Thursday June 15th, 2006
by: Ed Mayberry, June 15, 2006 5:06:00 am
Healthcare costs in Houston rose at a rate of 6.4 percent this year, down from a 12.2 percent increase in 2005. Costs have not been in the single digits since 1999 when it was 5.4 percent and was as high as 17.8 percent in 2002. Employee Benefits Solutions released its 11th annual Healthcare Cost and Benefit Trends Survey in partnership with the Houston Business Group on Health. EBS President Jim Watt says the survey results can be attributed to modifications in benefit levels costs that are just now showing up.
"Healthcare costs are trending down. That means a year-over-year change in costs have gone from 12.8 percent last year to 6.4 percent this year, so roughly half of what that was. And I attribute a lot of that to the plan design changes that employers made in a prior period, in 2004, 2005, now evidencing itself in 2006. So, good news for employers and good news for employees alike."
Watt says surveys like these help companies plan for the future.
"They're broadly used, we're coming to find out, not only by CFOs inside of organizations as they plan and look at the future on how they want to compete for employee talent and how they want to compete in the marketplace for the products and services. And also HR departments, and how they design the program so that they can compete for the human capital talent that's out there, and very, very mobile these days."
Although costs continue rising, the survey found that healthcare costs are trending down.
"Given that trend healthcare changes year-over-year have been in the double digits, this will be perceived positively by most people. Now, your typical CFO likes to think about inflation in real terms, not in healthcare terms, so you know it still has an impact on all organizations. These costs are passed through to their customers in the goods and services they offer. So it's better news relative to other years, but healthcare costs still trending at this rate is still problematic, overall."
Some 171 employers--large and small--participated in the survey from various industries. These employers collectively spend $2.9 billion on healthcare benefits, and $1.6 billion of that is spent in Houston.
Houston remains a seller's market in real estate, according to the Houston Association of Realtors. Total property sales for May totaled 8,629, which was an 11.6 percent increase over May 2005. Some $1.7 billion in properties were sold--a 20.9 percent increase compared to last year's nearly $1.4 billion in April sales. The median home price for a single-family home reached an all-time record of $152,000--a 5.6 percent increase--and the average single-family home price broke through the $200,000 mark for the first time to $204,005--an 8.2 percent increase.
First-time claims for unemployment benefits fell last week to the lowest level in nearly four months. The Labor Department reports initial jobless claim filings dropped by 8,000 to 295,000. It's the second straight week that claims have fallen. Even with the two-week improvement, some economists still look for the labor market to weaken in coming months, reflecting a slowdown in economic growth. Signs of that slowdown were apparent in the surprisingly weak increase of just 75,000 new jobs last month--100,000 below what economists had expected.
The Houston area Monster Local Employment Index for May indicates online job demand rose two points to 112 in May, continuing a four-month upward trend. Online recruitment activity is reflecting the region's thriving economic climate in which payroll employment is expanding at virtually twice the national pace. Oil companies have shown signs of expanding their drilling, oil and gas services in response to soaring profits from elevated energy prices. The index is based on a real-time review of millions of employer job opportunities culled from 1,500 Web sites.
Houston teachers will get an average raise of 7.5 percent and the Houston Independent School District would send millions of dollars more to schools under a $1,437 billion budget plan outlined by Superintendent Abelardo Saavedra. Some teachers would receive up to a 15 percent raise. The state funded $31 million for the pay raise, and HISD will contribute $11.8 million. Pay for starting teachers will be boosted to $39,870 a year--up $3,820 from last year. The new budget would also set aside $3 million to help academically-struggling schools, $4.8 million more for elementary and middle schools and $10 million for a new program to bring school buildings up to standard.
Rival unions are creating a new union to represent the 13,000 City Hall employees, creating the Houston Organization of Public Employees. The union created by Services Employees International Union and the American Federation of State, County and Municipal Employees will be government by five members, with three coming from SEIU and two from AFSCME. The union hopes to get the signatures of support it needs in the next 30 to 40 business days.
About 100 immigrant janitors marched through Houston today to protest a company accused of withholding checks and not paying workers for all of their hours. The march took place after a federal lawsuit was filed against Houston-based Professional Janitorial Service. The lawsuit accuses the company of violating the Fair Labor Standards Act by taking a half-hour deduction from workers pay stubs for hours they had actually worked. Attorney Kevin Chavez, who represents the janitors, says the workers are being taken advantage of because of their immigration status. Chavez says many are illegal immigrants. A company spokeswoman had no immediate response to the lawsuit.
Texans are seeing a slight increase in gasoline prices for the second week in a row. The weekly AAA Texas retail gasoline price survey reports today that the average price of a gallon of regular, self-serve gasoline was nearly two-dollars and 83 cents. That up one cent from last week. The national average has risen to about $2.90. The cheapest gas in Texas was in Corpus Christi for $2.65 per gallon. The most expensive gas in the state was $2.93 in the Galveston-Texas City area. Houston's average is up seven-tenths of a percent to $2.92 a gallon.
Planning to buy tickets for your summer vacation at the last minute? Your procrastination will cost you. Last-minute travelers, along with those in the first-class cabin, will be paying more this summer. Fares are creeping up, and you can blame it on fuel prices. Delta just imposed a $50 hike on one-way tickets for walk-up and first-class passengers. United quickly matched it. And a Northwest spokesman says they're looking at it. Delta's most expensive one-way domestic coach fare is now $699. That's a $200 increase from when the carrier introduced its Simplifares program about a year and a-half ago.
Airlines and two cities today joined forces on a compromise over the flight-restricting Wright Amendment at Dallas Love Field. The mayors of Dallas and Fort Worth unveiled the deal involving Dallas-based Southwest Airlines and Fort Worth-based American Airlines. The Wright Amendment restricts long-haul direct flights from Love Field, which is close to downtown Dallas. It was enacted more than a quarter-century ago to bolster then-fledgling DFW Airport, which is home to American Airlines. The measure to be forwarded to Congress would include allowing through-ticketing at Love Field. Currently, direct flights are restricted to nine nearby states. The plan down the road would restrict Love Field to 20 gates--with Southwest getting 16, two for American and two for Houston-based Continental Airlines. The proposal also includes upgrades to Love Field. The deal now goes to Congress.
Industrial production fell in May for the first time in five months. The Federal Reserve reports output at the nation's factories, mines and utilities was down one-tenth of a percent last month, reflecting sharp declines in auto and machinery production and a dip in mining activity. In addition, the rate at which American industry is operating fell two-tenths percent last month--to 81.7 percent of capacity. Analysts think these latest numbers could have some bearing on the Fed's concerns about inflationary pressure. The central bank has been warning since December of inflation risks that could be worsened by growing use of the labor pool and industrial capacity.
The U.S. Senate today gave final Congressional approval to an emergency spending bill for the wars in Iraq and Afghanistan and for hurricane relief. People and businesses in parts of the Gulf Coast--including Texas--are still recovering from two deadly 2005 storms--Hurricanes Katrina and Rita. The vote sends the $94.5 billion measure to President Bush for his signature. The bill includes almost $20 billion to help the Gulf Coast. More than two-thirds of the money, $66 billion, is for the ongoing wars. The measure also includes President Bush's plan to provide about 1,000 more border patrol agents along the Mexican border, send about 6,000 National Guard troops to the border and build detention space for 4,000 illegal immigrants.
A ship that's nearly three football fields long appears idle--perhaps even abandoned--in the Gulf of Mexico. But below decks, a 200-member crew of geologists, engineers and technicians work around the clock to control every move of an adjoining oil rig as it bores bore through the ocean floor. Chevron is developing a deepwater oil field 190 miles off the Louisiana coast that it projects will produce 100,000 barrels of crude per day by 2008 and 500 million barrels overall. Each well will reach more than 26,000 feet below sea level. It's the kind of deepwater discovery once thought to be out of reach. But with improved technology and climbing global oil prices, companies are spending billions to develop oil fields the Interior Department says will substantially boost Gulf production. The Interior Department defines deepwater drilling as drilling in water depths between 1,000 feet and 5,000 feet. Anything greater than 5,000 feet is considered ultra deepwater drilling. As the wells producing oil in the shallower waters in the Gulf of Mexico dry up, oil and gas companies need to look farther offshore for oil to maintain domestic supply levels. It's a volatile business with companies facing increasing development costs, a battle with the federal government over royalties and continued rig shortages. When Chevron begins producing oil from the Tahiti Reservoir, it'll be among several new major oil and natural gas projects in the Gulf over the next two years. Within a year, BP expects to have two Gulf projects producing oil designed to collectively generate 450,000 barrels of oil a day. Anadarko Petroleum will operate Independence Hub, also in the Gulf, slated to produce a billion cubic feet of natural gas a day. The deepest Gulf discovery: last December, Chevron used Transocean's Discoverer Spirit drill ship to produce a well 34,189 feet deep and about 170 miles southeast of New Orleans. It was done in 3,500 feet of water.
Houston-based Southwestern Energy says daily production at the Fayetteville Shale Natural Gas Field has increased since early May. Southwestern says gross production at the Fayetteville Shale rose to 30 million cubic feet per day--compared to 20 million cubic feet on May 1st. The company cited more drilling rigs in operation, an increase in wells completed and better performance at certain wells. The company now has ten rigs running on the gas field, compared with seven at the start of May. The Fayetteville Shale is an unconventional gas field in Arkansas, where Southwestern and Chesapeake Energy, among others, have drilled.
The arts and crafts chain Michaels says an internal review shows that the company understated nearly $60 million in compensation between 1990 and 2001. Irving-based Michaels says the investigation focused on its stock options-granting process. It didn't provide details on options nor identify executives who received them, but it says it doesn't believe it needs to restate any financial results. In related news, the New York Post reports that three groups of buyout firms are interested in buying Michaels. According to the Post, the prospective buyers are: a consortium of the firms Bain Capital, the Blackstone Group, the Carlyle Group and Thomas H. Lee Partners; a second group, consisting of Apollo Management, Kohlberg Kravis Roberts and Fort Worth-based Texas Pacific Group; a third group, featuring California firms Hellman and Friedman and Leonard Green and Partners.
Weak customer traffic, which contributed to a decline in revenue, is being blamed for a nearly doubling of the loss suffered by Pier One Imports during the first quarter. The Fort Worth-based home furnishings retailer says it lost 26 cents a share--excluding charges--in the latest three-month period, contrasting with 14 cents in red ink a year earlier. That matches analysts' expectations. Quarterly revenue was down more than 3.5 percent as sales at stores open at least a year fell 6.6 percent. Looking ahead, Pier One says it still sees better merchandise margins this quarter, but expects sales for this month to be in the negative low-to mid-teens range.
A lawsuit filed in Austin by a conservative taxpayer watchdog group targets how much Texas is spending. The suit says the state's biennial spending limit is an artificial gauge of the economy. The constitution requires that the Texas budget not exceed economic growth. The Legislative Budget Board determines that limit before each regular legislative session, based on personal income of all Texans. The limit for the current budget was set at about $56 billion. But the group Citizens Lowering Our Unfair Taxes says personal income gives an inflated measure of the economy. The lawsuit asks the court to establish a reasonable yardstick to measure the economy and to force an open vote of the legislature in setting the limit. The lawsuit also asks that the court assess the spending in a new school finance tax structure.
Three chemical manufacturers have been ordered to pay the city of Modesto, California, $178 million for contaminating its water with suspected carcinogens. The defendants in the case are Vulcan Materials, Dow Chemical, and RR Street and Company. Occidental Chemical of Dallas and Pittsburgh-based PPG Industries were ordered to contribute to the award. Jurors in San Francisco Superior Court found the companies acted with malice because they failed to tell dry cleaners how to use the chemicals without harming the environment. The jury levied more than $175 million in punitive damages late yesterday and over $3 million in actual damages for groundwater contamination. Representatives of the companies say they plan to appeal the verdict.
Fort Sam Houston in San Antonio has received 1,300 utility service termination notices for delinquent bill payments. Post officials blame the late payments on a $26 million budget shortfall this year. CPS Energy warned commanders at the post to pay $4.2 million or risk losing power. The post is three months behind on its bills, but both army and utility officials say the two parties are talking and no cutoff is imminent. The post is waiting on supplemental funding from the Army Installation Management Agency. Congress this week has been considering a supplemental appropriations bill to fund the military and hurricane relief. In the meantime, officials from CPS Energy say they'll work with the post to resolve the outstanding debt. Customer Services Director Sylvia Arnold says the post as important to the utility and the community, and that it's not a high risk for non-payment.
Three San Antonio-area sites are among the field of candidates for a proposed federal lab for study of the nation's most dangerous disease threats. The U.S. Department of Homeland Security has plans for a $450 million national bio- and agro-defense facility. Brooks City-base, the Southwest Foundation for Biomedical Research and the Texas Research Park are among 29 locations under consideration for the lab. All are in San Antonio. Texas A&M University is the only other Texas site under consideration for the lab. Also being considered is the existing Plum Island Animal Disease Center in New York. Initial plans are for a 500,000-square-foot lab with up to 300 scientists and support staff on at least 30 acres. The lab would develop countermeasures against human and animal diseases that could be used as terrorist weapons. About five finalists will be announced around September, with a final selection expected in 2008. The facility could be on line by 2012.
Companies have been racing to attract business from the nation's fast-growing base of Hispanic consumers. But experts say many marketing tactics miss the point or are flat-out wrong. Some consultants met in Dallas for a seminar on marketing and who's doing what. Cingular Wireless, the nation's largest cell phone provider, offers bilingual and Spanish ring tones to its customers. The company tries to have bilingual employees in each store. Marketers say simply translating a slogan or ad from English creates a high margin of error and the chance of sending a message with the wrong connotation. For example, chocolate maker Hershey tried to market a line of sweets aimed at Latinos, it used a word that some recognize to mean caramelized milk. But Juan Faura with the Dallas advertising firm Cultura says the word is a lewd reference for other Latinos.
Galveston.com has won a Stevie Award for best overall Web design in the 2006 American Business Awards, and is a finalist in the Web site brand building and promotion category. The president and vice president of Galveston.com were presented the Stevie at an awards ceremony in New York City.