Author: Site Staff

Concerns about the economy, home values and health costs continue to sap workers’ confidence that they will have enough cash for a comfortable retirement.

The percentage of workers who said they were very confident about having enough money to retire comfortably dropped to 18 percent this year from 27 percent in 2007, according to the 2008 Retirement Confidence Survey.

That represents the largest one-year drop in confidence in the 18-year history of the survey, the study said.

At the same time, the percentage of workers who said they lacked confidence about having enough money for a comfortable retirement jumped to 37 percent this year from 29 percent in 2007.

The survey was conducted by the Employee Benefit Research Institute, a Washington retirement research organization, and Mathew Greenwald & Associates, a Washington public opinion and market research company.

“The good news is that after years of false optimism, at least active workers are beginning to realize that their current level of retirement savings appears to be inadequate for living comfortably throughout their retirement years,” said Jack VanDerhei, one of the study’s co-authors, in an interview. VanDerhei is also an EBRI fellow and professor at Temple University.

The survey also found that the percentage of retirees who were very confident about maintaining enough money for a comfortable retirement plummeted to 29 percent this year from 41 percent in 2007. The percentage of those lacking confidence rose to 34 percent this year from 21 percent last year.

While the survey found that the percentage of workers who say they’ve saved for retirement rose to 72 percent in 2008 from 66 percent the year before, nearly half of those saving for retirement had total savings and investments — minus the value of their primary residences and any defined-benefit plans — of less than $50,000. Seventy-six percent of workers who said they had not saved for retirement reported total assets of less than $10,000.

The survey also said that while 41 percent of workers said they or their spouse had a defined-benefit plan, 59 percent said they expected to receive income from a defined-benefit plan in retirement.

The discrepancy between those numbers suggests that some workers may be under the illusion that they will receive a retirement benefit that they will not actually get, the study said.

The EBRI-Greenwald survey was based on telephone interviews of a random sample of 1,057 workers and 265 retirees in the U.S. age 25 and older.

Filed by Pensions & Investments, a sister publication of Workforce Management. To comment, please e-mail editors@workforce.com.

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The obesity epidemic costs U.S. private employers an estimated $45 billion a year in medical expenditures and worker absenteeism, according to a report released today by the Conference Board.

The report found obesity is associated with a 36 percent increase in health-care spending, more than results from smoking or alcoholism. Since 34 percent of American adults fit the definition of obesity, cutting costs associated with the condition will challenge companies for years to come.

“Employers need to pay attention to their workers’ weights, for the good of the bottom line, as well as the good of the employees and of society,” said Linda Barrington, a labor economist and research director at the Conference Board.

Companies are gearing up to combat obesity.

The report said that more than 40 percent of U.S. companies have obesity reduction or wellness programs, and an additional 24 percent plan to start such programs in 2008. The programs can yield a return on investment from ranging from zero to as much as $5 for each $1 invested.

But throwing money at such programs can also add to employers’ woes.

Companies risk discrimination lawsuits if they are too forceful about encouraging employees to manage their weight, even if it is for the employees’ own good. And not all weight loss and obesity programs get results, which could leave employers stuck with a weighty bill.

The report suggested companies involve their employees in the planning of any health initiatives, before programs are put into place.

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

WellPoint Inc. enrollees’ protected health information and other personal records, including Social Security numbers, may have been exposed via the Internet for an unspecified period of time, WellPoint said Tuesday, April 8.

The membership-based health insurer said two computer servers on which the records were stored were maintained by a third-party vendor and were not properly secured, according to a statement from the Indianapolis-based health insurer. The snafu affected approximately 130,000 customers, according to WellPoint.

WellPoint said that it has notified all possibly affected members and has offered free credit monitoring and customer service support. The insurer said both servers were “not properly secured” in 2007.

WellPoint said both servers are now secured and that it is conducting an internal investigation to find out the cause of the problem.

“We have taken the appropriate steps to secure the data and will continue to work with all vendors to reduce the risk of future incidents,” WellPoint said in a statement. “We are notifying all members who could have been affected by this incident, as well as regulatory officials.”

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

Before it became the poster child for the collapsing subprime mortgage market, Bear Stearns was known for its smart, rough-edged, aggressive brokers who rolled up their sleeves each day and made money.

Following the company’s brush with bankruptcy and with a takeover by JPMorgan Chase looming, Bear Stearns’ top talent probably will head for the door.

JPMorgan may be powerless to hold on to them—even with a retention bonus reported to equal 100 percent of annual revenue for brokers making $500,000 or more.

“That’s not going to stop the best from going because competitor firms would certainly be prepared to offer more than one times revenue,” says Jo Bennett, a partner at Battalia Winston, an executive recruiting firm based in New York.

Bennett’s corporate clients are eager to land some of Bear’s several hundred brokers.

“We’re networking like crazy,” she says.

Bear brokers are probably responding.

“These are people with big egos,” says Peter Cappelli, professor of management at the University of Pennsylvania. “They’re used to having lots of options.”

The situation isn’t so bright for the vast majority of Bear’s 14,000 workers, who are likely to be spit out when they’re devoured by the 180,000-employee JPMorgan.

Bear financial advisors are marketable, even in the midst of a downturn for the financial industry, because of their relationships with rich clients.

“There’s a lot of loyalty to the individual broker,” says Barry Miller, manager of alumni career programs and services at Pace University in New York and a career consultant.

That gives Bear brokers freedom to flee JPMorgan. Many have probably suffered devastating financial losses because of the low-ball price JPMorgan offered for Bear stock. About a third of Bear employees own company shares.

JPMorgan proposed $2 per share before raising its price to $10. By contrast, Bear traded at $77 on March 3. It fetched about $160 in early 2007.

Such a precipitous drop takes a psychological toll on Bear employees and adds complexity to the takeover, according to Alan Johnson, managing director of Johnson Associates, a New York compensation consulting firm.

“They’ve just been through a calamity, and a lot of them aren’t going to be able to function for the next six months or a year,” Johnson says. “It’s like a death in the family.”

JPMorgan will bear the brunt of that shock.

“The unique problem for JPMorgan is dealing with the enormous anger and frustration,” Johnson says.

JPMorgan can address the resentment by assuring top Bear performers that they will fit into the new company, according to Barbara Herman, a senior consultant at Diamond Consultants, a Chester, New Jersey, executive search firm.

“They need to demonstrate how they’re going to support a Bear Stearns financial advisor during the transition,” Herman says. “They have to provide meaningful information in a timely way. They have to keep their promises.”

JPMorgan chairman and CEO Jamie Dimon’s plea for other financial companies to stay away from Bear staff “will be honored for now,” Herman says, because of Dimon’s stature. “But it can’t go on indefinitely.”

—Mark Schoeff Jr.

Michigan had the most high-tech job losses of any state in the U.S. in 2006 but remained ranked as the No. 10 cyber state in the nation for total jobs, according to “Cyberstates 2008,” a report released by Washington-based AeA, the largest technology trade association in the country.

It was one of just three states to lose high-tech jobs in the year, the most recent year state-by-state data was available.

Michigan had 176,100 tech jobs, down about 1,500. Colorado lost 900 jobs and Delaware lost 300.

Michigan’s total high-tech payroll of $13.2 billion ranked 13th in the U.S.

The state gained 500 jobs related to computer systems design and 400 related to electronic components, but saw losses in engineering services (1,800), R&D and testing (600) and telecommunications (200).

Nationally, tech jobs increased for the second consecutive year in 2006, adding 139,000 jobs for a total of about 5.8 million.

California added 21,4000 jobs for a total of 940,700, with Texas adding 13,700 jobs, Virginia 9,800, New Jersey 8,500 and New Mexico 6,700.

In Michigan, high-tech firms employed 49 of every 1,000 private-sector workers, and they had average earnings of $75,200, which was 79 percent more than Michigan’s average private-sector wage.

Filed by Tom Henderson of Crain’s Detroit Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

WellPoint Inc. is changing its provider reimbursement strategy to withhold payment for certain medical errors.

The reimbursement modifications, which involve preventable adverse events as defined by the Centers for Medicare and Medicaid Services and the National Quality Forum, will be implemented in phases and be modified and expanded. Prior to this announcement, the policy had been implemented on a pilot basis in Virginia.

The Indianapolis-based health insurer will not pay for surgery performed on the wrong body part, for surgery on the wrong patient, or for the wrong surgery being performed on a patient. In addition, WellPoint will not make any additional payments if any of the following occur:

* Object left in the body during surgery.
* Air embolism or blockage.
* Blood incompatibility.
* Catheter-associated urinary tract infection.
* Pressure ulcers.
* Vascular catheter-associated infection.
* Infection inside the chest after coronary artery bypass graft surgery.
* Hospital-acquired injuries such as fractures, dislocations, intracranial injuries, crushing injuries and burns.

“WellPoint firmly believes that putting processes in place that focus on preventing these events can have an immediate impact on health care safety and quality,” Dr. Sam Nussbaum, executive vice president for clinical health policy and WellPoint’s chief medical officer, said in a statement.

“We will continue to work collaboratively with physicians and hospitals to analyze why and how these events occur, and to proactively find ways to improve patient safety and clinical care,” he said.

The new strategy also will save patients and employers money since it does not permit in-network hospitals to bill them for such errors, according to WellPoint.

WellPoint joins a growing list of payers that are no longer reimbursing providers for health care costs stemming from preventable medical errors. Earlier this year, Aetna Inc. said it had begun to include provisions in some provider contracts that they won’t pay for nor allow patients to be billed for care related to the so-called “never events” identified by the National Quality Forum.

Last August, CMS announced it would no longer pay for some hospital mistakes beginning on October 1, 2008. In addition, the Washington-based Leapfrog Group, a consortium of large, national employers focused on patient safety, has announced its support of such payment denials.

In 2002, the National Quality Forum defined 27 events that should never occur within a health care facility.

There are six types of so-called “never events”: surgical errors; product or device events, such as using contaminated drugs; patient protection events, such as discharging an infant to the wrong person; care management events, such as medication errors; environmental events, such as electric shocks or burns; and criminal events, such as the sexual assault of a patient.

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

The three-judge appeals court panel that earlier this year allowed San Francisco to temporarily implement its controversial health care spending law will decide the fate of the ordinance.

The 9th U.S. Circuit Court of Appeals disclosed Monday that Judges William Fletcher, Alfred Goodwin and Stephen Reinhardt will hear oral arguments April 17 on a lower court ruling that found the federal Employee Retirement Income Security Act pre-empted the San Francisco law that requires employers to spend a certain amount of money on employees’ health care coverage or pay certain fees.

Those judges in January allowed the law, being challenged by a San Francisco restaurant trade association, to go into effect pending a final decision by the appeals court. In allowing implementation of the law, Judge William Fletcher wrote that San Francisco has a “strong likelihood” of prevailing in its argument that ERISA does not pre-empt the ordinance.

The San Francisco Health Care Security Ordinance does not require employers to adopt an ERISA plan or other health plan and does not require offering specific benefits in a health plan, the judge wrote.

Under the San Francisco measure, large employers are required this year to spend no less than $1.76 per hour per eligible employee on health care. Employers have a variety of options to meet the spending requirement, including paying employees’ health insurance premiums, contributing to health savings accounts or health reimbursement arrangements, or paying fees to the city.

Since the law went into effect in January, many San Francisco employers have discovered that the law affects them even though the costs of their health care plans exceed the minimum requirements set in the statute. For example, the spending requirements apply to employees working as little as 10 hours a week and who rarely are covered in corporate plans.

Interest in the outcome of the challenge to the law extends beyond San Francisco. If the law is upheld, it could set the stage for cities and states to adopt their own health care spending measures, imposing on multi-state employers both administrative burdens to keep track of the mandates and cost pressures if they have to upgrade their health care programs.

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

In an effort to help companies hire and retain more highly skilled foreign nationals who graduate from U.S. universities, the Department of Homeland Security is proposing to expand a program that would allow them to stay in the country longer after receiving their degrees.

On Friday, April 4, the agency announced a preliminary regulation extending the time that foreign graduates in science, technology, engineering or mathematics can work for a U.S. company without obtaining a visa.

That will give them a greater opportunity to secure an H-1B visa, which is for people who have at least the equivalent of a U.S. bachelor’s degree. The H-1B cap is likely to be exceeded again this year, forcing spring graduates to wait until next April to apply.

H-1B opponents criticized the DHS proposal.More criticism may be generated by a condition in the regulation that mandates that only companies using E-Verify, a government-run electronic verification system, can participate.

The Society for Human Resource Management and many other HR groups assert that E-Verify is inefficient, error-prone and could potentially designate many legal workers as ineligible for employment. They are promoting a bill that would establish an alternative verification system.

The new DHS regulation is subject to a 60-day comment period. Then DHS can promulgate a final rule. It’s unclear whether the process can be concluded before the end of the Bush administration.

Under the regulation, the Optional Practical Training program would increase from 12 months to 29 months. Microsoft chairman Bill Gates called for such a reform in congressional testimony last month, saying that hiring and retaining foreign-national graduates is critical to helping technology companies innovate.

The push for a longer training program is the result of a shortage of H-1B visas. For the last fiscal year, companies sent in 123,000 applications for 65,000 H-1B visas, exceeding the cap on the first day they were available, April 2.

Under current law, if a foreign-national hire doesn’t get an H-1B visa within 12 months, he or she must leave the United States.

For the 2009 fiscal year, the cap is set again at 65,000, and an even greater demand is expected. DHS may announce as soon as Monday, April 7, that the cap has been exceeded and that the visas will be distributed by lottery.

The move to expand the training initiative may ease the disappointment of companies, especially in the technology sector, who say they can’t fill high-skill jobs.

“It’s a good first step,” says Robert Hoffman, vice president of government and public affairs for Oracle and co-chair of Compete America. “The administration has clearly recognized through this action that there is a severe skills shortage in this economy.”

Hoffman says that there are 140,000 openings at S&P 500 companies for engineers, scientists and other highly skilled professionals.

But he warned that the DHS regulation alone is not enough. Congress must increase the number of H-1B and permanent work visas, or green cards. Bills to do so are mired in a political stalemate on immigration reform.

If Congress doesn’t act, “you’re going to create one heck of a bottleneck,” Hoffman says. “You’re going to find (that many) more highly skilled individuals are forced to leave the country.”

Opponents of the H-1B program contend that it displaces U.S. workers and depresses wages. They also criticize the training program expansion.

“It’s completely unnecessary,” says John Miano, a Summit, New Jersey, lawyer and computer consultant who founded the Programmers Guild. “Student visas are not supposed to be the gateway to immigration, but they’re being transformed into that.”

Outsourcing companies from India obtain many H-1B visas in order to send foreign workers to the United States who ultimately take jobs away from U.S. applicants, Miano says.

Data on the impact of H-1Bs doesn’t exist, and Department of Labor enforcement is limited, according to Miano.

“No one knows what’s going on in the system,” he says. “There is no ability to investigate these things.”

But Homeland Security Secretary Michael Chertoff promoted the extension of the training program as a way to bolster the U.S. economy.

“This rule will enable businesses to attract and retain highly skilled foreign workers, giving U.S. companies a competitive advantage in the world economy,” he said in a statement.

—Mark Schoeff Jr.

Though a Bureau of Labor Statistics report revealed companies shed 80,000 jobs from the U.S. economy in March and a whopping 232,000 jobs have been lost since January, recruiting experts say talent acquisition is still going strong in certain areas.

“We are still swamped with requisition orders,” Jim Lanzalotto, vice president of Yoh, a talent and outsourcing services provider, said after the labor report was released Friday, April 4. “I checked all of our numbers this morning to make sure I wasn’t losing my mind.”

Lanzalotto said the labor market outlook will depend on the sector.

“There are areas, such as biosciences and engineering, where unemployment rates are in the 1 to 2 percent range,” he said. “Companies just can’t get their hands on this type of talent fast enough.”

March marked the third consecutive month of job losses, according to the BLS report, and it’s a clear sign the labor market is feeling the impact of a contracting economy, said Bart Van Ark, vice president and chief economist at the Conference Board in New York.
 
Van Ark is projecting not a deep recession but a prolonged economic slowdown, which could mean sluggish labor market conditions persist for several more months.

“It took us a long time to get to this point,” he said. “I don’t think a speedy recovery is in the cards.”

The fact that jobs were shed did not come as a surprise, Van Ark said. What caught many people off guard was the spike in unemployment, which climbed from 4.8 percent to 5.1 percent—the highest monthly increase since September 2005.

Because labor conditions are so varied from one industry to another, it behooves employers to increase communication and transparency with workers during such a tenuous time, said Manny Avramidis of American Management Association, a training and development provider in New York. This may mean holding conferences or requiring managers to meet with employees to explain how a company is doing.
 
Avramidis said opening the lines of dialogue is most critical with rank-and-file workers.

“Managers will be more or less in the know of where they stand on their jobs,” he said. “But the little guy can get easily spooked from what he sees in the media and decide to leave without reason.”

Companies that anticipate reductions in staff need to take further action.

“They better make sure that their succession plans are solid,” Avramidis said. “It will help them make smart reduction decisions.”

—Gina Ruiz