Boston Globe unions say NY Times wants $20M cut

BOSTON (AP) -- Union leaders say The New York Times Co. has told The Boston Globe's unions they must agree quickly to $20 million in concessions.

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The Globe reported the Times Co. threatened to shut down the newspaper if the concessions aren't met.

Executives from the Times Co., which owns the Globe, met this week with leaders of the newspaper's 13 unions. Boston Newspaper Guild president Daniel Totten said the concessions could include pay cuts, the end of company pension contributions and the elimination of lifetime job guarantees. The Guild is the Globe's biggest union, representing more than 700 employees.

Both a Times spokeswoman and the Globe's publisher, Steve Ainsley, refused to comment for a story on the Globe's Web site. Ainsley, Totten and Globe editor Martin Baron did not immediately return messages left after business hours by The Associated Press.

The concessions will be negotiated with each of the unions, leaders said.

"We all know the newspaper industry is going through great transition and loss," said Ralph Giallanella, secretary-treasurer of the Teamsters Local 259, which represents about 200 drivers who deliver the newspaper. "The ad revenues have fallen off the cliff. Just based on everything that's going on around the country, they're serious."

Economic woes have ripped through the newspaper industry in recent months. Scripps Co. closed the Rocky Mountain News in Denver and Hearst Corp. shut down the Seattle Post-Intelligencer. The Christian Science Monitor, which is based in Boston, stopped daily publication last week in favor of online news. Other major papers have filed for bankruptcy.

The Globe has gone through several rounds of layoffs and buyouts and reportedly lost tens of millions of dollars last year.

Is the Economy Killing the 401(k)?

For beleaguered investors in 401(k) retirement plans, the news keeps getting worse. Over the past year the typical plan participant has suffered a loss of anywhere from 20% to 35%. Now a growing number of employers are adding to their workers’ woes by cutting their 401(k) matching contributions. A recent survey by Spectrem Group found that 34% of U.S. employers had reduced or eliminated their matches since January 2008, and another 29% intend to do so over the next 12 months.

The Pension Rights Center, which keeps a running tally of companies that have cut their 401(k) matches, reports that more than 100 employers are on the list. Among the recent additions: J.P. Morgan Chase, Rockwell Automation, and—can you say irony?—the leading advocate for retirees, AARP.

From the employer’s standpoint, cutting the 401(k) match is a quick way to slash costs, and it’s a kinder alternative to laying off employees. But the long-term impact of the cuts threatens the retirement security of their workers, which in turn cast doubt on the future of the 401(k) plan. There are signs that 401(k) participants, once famous for their inertia in past economic downturns, have started to give up on their saving. Spectrem’s survey found that 20% of employees have lowered their contribution rates, and another 5% intend to do so over the next 12 months. Those that are continuing to contribute are taking fewer risks. According to the Hewitt Associates 401(k) index, some 80% of contributions are flowing to fixed-income investments, not stocks.

All of which will make it more difficult for plan participants to earn the returns they need to achieve a comfortable retirement—and for the 401(k) plan to deliver on its promise. A study by the Employee Benefits Research Institute found that it will take most older workers (those who have been at their job for 20 years or more) at least three years to recover their 2008 losses. That calculation assumes employees continue to hold stocks, earn returns of at least 5% annually, and continue to contribute to their plans. If the stock market returns zero for the next few years, it will take workers nearly five years to recover their losses.

The flaws of 401(k)s have come under sharp scrutiny in Washington. At a February hearing the Senate Aging Committee examined 401(k) target-date retirement funds, which posted surprisingly large losses, particularly for older workers who were seeking safety. “Despite their popularity, there are absolutely no regulations regarding the composition of target funds,” said committee chairman Sen. Herb Kohl (D.-Wi.). “With more and more Americans relying on 401(k)s and other defined contribution plans as their primary source for retirement savings, we need to make sure their savings are well-protected with strong oversight and regulation.” The House Education and Labor Committee has also held hearings on 401(k) plans—at the most recent one, committee chairman Rep. George Miller (D.-Calif.) labeled 401(k)s plans a “a high-stakes crap shoot.”

As the criticism mounts, some policy experts are seizing the opportunity to push for a new tier of savings plan designed supplement or replace the 401(k), which would provide a steady stream of retirement income. A flurry of proposals have already been issued, including one last month, backed several policy groups and Service Employees Union International. This latest plan calls for a universal retirement program that would mandate contributions from employers and employees, with the government subsidizing lower-income workers.

Will some sort of new retirement plan get any traction? Despite the 401(k)s shortcomings, major changes seem unlikely at the moment. Even President Barack Obama’s proposal for an automatic IRA, which would establish a simplified retirement plan for small business workers, is facing stiff resistance from the GOP and business interest groups. But if the stock market keeps sliding and the recession lingers on—and millions of baby boomers move into retirement without enough money to pay the bills—Washington is bound become more receptive to broader changes. For now, though, the only remedy for your beaten-down 401(k) is to somehow save a lot more.

– Penelope Wang