Investing April 29, 2002

Dot.com Job Cuts Down 47%

April 29, 2002 (PLANSPONSOR.com) - Internet firms shed 824 jobs in April, significantly down from the 1,549 job cuts announced the previous months, according to data from Challenger, Gray & Christmas.
Reported by

This month’s tally is 95% lower than the same time last year when the dot.coms hemorrhaged 17,554 jobs in April 2001. This month is also the eighth consecutive month in which the job-cut total was lower than the same month the previous year.

Every month since October, with the exception of March, tech firms have made fewer job cut announcements than the previous month.

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The April figure brings announced dot.com job cuts to a year-to-date total of 4,845. Since the outplacement firm started tracking dot.com job cuts in December 1999, announced cuts have reached 147,285. 

Though the dot.com bloodletting has slowed, it has been two years since the monthly job cut announcements were below the 1,000 mark. The April 2000 figure was 327.

This month, consumer services suffered the most job cut announcements at 393, followed by the technology sector, which lost 300 jobs.

Benefits April 26, 2002

Nearly Half Employer Benefit Dollars Going to Health Insurance

April 26, 2002 (PLANSPONSOR.com) - Retirement benefits are still the largest single sector of benefits spending by employers - but health benefits have been catching up fast, according to new research.
Reported by

In 2000, retirement benefits constituted 48% of total benefit spending, while spending on health benefits amounted to 42.1% of the total, according to the Employee Benefit Research Institute (EBRI).  In 1960 retirement benefits were nearly 60% of the total, while health benefits made up just 14.3% (‘other’ benefits were 25.7%, compared to just 10% of the total in 2000).

Still, the average annual growth rate in employer spending on benefits dropped off significantly during the 1990s, compared with the prior decade.  In the 1980s, the average annual growth rate was more than 8%, versus just 3.9% during the 1990s – a drop off attributable to the adoption of managed care among employment-based health plan sponsors, according to EBRI.

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Further, the slower growth rate in employer spending on group health insurance accounted for a large part of the slower growth rate in overall spending on employee benefits, according to the report.

Health Spending Dips, Rises

The rate of employer spending on group health insurance has declined steadily from 1981, when spending on group health insurance increased 17.5%.  In fact, by 1997 employer spending on health insurance actually posted a negative growth rate of -4.9%.  Unfortunately for employers, since that time the growth rate of employer spending on group health insurance has once again been on the rise, reaching 7.1% in 2000.

Overall, employer spending on retirement income benefits, less Social Security, increased at an average annual rate of 1.9%, growing to $186.1 billion in 2000, up from $154.4 billion in 1990.  EBRI notes that private-sector employers spent $55.3 billion on retirement income benefits, less Social Security, in 1980 – an amount that increased to $62.6 billion in 1990, and to $69.8 billion a decade later.

The growth in spending by state and local governments was even more dramatic, growing from $19.1 billion on retirement income benefits, less Social Security, in 1980 to $33.0 billion in 1990, and to $44.2 billion in 2000.

During the 1990s private-sector spending on retirement income benefits increased at an average annual rate of 1.1%, compared with 3.0% among state and local governments.

Other Findings

Employer spending on other benefits (i.e., unemployment insurance, life insurance, and workers’ compensation) increased to $86.9 billion in 2000 from $78.7 billion in 1990, growing at an average annual rate of 1.0%. 

Meanwhile, employer spending on Social Security, Old-Age, Survivors, Disability, and Hospital Insurance (OASDHI), grew at an average annual rate of 5.0% in the 1980s, and 5.8% in the 1990s.

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