Author: Site Staff

A last-ditch effort to extend the life of America’s Job Bank seems unlikely to succeed.

Earlier this year, a group of state administrators appealed to congressional leaders to keep the free online job site from shutting down in June. But the group’s executive director doubts Congress will heed the call.

In February, the National Association of State Workforce Agencies sent letters to Sen. Tom Harkin, D-Iowa, and Rep. David Obey, D-Wisconsin, asking for continued funding for America’s Job Bank “until a new system is implemented.”

“NASWA believes Congress should provide a ‘line item’ of $6 million for continuing AJB in a supplemental appropriation for another year starting July 1, 2007,” NASWA president Roosevelt Halley wrote in the letter.

But Rich Hobbie, NASWA’s executive director, has little hope at this point. He says the best chance for the additional $6 million was getting the request included in a military appropriations bill. But neither the House nor Senate version of the bill—both of which sparked controversy because of timetables for withdrawing troops from Iraq—include the America’s Job Bank funding, Hobbie says.

“It appears unlikely now,” he says.

Harkin did not immediately return a call requesting comment. An aide to Obey did not return a call seeking comment.

NASWA is a group of state administrators of programs and services provided through publicly funded state workforce systems.

America’s Job Bank dates to 1995, and the free site currently lists more than 2.1 million jobs and nearly 650,000 résumés. Last year, the Labor Department said it planned to phase out America’s Job Bank, arguing that maintaining and improving the site no longer makes sense “given that AJB duplicates what is already available in the private sector.”

But the decision to shutter the site has raised a number of questions, including how companies will meet compliance needs. There’s also concern about possible harm to smaller employers and lower-skilled job seekers.

At least two organizations have announced services intended to replace America’s Job Bank. One is NaviSite, a for-profit company that has operated America’s Job Bank for years as a contractor. Another is the DirectEmployers Association, a nonprofit consortium of companies.

The association’s site, dubbed JobCentral National Labor Exchange, won an endorsement in late March from NASWA. Hobbie said NASWA will play a role in governing the exchange, along with the DirectEmployers Association and participating states.

—Ed Frauenheim

The most critical factor for getting employees to consider purchasing annuities into 401(k) plans is having advisors on site at the workplace, according to a study by Cerulli Associates released Tuesday, April 2.

The Cerulli Edge, the quarterly retirement analysis, found that that only 40 percent of 401(k) plans allow advisors in the workplace.

This presents a prime opportunity to advisors because of the confusing nature of annuities.

“Offering advice at the work site can be an effective strategy that encourages participants to not only think about annuities, but also consider all of the options available to them,” the report indicates.

A provision of the Pension Protection Act of 2006 directs the Department of Labor to clear up the regulations for including annuity options within 401(k) plans.

Once this occurs, Cerulli analysts believe it will open up the window to include more annuities inside 401(k) plans.

Filed by Lisa Shidler of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

The National Rifle Association has found a surprising partner in its support for a Florida bill that would allow employees to keep guns locked in their cars on company grounds.

At a Florida Senate committee hearing March 27, the Florida AFL-CIO came out in support of the bill.

For the union, “guns are not the issue,” says spokesman Rich Templin. “This is about protecting workers’ rights. When you drive to work, your car still belongs to you. Your privacy doesn’t end when you get to work.”

SB 2356, which was introduced earlier this year, prohibits employers or any entities from banning employees from keeping “any legal personal property” locked in their cars.

The Senate Criminal Justice Committee voted 7-1 in support of the bill, which next will go to the Senate Judiciary Committee. But a similar bill  was proposed last year in Florida and never passed into legislation.

The Florida Chamber of Commerce and others have strongly opposed the measure, arguing that it violates their property rights.

“Our principal concern is that this bill is somewhere between an attack on the employer/employee contract and on property rights overall,” says Mark Wilson, executive director of the Florida Chamber of Commerce.

And many were shocked to learn of the AFL-CIO’s support for the bill.

“As the first people in line to be shot in a workplace incident, it seems pretty ludicrous that a union organization would support arming workers,” says Brian Siebel, a senior attorney at the Brady Campaign to Prevent Gun Violence.

But Templin emphasizes that for the AFL-CIO, this is an issue of protecting workers’ rights.

“As soon as someone takes the gun out of their vehicle or makes a threat, the law addresses that,” he says. “This is about protecting workers’ rights to keep things in their cars.”

Templin notes that there have been incidents where members have been fired for having union materials in their cars, and this law would prevent such incidents.

To support the bill, the AFL-CIO in Florida is sending out e-mails to its 500,000 members encouraging them to call their senators in support of the bill, Templin says.

The alliance could make it particularly difficult for employers, many of whom are already trying to fight this bill, says Mark Neuberger, a labor lawyer at Buchanan Ingersoll in Miami.

“Employers are already fighting this to protect the security of their workplaces,” he says. “But now this could become a bargaining issue with the union.”

—Jessica Marquez

General Motors highlighted yet again the erosion of retiree health benefits among U.S. employers when the automaker disclosed in its recently filed annual report that reducing retiree health costs was critical to its turnaround plan.

In the report filed with federal regulators, GM called its $68 billion employee and retiree health care obligations “the source of our largest competitive disadvantage.” In January, the company joined other Detroit automakers by capping retiree benefits. GM also is seeking additional concessions from the United Auto Workers union, whose contract expires in September.

The promise employers once made new employees to pay for retiree health benefits continues to disappear, according to a new study published by Watson Wyatt and the National Business Group on Health. Less than one in five employers today offer a defined retiree health care benefit to new employees, the study notes. And just 15 percent of employers plan to follow General Motors and offer limited financial assistance to new hires when they retire, the report states.

“Large companies have been eliminating retiree medical benefit coverage for new employees at an accelerated rate for a number of years,” says Ted Nussbaum, director of health care consulting in North America for Watson Wyatt, “to the point that only 18 percent of companies that provide retiree health benefits do so for new hires.”

The promise of retirement with secure health care instead has morphed into an offer by employers to help retirees pay for health insurance, give them access to cheaper premiums or do nothing for them at all. Thirty percent of employers said they would offer no financial support to future retirees but would provide access to less expensive group coverage premiums that individuals would otherwise be unable to secure.

Meanwhile, 37 percent of the 573 companies representing 11 million employees interviewed for the study said they plan to provide no financial help to new hires during their retirement.

CNH Case New Holland, a Racine, Wisconsin-based heavy equipment manufacturer, is among the employers that have eliminated retiree health care benefits for new hires and instead restructured their current health benefits to allow employees to save money for retirement health care costs using a combination of health reimbursement and health savings accounts.

If a person saves the maximum annual amount under current law—$2,850—and earns 7 percent annually, they will only save $155,000 in 20 years. Retirement health costs are formidable, says Jay Savan, a senior health care consultant with Towers Perrin, and most people aren’t prepared.

“You will need $600,000 if health care costs grow at the rate they are growing now,” he says.

Other employers, like Cleveland-based financial services firm National City, also have eliminated defined health benefits in favor of capped financial assistance that would help retirees eligible for Medicare to supplement their coverage, says David Repko, health and welfare manager for National City. Soon more retirees will rely on Medicare, as will employers who want to stop covering their retired population.

The Medicare trust fund is expected to be drained by 2018, according to the U.S. Government Accountability Office. Repko puts total Medicare obligations at $30 trillion and growing.

“It’s a number that’s going to come home to roost,” he says, “on us and on our children.”

Such a time could come sooner as more employees face a retirement without company-provided health care.

Jeremy Smerd

Enrollment in health savings accounts linked to high-deductible health insurance plans grew last year among large U.S. employers at nearly three times the rate of small employers, a survey shows.

In fact, the fastest-growing market for HSA/HDHP products is large-group coverage, which has grown from 19 percent of the market in March 2005 to almost 50 percent of the market as of January, according to the survey conducted by the Washington-based trade association America’s Health Insurance Plans.

The survey, which was released Monday, April 2, found that more than 2 million employees of large companies were enrolled in HSAs in January of this year, up from 679,000 a year earlier and just 162,000 in March 2005, the first year that HSAs were widely available.

Although growth wasn’t as strong in the small-group and individual markets, enrollment still surged there. Enrollment in small-group HSA plans more than doubled to 1.1 million in January from 510,000 a year earlier. By comparison, individual market plans gained just 29 percent, with enrollment growing to 1.1 million from 855,000 a year earlier.

Altogether, about 4.5 million people were covered by HSA/HDHP products, according to the AHIP census, a 43 percent increase since last year.

“When you have in the large-group market a tripling in a year,” it shows that HSA plans “are quickly becoming a mainstream option,” said Michael Tuffin, a senior vice president at AHIP.

He also said the growth rate is phenomenal given the fact that the product is little more than two years old. While HSAs were authorized by Congress under a 2003 law and have been available since January 1, 2004, many employers waited to offer the plans until the Treasury Department issued guidance in August 2004 that resolved many of the operational concerns that had been raised about HSAs.

“The first real shot that employers had to offer this was 2005, and here we are January of ’07 with these numbers. That’s not insignificant,” Tuffin says.

He said the findings should assure other employers that are thinking about adding HSAs to their health plan options.

“Employers large and small are incorporating health savings account plans into their offerings for employees,” he says.

While the growth rates for large employers and small-group employers were exceptional, the tempering of enrollment gains experienced by the individual market slowed the overall growth rate for January to less than half that seen between March 2005 and January 2006.

Tuffin attributed the slowdown to “natural maturing of a marketplace.”

“I think 43 percent growth by any definition is robust and indicative of success,” he says. “Nothing’s going to grow at 200 percent forever.”

Moreover, “in a market that has a very low growth rate as a whole, to have one aspect of that market grow by 43 percent in a year shows that something’s happening,” Tuffin says.

Among other notable findings of AHIP’s 2007 HSA/HDHP census:

• Enrollment in HSA/HDHPs topped 100,000 lives for 11 large employers in January, up from seven employers in January 2006 and just two in March 2005.

• Large employers’ average annual premium for family coverage was $6,963 in January, while single coverage averaged $2,796.

• Annual deductibles in the large-group market averaged $3,996 for families and $1,952 for individuals.

• Eighty-six percent of HSA/HDHP enrollees had average annual balances of $2,500 or less at year-end 2006, while 4 percent had average annual balances exceeding $5,000.

• More than 90 percent of employers included in the survey offer HSA plan options with preventive benefits that are covered outside of the deductibles.

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

 Six years ago, Argentina was in the throes of a financial crisis so deep that the government had to devalue its currency just to stay afloat. The effects, of course, were widespread, but an immediate consequence was that a budding young workforce abandoned school simply to help their struggling families survive.

Today, Argentina is recovering from the economic disaster that pushed it to the brink of ruin, and the South American nation’s employment base is quickly making up for lost time. Young, energetic workers are drawing the attention of multinational companies seeking an educated workforce at a relatively reasonable price. And it appears Argentina is willing and able to deliver.

Many of the labor market’s newest entrants were influenced by Argentina’s 2001-2002 financial meltdown.

“It made them learn that they need experience and they need to be prepared for the changing world of work,” said Jorgelina Calvente, director of corporate communications for Manpower South America, in an interview at the company’s Buenos Aires office.

The experience drove home the importance of education, as well as the need to learn English.

“We’d better integrate ourselves with the rest of the world, or this is it for us,” says Marina Santangelo, a 22-year-old staffer at Next Level, a company that markets Intel products. “People who speak English, people who have an open view of the world, can get better jobs here.”

It also helps that public universities in Argentina are free. With a higher literacy rate and more university students per capita than Brazil or Mexico, Argentina is setting itself apart among Latin American nations.

“I see Argentina becoming a more attractive country as it relates to other emerging markets,” says Gary Coleman, global managing director for manufacturing for Deloitte Touche Tohmatsu in New York.

In 2003, Intel turned to Argentina for its talent pipeline, establishing a software manufacturing operation in the province of Cordoba, which is about 500 miles from Buenos Aires. Motorola, EDS and Siemens also have operations there.

“Argentina’s educational system has traditionally been one of the strongest in the region,” said Luis Blando, the general manager of Intel Software of Argentina, in an e-mail interview. “The country’s past industrial and scientific successes have created a latent talent population that’s characterized by above-average levels of experience in management and leadership.”

Cordoba has become Argentina’s Silicon Valley, largely through a public-private partnership that builds on its university network. The government also provides tax breaks and other incentives.

With government help, Intel established the Argentina Software Development Center, which produces Internet processing software and is projected to employ 400 engineers by 2011. “Inside of a year since the center was inaugurated, it has contributed substantially to worldwide products,” Blando says.

Cordoba is carrying out its vision without spending a lot of money on infrastructure.

“All the added value is the mind,” says Daniel Luaces, manager of professional services at Manpower. “The most important part of the IT business is the human resources.”

Argentina is capitalizing on offshoring and business process outsourcing trends in part because of the quality of education and a high level of English proficiency among the population, Luaces says.

It also benefits from being in roughly the same time zones as the United States, as well as cultural affinity with its Western Hemisphere neighbor, according to Luaces. Like other developing markets, Argentina provides workers at low wages. But unlike some countries, it also has fairly relaxed labor laws.

“There’s greater freedom by the employer to move people around, cross-train them and dismiss them if they’re not the best,” Coleman says.

Mark Schoeff Jr.

The Pension Benefit Guaranty Corp. is taking over a pension plan sponsored by bankrupt auto parts manufacturer Collins & Aikman Corp.

The Collins & Aikman plan, which has about 21,000 participants, is 58 percent funded, with $434 million in liabilities and $253 million in assets. The PBGC expects to be liable for about $161 million of the $181 million funding shortfall.

Assumption of the plan on the PBGC’s balance sheet as an estimate of the liability was included in the PBGC’s fiscal 2006 financial statements.

The PBGC said it is taking over the plan because Troy, Michigan-based Collins & Aikman already has missed making $7.6 million in required contributions and the plan will be abandoned when the company sells off its assets, as contemplated in its bankruptcy proceedings.

Collins & Aikman filed for Chapter 11 bankruptcy nearly two years ago. A confirmation hearing on the company’s liquidation plan of reorganization is scheduled for April 19 in U.S. Bankruptcy Court.

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

Congress’ recent calls for increased scrutiny of how defined-benefit plans utilize hedge funds may give some employers pause before they invest in such vehicles.

But experts say that as long as employers diversify their hedge fund investments, they shouldn’t run into trouble.

A recent survey conducted by Greenwich Associates found that 27 percent of employers with defined-benefit plans invest in hedge funds, up from 21 percent in 2004.

These investment options are particularly popular because their performance is not tied to the equity markets. So when equity markets tank, hedge funds do well. That’s why International Paper invests $723 million of its $8.4 billion defined-benefit plan in hedge funds, says Robert Hunkeler, vice president of investments.

“Our investment in hedge funds came out of our realization that we would have a hard time reaching our performance objectives by being 50 percent invested in large-cap equities and bonds,” he says.

But Senate Finance Committee Chairman Max Baucus, D-Montana, and Sen. Chuck Grassley, R-Iowa, aren’t so sure about this line of thinking. On March 1, they wrote a letter requesting the Government Accountability Office to review how pension plans use hedge funds.

“Of particular concern to the committee is the extent to which under-funded plans sponsored by financially weak employers may be investing in hedge funds,” the letter states.

Then on March 7, Grassley proposed an amendment that would require hedge funds to register with the Securities and Exchange Commission, meaning they would be regulated by the agency.

Congress has reason to be concerned. Last September, Amaranth, a $9.5 billion hedge fund based in Greenwich, Connecticut, lost $6 billion and collapsed after a trader made a poor energy bet.

Experts, however, say that as long as defined-benefit plan sponsors diversify their hedge fund investments and perform proper due diligence on managers, they have no reason to worry.

“The lesson of Amaranth was, don’t invest directly in one hedge fund firm that represents more than 5 percent of your portfolio,” Hunkeler says.

After the Amaranth blowup, International Paper diversified its holdings to include more funds of hedge funds—which are umbrella investments of hedge funds, and thus more diversified. And the firm won’t put more than 5 percent of its hedge fund investment in one manager.

Diversification, however, doesn’t necessarily deter employers from investing a large percentage of their defined-benefit plans in hedge funds, says Keith Hocter, investment consultant at Bellwether Consulting in Montclair, New Jersey.

“It’s not unheard of for a company to invest 100 percent in hedge funds,” he says. “Hedge funds are a very broad space; some are very conservative and some are very aggressive.”

Employers need to make sure they fully understand the funds’ investment strategies and risks, Hocter says.

Experts are conflicted about whether regulation of hedge funds would be valuable in the long run.

“I’m not sure the costs of making hedge funds register is going to justify the benefit,” says Jeff Gabrione, who heads manager research for Mercer Investment Consulting. “And like everything else, those costs will get passed on to the consumers.”

—Jessica Marquez

Fidelity Investments, the biggest U.S. mutual fund company, says it will do away with its traditional pension plan for about 32,000 of its workers in order to offer them a retiree health reimbursement plan and a beefed up profit-sharing plan.

“The pension plan was a relatively small component of our overall retirement savings program,” says Fidelity spokeswoman Anne Crowley. “The cornerstone of our retirement savings program is our profit-sharing plan.”

The profit-sharing plan has two components—an annual profit-sharing contribution Boston-based Fidelity makes to employees and Fidelity’s dollar-for-dollar match of its employees’ 401(k) contributions, the spokeswoman says. Fidelity currently matches up to 5 percent of employee 401(k) contributions.

In doing an analysis of benefits, Fidelity identified a “significant gap” in that it didn’t have a health care component for retirees, Crowley says.

“We have a very generous health care plan when we’re employed, but there was not a health care component for you when you retired,” she says. “In light of that and our own studies which showed this week that a couple reaching 65 will [need] $215,000 to fund health care costs in retirement, we felt it was a significant gap that needed to be addressed.”

Under the new plan, the 401(k) plan match will rise to 7 percent and profit-sharing contribution will continue, Crowley says.

The pension plan will be terminated May 31, and employees of Fidelity for a year or more will immediately become vested.

Employees can receive the accrued benefits either in a lump sum that they can roll into their profit-sharing plan where they can direct investments, or they can choose to take it in an annuity, which will provide them with a lifetime annual payment in retirement, she says.

Current retirees will continue to receive the same monthly pension distribution, but it won’t come from the Fidelity pension plan, Crowley says.

Filed by Kathie O’Donnell of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

A potential immigration reform proposal emanating from discussions between the Bush administration and Senate Republicans is causing consternation among corporate interests because it does not provide a path to permanent residence for temporary or undocumented workers.

At the same time, a group of high-tech businesses is warning that the visa cap for highly skilled immigrants will be reached sometime in April—in a record time of just weeks, or perhaps even days, after the government begins accepting applications from companies on March 31.

Raising the limits on H-1B visas is part of a comprehensive immigration reform bill introduced in the House on March 22 by Reps. Luis Gutierrez, D-Illinois, and Jeff Flake, R-Arizona, that would also strengthen border security, increase work-site enforcement, allow 400,000 to 600,000 low-skill workers into the country annually and establish a path to legalization for illegal immigrants.

A similar comprehensive measure has not yet emerged in the Senate, where the Bush administration has been working with GOP members to fashion a legislative framework.

Those talks, however, are resulting in a proposal that would delay the launch of a temporary worker program and increase the number of employment-based green cards only after certain triggers are met, according to a PowerPoint presentation of the plan released March 29 by the National Immigration Forum, a pro-immigration group.

The benchmarks include increasing border patrol forces to 18,300, building 370 miles of barrier between the U.S. and Mexico and ensuring that an employment verification system is in place that has the capacity to process temporary workers.

In addition, temporary workers would be admitted to the country under a program in which they work for two years and return home for six months. They can repeat that cycle two more times.

The country’s approximately 12 million undocumented workers can obtain so-called Z visas, which would be renewable every three years indefinitely. But they would have to pay a $2,000 fine and a $1,500 fee at each renewal. There would be no special provisions for a path to legal residency for temporary or undocumented workers. Each would have to apply through the normal green card process after current backlogs are cleared. Illegal immigrants would have to pay a $10,000 fine.

These proposals are drawing criticism in the business community. “Right now, it’s unworkable,” says Laura Reiff, a partner at the Greenberg Traurig law firm in Washington and co-chair of the Essential Worker Immigration Coalition.

The putative White House-Senate proposal won’t help companies that need low-skill workers, according to Reiff. She argues that there must be a bridge to legal residency for immigrants so that employers have a stable workforce.

“This is what we need for economic security in the United States,” she says.

Another group of business advocates stressed on March 29 that the country must admit more high-skill immigrants to survive fierce global competition. That group is urging Congress to reform the H-1B visa program that allows temporary residency to immigrants with at least a bachelor’s degree or equivalent work experience.

The current cap of 65,000 for the next fiscal year, which begins on October 1, is likely to be met within weeks of the opening of the application process this weekend, according to members of Compete America, a business coalition. An additional 20,000 spots are available annually for foreigners who have advanced degrees.

If a company didn’t obtain H-1B visas this year, it would have to wait until October 2008 to employ foreign high-tech workers.

“This year [the process] has reached a level of dysfunction that can only be described as absurd,” says Robert Hoffman, vice president of government and public affairs for Oracle.

Advocates say that the demand for employees with backgrounds in science, technology, engineering and math exceeds the number available in the U.S. workforce. In addition, more than half of the advanced degrees awarded each year in those areas go to foreign students.

Those graduates can stay in the country only one year after they leave school if they don’t have an H-1B visa. Even if they do get an H-1B, they have just begun a long journey toward legal residence. The green card backlog stretches back to those who applied at the beginning of the decade.

Uncertainty about the length of time that high-tech talent can stay in the country undermines business planning, says Lowell Sachs, senior manager of federal government affairs for Sun Microsystems.

“We need predictability,” he says.

Companies also want to be able to integrate top performers. “When we hire this talent, we want them to make a career with our company,” says Amy Burke, director of government relations for Texas Instruments.

If a company can’t hire high-skilled foreign workers, it may send them—and, perhaps, entire operations—to its facilities abroad. Or companies from other countries may hire foreign students once they graduate from U.S. universities. Current immigration policies “are pushing people toward our competitors,” Hoffman says.

Advocates back the reforms contained in the Gutierrez-Flake bill. They include raising H-1B limits to 115,000 annually and increasing employment-based green cards from 140,000 to 290,000 annually. The bill also would substantially increase the number of spouses and children who can receive green cards. 

If comprehensive reform breaks down, members of Compete America say they have received assurances from Capitol Hill leaders that H-1B changes will move in separate legislation.

But the H-1B program also has detractors with political clout.

“Unfortunately under current law, employers, especially in the high-tech industry, are abusing these temporary visa programs by exploiting workers, driving down standards and often facilitating the displacement of domestic workers and the outsourcing of jobs,” AFL-CIO president John Sweeney said in a statement supporting a bill introduced on March 29 that targets visa fraud and abuse.

All sides will be making their voices heard over the next few months as Congress and the White House wrestle with immigration reform. But most people agree that, with an election year looming, time is of the essence.

“The clock is really ticking,” Reiff says.

—Mark Schoeff Jr.