Cracks in Americans’ nest eggs have spread to a Guilderland provider of retirement plan educational materials, which last week cut 10 percent of its local work force.
After seeing its 401(k) retirement plan administrator customers get slammed by investment losses and rising unemployment, Newkirk Products reduced its Guilderland work force by 30 to 270. The cuts represented the first layoffs the firm has pursued in its 37-year history.
“It was a sad day here last week,” said company President Peter Newkirk.
Accompanying the cuts were wage reductions for the company’s remaining work force of over 400 employees in New York, New Jersey and Minnesota. Newkirk said the wage reductions were based on a sliding scale, with the highest paid workers losing the most amount of their salary.
“We had to do that so we didn’t have to eliminate more jobs. Everyone is feeling the pain.” Newkirk said.
Newkirk traced that pain back to retirement plans, which have lost trillions of dollars in value since the stock market’s meltdown in September. For example, the 1,793 retirement plans monitored by the Wilshire Associates independent investment consulting firm in Santa Monica, Calif., saw their median return plummet 23 percent last year. Those plans have a combined $760 billion in assets.
Also hurting the Guilderland firm is U.S. employers’ lack of hiring, which is diminishing demand for the introductory 401(k)-related material Newkirk prepares and publishes.
Despite soft demand from retirement plan administrators, Newkirk said his managed care arm, which publishes pre- and post-enrollment materials for health insurers, remains strong.
Newkirk also expects the firm’s operations that cater to financial professionals, such as certified public accountants and financial planners, to receive a boost from the $787 billion recovery package President Obama signed into law Tuesday. Over the weekend, Newkirk Products prepared and printed copies of a 16-page booklet that details recent tax law changes by the American Recovery and Reinvestment Act of 2009.