was generated by Ingenix, a subsidiary of United Health Group.

Typically, health plans pay about 80 percent of such out-of-network charges when a doctor is not in a plan’s network. By underestimating those costs, the plaintiffs charge, the insurers shortchanged both patients and doctors.

Dollar figures were not named in the suits, but the president of the Medical Society of the State of New York, Dr. Michael Rosenberg, has said damages for New York physicians alone should total hundreds of millions of dollars.

New York state Attorney General Andrew Cuomo earlier this year reached settlements with Aetna and other companies in which they agreed to stop using the Ingenix data and to pay a total of $70 million toward setting up a new nonprofit entity to replace Ingenix. That entity has yet to be named, but Cuomo said it will be based at a New York university.

“The attorney general got rid of Ingenix, but so far he hasn’t really touched the retribution issue,” said a spokeswoman for the medical society.

At the AMA, a source familiar with the litigation calls the new litigation “a belt and suspenders action” meant to guarantee that should other plans try to continue using Ingenix data in other states by claiming that the Cuomo settlement applies only in New York, they will not be able to do so.

A spokeswoman for Aetna declined to comment on the new suits, but added: “We’re disappointed the medical community has chosen to litigate on top of already pending consumer litigation on the topic. If everyone believes that are entitled to additional payments, the health care system as a whole will bear the burden.”

Filed by Gale Scott of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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A Merrill Lynch analysis of the nonfarm payroll numbers contains some good, some bad, and some ugly news.

The analysis, released on Friday, February 6, by Merrill North American economist David Rosenberg indicates that the actual unemployment rate, while normally higher than the official one by the Bureau of Labor Statistics, hit a level not seen since at least 1994.

First the good news: Inflation is not much of a threat as a result.

Now for the bad news: As Rosenberg explained, what the official unemployment rate misses is the vast degree of ‘underemployment’ as companies cut back on the hours that people who are still employed are working. Those hours have declined 1.2 percent in the past 12 months.

The BLS still counts people as employed if they are working part time, but the number of workers who have been forced into that status because of slack economic conditions has ballooned nearly 70 percent in the past year, according to the study. Rosenberg said was that was a record growth rate for the 15-year period he has studied.

And here’s the ugly part: When that amount of slack in employment is taken into account, Rosenberg found that the ‘real’ unemployment rate has actually climbed to 13.9 percent, an all-time high for the period he studied. And that figure is up from 13.5 percent in December and 11.2 percent a year ago.

As a result, the economist said worries that the federal deficit will lead to inflation anytime soon are misplaced.

“With this amount of excess capacity in the jobs market, and keeping in mind that the inflation process is dominated by the direction of labor costs, it is tough to believe that inflation at this point is anything but a far-in-the-distance prospect,” Rosenberg wrote. “A present-day reality it is not.”

Filed by Ronald Fink of Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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House and Senate economic stimulus measures attempt to create jobs through the old-fashioned Keynesian pump priming of massive government spending.

But Congress and the Obama administration hope that the resulting employment goes beyond traditional infrastructure work and includes a significant number of so-called “green jobs” that would both expand payrolls and protect the environment.

The two chambers are ready to begin negotiations to combine an $819 billion House stimulus package, which was approved last week, and an $838 billion measure the Senate passed Tuesday, February 10, by a 61-37 vote.

The bills created a partisan rift.

The House version passed with no Republican support, and the Senate bill garnered only three GOP votes. Most Republicans asserted that the measures would not revive the economy but were rather just vehicles for government projects.

Now a House-Senate conference will try to reconcile the bills quickly. There are wide differences in some areas, but not when it comes to spending on renewable energy. The House invests about $41 billion, while the Senate allocates about $39 billion.

Experts aren’t certain how many green jobs might grow out of the stimulus legislation. The Congressional Budget Office estimated that the original Senate bill would create between 600,000 and 1.9 million total jobs by the end of 2011.

The chairman of the Senate Finance Committee is confident that the $19 billion in energy tax breaks included in the Senate version will increase employment.

“These incentives will create green jobs producing the next generation of renewable energy sources—wind, solar, geothermal—spur development of alternatives and help to combat climate change by reducing our use of carbon-emitting fuels,” said Sen. Max Baucus, D-Montana, in a floor speech Monday.

One of the provisions in the Senate bill would establish a 30 percent investment tax credit for facilities that produce advanced energy equipment. Sen. Debbie Stabenow, D-Michigan, hopes that that proposal will survive the conference negotiations because she said it would help her state recover.

Stabenow illustrates her point by noting that a wind turbine contains about 1,200 parts. Building them would produce work for tool and die makers and machine shops that have been hit hard by the faltering automotive industry.

“It is green manufacturing and good-paying green jobs that will sustain and grow the middle class of America,” Stabenow said. “The next generation of manufacturing should be green manufacturing.”

It’s not just scientists and engineers who would benefit from the growth of the environmental sector. Laid-off auto workers have skills that can transfer to activities like weatherization and insulation in the wind and solar thermal industries.

A study by Management Information Services Inc. showed that if 30 percent of U.S. electricity was generated from renewable energy by 2030, tens of thousands of jobs would be created for steel and sheet metal workers, electricians and welders.

“A green job is a blue-collar job done for a green purpose,” said David Foster, executive director of the BlueGreen Alliance.

Experts foresee a verdant labor market. “In the next few years, I don’t think there will be trouble in finding workers for most or all of these jobs,” said Roger Bezdek, president of Management Information Services.

Organized labor leaders are urging that green jobs come with worker protections, including the right to organize. A recent report commissioned by the labor group Change to Win, the Sierra Club, the Laborers International Union of North America and the International Brotherhood of Teamsters calls for environmental subsidy recipients to abide by labor standards.

Other recommendations include making government contractors abide by living-wage rules, implementing prevailing-wage requirements and using best-value contracting and project labor agreements.

“If it doesn’t put green in working people’s pockets, it is not a green-collar job,” said Terence O’Sullivan, president of the laborers union. “If it doesn’t ensure workers get respect, receive good benefits and have the freedom to choose to join a union, it’s not a green-collar job.”

—Mark Schoeff Jr.

The federal government would pay 50 percent of COBRA health care premiums for up to 12 months for employees who are laid off from September 1, 2008, through December 31, 2009, under a massive economic stimulus bill the Senate is expected to vote on Tuesday, February 10.

Those COBRA premium provisions, agreed to over the weekend by a bipartisan panel of Senate negotiators, are a change from the provisions earlier approved by the Senate Finance Committee. Under that panel’s measure, the government would have provided a 65 percent premium subsidy, but the subsidy would have ended after nine months.

The total estimated cost of the revamped COBRA provision would be about $20 billion, compared with $25 billion in the Finance Committee bill. Numerous other provisions in the stimulus measure also were changed by negotiators to reduce the total cost of the package by about $100 billion to just more than $800 billion.

Under an economic stimulus bill passed earlier by the House of Representatives, the federal COBRA premium subsidy would be set at 65 percent and last for up to 12 months. That measure also would allow employees terminating employment after 10 years with one employer and those 55 and older to retain COBRA until eligible for Medicare at 65.

That broad COBRA eligibility expansion, lobbyists say, is not expected to win final congressional approval.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Reversing his profit forecast to a loss, Nissan Motor Co. CEO Carlos Ghosn entered crisis mode Monday, February 9.

Ghosn announced plans to slash 20,000 jobs, cut production by 20 percent, scale back model launches and delay new factories. Nissan may also seek government bailout loans, Ghosn said.

The $2.91 billion net loss Ghosn now predicts for the fiscal year ending March 31 would be his first loss since taking charge of Nissan in 1999. The outlook wipes out an earlier forecast for net income of $1.76 billion.

The 20,000 job cuts account for roughly 8.5 percent of the company’s workforce.

They include some 2,000 temporary jobs that have already been eliminated in Japan and another 1,200 early retirement buyouts from the United States. Nissan has also already announced 1,680 cuts in Spain. Nissan did not give details about where the additional reductions will hit.

Ghosn has put on hold the Nissan GT 2012 midterm business plan announced last year and its target of achieving 5 percent revenue growth through 2012. That plan was introduced after the earlier Value-Up initiative missed its unit sales goal.

The top priority now is preserving cash as Nissan and Japanese rivals struggle against collapsing global demand, a surging yen and shrinking access to credit. Of Japan’s six biggest automakers, only Honda Motor Co. and Suzuki Motor Corp. are still predicting profits.

“Nissan is operating in an environment in which we are hit with three challenges at one time: the credit crisis, economic recession and strengthening yen,” Ghosn said in Tokyo while announcing fiscal third-quarter results. “Systematically, the worst scenario happened.”

Ghosn’s new recovery actions include:

• Slashing Nissan’s global workforce to 215,000 from 235,000 by the end of 2009.

• Cutting labor costs by 20 percent to $7.69 billion.

• Limiting launches to 48 new products in the next five years, instead of 60 as planned.

• Slowing the ramp-up of Nissan’s new factory in Chennai, India.

• Suspending Nissan’s involvement in a new Renault factory in Tangiers, Morocco.

• Reducing board member pay by 10 percent and managerial pay by 5 percent.

Nissan, 44 percent owned by Renault SA, will also approach governments worldwide about possible credit lines, Ghosn said. He applauded industry-support measures already implemented in Europe and being considered in Japan and the U.S.

“We need access to financing, that’s all we’re asking,” he said.

“Cash is king,” Ghosn said. “You need to generate cash and be extremely rigorous with cash.”

The company may seek up to $549.5 million in low-interest loans from the government-backed Development Bank of Japan, the Nikkei newspaper reported.

Nissan may also try tapping the $25 million the U.S. government has earmarked to help automakers and suppliers retool factories to make more fuel-efficient vehicles.

For the full year, Nissan expects an operating loss of $1.98 billion. That’s against an earlier outlook for an operating profit of $2.97 billion.

“Earnings are going to be bad at automakers for some time,” said Tomomi Yamashita, senior fund manager at Shinkin Asset Management.

“You’ve got the currency problem and the amount of production adjustment that’s ahead,” he said, adding that automakers could be in the red for a few more quarters.

Nissan will rein in capital expenditure by 21 percent in the current fiscal year and then cut again by 14 percent next year. The reductions will help Nissan save cash, Ghosn said.

Nissan’s U.S. sales fell 29.7 percent in January, while the market dropped 37.1 percent. The company also fared better than the industry last year in posting a 10.9 percent U.S. sales decline.

Filed by Hans Greimel of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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One in four companies have instituted salary freezes for 2009, according to a new survey from Mercer. And that total may rise to one in three employers by the time 2009 budgets are finalized, the consultancy predicted.

This year, executives are less likely to get an increase than rank-and-file employees, Mercer said. The biggest budget decrease in the survey findings is at the executive level, where 77 percent of the more than 400 respondents plan to decrease their salary budget from their 2008 projections.

“Given lackluster corporate performance and recent pressure from regulators, shareholders and the president, it’s not surprising to see that over the past few months, more than one-third of participants who reported executive salary data went from a 2009 planned base salary increase for their executives to a freeze,” said Steve Gross, global leader of Mercer’s broad-based performance and rewards consulting business, in a press release.

Organizations still budgeting increases for 2009 have trimmed these to 3.2 percent overall, down almost one-half of a percentage point from mid-October projections of 3.6 percent.

For some of the most troubled companies, even freezing salaries may not be enough to sustain operations. General Motors, racing to meet government conditions to keep $13.4 billion in government loans, will include pay cuts for salaried employees in a restructuring plan to be submitted February 17, Bloomberg reported Monday, February 9, citing people familiar with the plan.

GM has about 29,000 salaried workers in the U.S. The total worldwide firings may match the more than 5,000 salaried positions eliminated last year, the people familiar with the plan said. GM started offering buyouts to 62,000 union workers last week and is in talks with the United Auto Workers about trimming benefits, according to Bloomberg.

Of course, for many workers, the concern is over simply having a job at all. On Friday, the Labor Department reported U.S. employers shed 598,000 jobs, the most since 1974, driving the unemployment rate to 7.6 percent from 7.2 percent.

Filed by Matthew Quinn of Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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A ruling by the California Supreme Court in January lets patients off the hook for hospital bills they’ve accrued during emergency visits, but it does not resolve the larger issues that have put employers in the crossfire between hospitals and health insurers.

The court decision attempts to redress the hospital practice of balance billing, which typically occurs when a patient goes to an emergency room not covered under that person’s health insurance.

When a hospital does not get sufficiently reimbursed by the insurer, it often tries to collect the difference from the patient in addition to normal co-pays and deductibles. This is known as balance billing, and it often leads irate employees to call their health plan administrator to complain.

“A guy will say, ‘Hey, look, my wife dialed 9-1-1. I had a stroke, I ended up at the hospital and now I have a $30,000 bill,” said Russell Bigler, CEO of the Self Insured Schools of California, which manages benefits for public school districts in Central California’s Kern County. Bigler said the problem has worsened in recent years as more hospitals have terminated contracts with insurers.

“This is one of the fronts of the battle” of health care reform,” said Jonathan P. Weiner, professor at Johns Hopkins Bloomberg School of Public Health in Baltimore.

The ruling provided a victory for patients, employers and health insurers. But that victory could be short-lived if hospitals reduce emergency services, as they say they will, if they can’t make ends meet.

Already, hospitals around the country are terminating contracts with insurers because they say they are not getting reimbursed enough to stay in business. That leaves patients who live in those areas effectively uninsured when they go to the emergency room.

Prime Healthcare Services, a 13-hospital system in California, is one company that has bought bankrupt or near-bankrupt hospitals and then terminated contracts with insurers because reimbursement rates were not high enough to stay in business.

“There would never be a need to bill the patient if the HMO paid hospitals fairly,” said Mike Sarrao, vice president and general counsel for Prime Healthcare Services.

Currently, 11 states have laws that make reference to balance billing, with the most detailed laws prohibiting hospitals from collecting additional money from Medicaid patients, according to the Conference of State Legislatures, a Denver-based policy research organization. Many hospitals though say it’s those low rates that force them to make up the difference elsewhere.

The number of hospitals that terminate contracts with health plans varies from region to region, but the occurrence is especially common in areas where hospitals have less competition from other hospitals, such as in rural and inner-city areas or in markets that have seen hospital mergers, health policy experts say.

These changes pose a challenge for employers.

“Hospitals are exerting more and more market leverage,” said Dennis White, senior vice president for value-based purchasing with the National Business Coalition on Health in Washington. “They are getting tougher on the rates they will accept to stay in the network.”

Hospital systems are forcing concessions by employers and health insurers, White said, such as prohibiting employers from making public information about quality differences among hospitals. Some have prohibited the use of tiered co-pays that would discourage employees to seek care from certain hospitals.

“This is, again, the market butting up against the rights and needs of patients, which some believe should surmount market economics,” Weiner said.

Caught in the middle are patients and the employers who pay for their care. Employees, for one, will not tolerate getting stuck with a hospital bill, especially in these tough economic times. And when they do, they will let their employer know about it.

“Rest assured,” Weiner said, “if the self-insured employer gets nothing but pushback from employees, they will need to change their approach … which is exactly what the doctors and hospitals want.”

—Jeremy Smerd

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