By: The Associated Press and E&P Staff
New Jersey’s largest newspaper says it will reduce employee salaries and no longer cover the entire cost of employee health insurance.
Publisher George Arwady says the moves, announced Thursday, were made necessary by a continuing decline in advertising revenues at The Star-Ledger of Newark.
The salary reductions will be done on a sliding scale, starting July 1. The first $40,000 of an employee’s salary will be reduced 5 percent, the next $40,000 by 10 percent.
Employees also will have to pay 25 percent of their health care plan costs.
Earlier this year, the newspaper said it would stop contributing to its employee pension plan and ordered staffers to take 10-day unpaid furloughs this year.
A memo from Arwady to staffers has now been posted at Romenesko and www.poynter.org. Here it is:
I wish I was writing to bring you good news for a change, but it probably will not surprise you to learn that our advertising revenue continues to deteriorate. If the paper is to continue to publish we have no choice but to make further significant expense reductions. Some of these reductions will reduce your income and mine.
In the first four months of this year our advertising revenue fell by $20 million compared to the first four months of last year, much worse than we budgeted. Our projections call for the rest of this year to be even worse compared to budget and last year. In addition to continued severe problems in the automotive, real estate and employment categories, many of our major retail accounts now have severely cut their spending and have told us that it won?t get better until the recession eases. The bottom line is that the paper has lost millions so far this year, and is looking at many millions more in red ink if we don?t take action now.
1. Effective July 1, you will have to start paying 25% of the cost of your medical coverage. If you are single, that amounts to $26.68 per week. If your coverage includes yourself and one other person, that will be $50.73 per week. If you have family coverage (3 or more) that will cost you $80.11 per week. If you have insurance available to you from another source, you can avoid these charges by opting out by June 20. One help for you is that we will set up a payroll deduction so you can make these payments from your pre-tax earnings.
2. Effective July 1, your end-of-year bonus will be rolled into your base income and become a permanent part of your salary. There no longer will be lump-sum December bonuses. After your bonus has been added to your current salary, however, the combined amount will be reduced. The first $40,000 of your new combined annualized income will be cut by 5%. If you make more than $40,000, your next $40,000 in income up to $80,000 will be cut by 10%. Any annualized income over $80,000 will be cut by 15%.
Also, half of the bonus that you are hoping to receive in December will be paid to you in July. This one-time July lump sum will be treated as part of your annual salary and reduced by the appropriate percentage. This extra July payment may be helpful as you adjust to these new economic realities.
In addition to these changes, there will be a series of non-personnel cost reductions and efficiencies that, annualized, will save millions of additional dollars.
You may be wondering: what happened to the savings from last year?s buyouts? The short answer is that they saved our neck by offsetting the large deficits that we were experiencing last year. Without them, the paper would have been sold or closed.
That was then, and this is now. ?Now? means the worst recession of our lifetimes, coming at the worst possible time for your industry and your newspaper. You may remember that the deadline for last year?s buyouts was October 1 — exactly 48 days BEFORE the collapse of Lehman Brothers bank signaled the beginning of this steep economic decline. The steps I am announcing today are designed to offset the impact of the economic nosedive that we have experienced since the buyouts of 2008.
You also may be asking: Will this be the end? I can?t promise that. I also can?t promise that any of these changes will be temporary. I can promise you that I and the Star-Ledger management team will continue to do whatever it takes to keep this great newspaper alive and as strong as possible despite advertising revenue that we project to be 48% less this year than the paper brought in as recently as 2006.
I can understand if you are angry and upset at what you?ve read so far, especially in conjunction with the various other changes we?ve already had to make. I am sorry to have to make these new announcements. The Star-Ledger has wonderful employees, and none of this is a reflection on your efforts and talents. The reality is that each of us hitched our star to an industry that for many decades offered some of the very best pay, benefits, working conditions and stability. Suddenly, in a very few years, that has changed. We either have to adapt or die.
You are all aware of the recently announced closure of a number of print papers, including one in our company. Other daily papers, including three in our company, have reduced their printing cycle and greatly adjusted compensation. Others, including a number in our company, have taken the route we have chosen ? staying as a 7-day publication but reducing pay and making other changes that affect benefits. We think this is the correct path, and it will succeed for The Star-Ledger.
Even with these changes, the Star-Ledger will continue to have excellent pay and benefits in comparison to similar newspapers and similar companies within our region of the world. I firmly believe we will survive this storm and come out of the recession healthy and stable.
If, however, you do not want to continue to work here with reduced pay and the other changes, I invite you to approach Mona Barnes, myself or your department head and let us know by June 20. If you approach us, and if we believe we can operate your department successfully without having to replace you, you will be able to leave with two weeks? pay for every year of service up to a maximum of six months. This would be paid out weekly (not as a lump sum) and with health care provided for the period.
Mona and I will make ourselves available to all of you in a series of meetings which you can attend to discuss any of these issues.