Week in Review

State’s Unemployment Rate Dips in August

Signaling that California’s labor market may finally be stabilizing, the state’s unemployment rate dipped to 6.6% in August as employers axed far fewer workers than expected. a

The state shed a net 1,900 nonfarm positions last month, a modest drop in contrast to the country, which saw payrolls plunge by 93,000 jobs in August. In addition, the state Employment Development Department revised July’s job loss figures to 10,000 -- less than half what it had estimated last month.

Economists cautioned that California’s labor market remained a long way from recovery. Analysts said, however, that the shrinking job losses appeared to reinforce more forward-looking signals that show the national and state economies stirring to life.

“The job losses are diminishing,” said Tom Lieser, senior economist with the UCLA Anderson Forecast. “We are seeing a pattern that argues for a moderate economic expansion over the next year.”

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Savings of Work Injury Reform Bill in Question

Lawmakers agreed on a set of reforms for California’s troubled workers’ compensation system, whose spiraling costs have pounded employers, wrecked insurers and become an issue in the recall campaign.

But employer groups said the bill that emerged from a bipartisan conference committee late Tuesday contained language virtually identical to that in a preliminary measure circulated last week, except for one key difference: The projected annual savings have mysteriously doubled.

The reform measure, which was expected to speed through the Assembly and Senate and be signed by Gov. Gray Davis, promises to wring as much as $6 billion in costs annually from the $29-billion system by slamming the brakes on runaway medical costs and rolling back premiums for businesses.

Key lawmakers defended the integrity of the numbers. Sen. Richard Alarcon (D-Sun Valley), co-chairman of the workers’ compensation conference committee, said he was confident the reform package would generate the targeted savings.

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Employers See Health Premiums Rise 13.9%

U.S. employers’ health insurance premiums climbed an average of 13.9% this year, the most since 1990, in the third straight year of double-digit percentage increases, a survey showed.

But the survey, conducted by the Kaiser Family Foundation and the Health Research and Educational Trust, found some relief for workers. Companies this year didn’t shift as much of the increase in premium costs to employees as they did in 2002. Nor did many employers reduce the level of the health benefits or drop coverage for their workers, as had been feared.

On average, worker contributions for health insurance rose 8% for single coverage, to $42 a month, and 13% for family coverage, to $201, the survey showed.

Many employers, especially larger ones, reported that they were likely to pass on more of the costs of health benefits to workers next year. And more than half of the 1,856 private and public employers surveyed said they probably would increase the amount their employees would have to pay for prescription drugs next year.

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NYSE Chairman Says He Won’t Step Down

Richard Grasso said he would not resign as chairman of the New York Stock Exchange despite ballooning criticism of his compensation and leadership.

His comments came a day after the exchange shocked outsiders by revealing that it owed Grasso $48 million on top of the nearly $140 million it already had paid him this year. Grasso said he would not take the extra money, but his decision did little to quiet critics, who were angered that the $48 million had not previously been disclosed.

The flap is occurring as the NYSE, which imposes corporate governance rules, is being pressured by the Securities and Exchange Commission to improve its own standards.

Veteran NYSE board member William B. Summers Jr., chairman of McDonald Investments Inc. in Cleveland, said Grasso continued to have “broad, enthusiastic support on the board.”

Still, there were hints that Grasso’s backing may be slipping. Two NYSE members have written to Securities and Exchange Commission Chairman William H. Donaldson urging Grasso’s ouster.

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Internet Account Owners Targeted in RIAA Suits

In an aggressive bid to stamp out online piracy, the recording industry sued 261 Internet users around the country, accusing them of offering large libraries of songs for copying on five popular file-sharing networks.

The cases mark a turning point in the industry’s four-year battle against rampant piracy on the Internet. For the first time, the industry is training its legal firepower on individuals, not the companies profiting from the public’s hunger for free music.

The defendants named weren’t necessarily the people using file-sharing networks. The Recording Industry Assn. of America’s investigation identified only the people whose Internet access accounts were being used to share files.

The lawsuits allege that users of Kazaa and four other networks violated the labels’ copyrights by downloading or sharing songs without permission. The defendants were accused of offering an average of 1,000 songs each for others to copy, expos- ing themselves to damages of $750,000 to $150 million each.

With such huge potential penalties, many defendants are expected to concede instead of fight. A few agreed to pay about $3,000 to settle claims before they were filed. The RIAA also offered amnesty to file sharers who turn themselves in before they are targeted.

One defendant who has agreed to settle was 12-year-old Brianna Lahara of New York. The labels agreed to drop her case for $2,000 and an apology.

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Disney, Pixar Seas Apart in Contract Negotiations

Walt Disney Co. Chairman Michael Eisner is straining to make -- or break -- a deal with Pixar Animation Studios by the time the entertainment giant’s board meets at month’s end.

The difficult bargaining, which has been underway for the last two weeks, finds Burbank-based Disney and its key animation supplier far apart on major issues, according to people familiar with the talks.

Open points include financial terms, whether productions underway would be swept into the new agreement and how Disney would coordinate the release of its own animated films with Pixar-supplied movies in which Disney would no longer have ownership, the people said.

The stakes are unusually high: Five Pixar-produced films, including “Monsters, Inc.” and this year’s “Finding Nemo,” have generated more than $1 billion in total profit for the partners and accounted for about half of Disney Studios’ operating profit in recent years.

Eisner hopes to get his board, which is scheduled to meet Sept. 23, to approve a new financial arrangement that would continue his company’s 12-year alliance with Emeryville, Calif.-based Pixar -- or to endorse a break-off that would leave Pixar and its chairman, Steve Jobs, free to find a new Hollywood partner.

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Nike to Pay $1.5 Million to End False Claims Case

Nike Inc. agreed to pay $1.5 million to end a closely watched commercial speech case that the U.S. Supreme Court declined to decide, leaving in place a California Supreme Court ruling that allows consumers to sue companies over allegedly false statements.

In announcing the settlement, the Beaverton, Ore., athletic apparel company said it agreed to give the money to the Fair Labor Assn. to spend on its global factory monitoring program. The company said it would rather put the money toward improving factory conditions than pay for costly litigation with an uncertain outcome.

Marc Kasky, a San Francisco activist, had sued Nike under California’s unfair-competition law, claiming the company had lied about labor practices at some factories in Asia.

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For a preview of this week’s business news, please see Monday’s Business section.