Second class all the way

By Rachel Beck

Associated Press

NEW YORK – Gone are the catered lunches, baskets of fresh fruit and free bottled water. Likewise, handouts of cell phones or souped-up laptop computers. And forget first-class air travel, upscale hotels and car services.

The generous employee perks that became commonplace in corporate America during the booming 1990s are being slashed by businesses scrambling to save nickels and dimes during the economic downtown.

While workers love the cushy benefits, they are glad to forgo such indulgences if it means their businesses can stay alive.

“I’ve eaten at more diners than I’ve ever eaten at before,” said Richard Laermer, chief executive of RLM public relations in New York. “If that’s what it takes to keep costs down, I will do it.”

The competitive job market over the last few years left corporations struggling to find and retain quality employees. In addition to high salaries, signing bonuses and stock options, many businesses tossed in other benefits to woo potential workers.

Some provided in-office massages and pedicures, while others offered concierge services that handled workers’ dry cleaning. Many companies spent generously on parties at hot restaurants and clubs, and employees were showered with the latest high-tech gear.

But the weakened economy and stock market bust changed all that.

“There is now a very clear distinction between ‘nice vs. necessary’ when it comes to perks and other symbolic services,” said Tom Casey, a partner in charge of Unifi Network, the human-resources subsidiary of PricewaterhouseCoopers.

At RLM, Laermer had to put the brakes on spending as many of his clients hit the financial skids, some of them going out of business. Not only did he cut off room service when he travels, he now stays at less expensive hotels. He has traded car-service and taxi travel in New York for the subways.

His staff has been stripped of its BlackBerry interactive pagers, which let users read their e-mail from anywhere. Free food is no longer brought into the office.

“We went a little far with our expenses,” said Laermer, whose clients included defunct online delivery service Kozmo.com. “We should have been a little more careful.”

At UGO Networks, a Web-based entertainment portal, the price of soda pop was boosted from a quarter to 50 cents after a corporate subsidy went by the wayside. Company parties, formerly held at downtown clubs and restaurants, have been replaced by cupcakes in the office.

New York-based UGO also dumped its array of flavored coffees and espressos, replacing them with plain black coffee. Some staffers have gone so far as to ask co-workers to reduce the number of disposable coffee cups they use, and preferably to start using their own mugs.

Lucent Technologies Inc. already cut some 19,000 jobs, with up to 20,000 more in the offing. The telecommunications giant also is scaling back in other ways as it pursues a target of $2 billion in annual savings. Worker cubicles at its Murray Hill, N.J., headquarters now have one fluorescent bulb, down from four. Employees who carry both cellular phones and pagers have been asked to surrender one of the devices. Free coffee and water coolers have also disappeared.

Dow Jones &Co., publisher of The Wall Street Journal, got rid of the indoor plants at its offices in New York and South Brunswick, N.J., to save on the cost of maintenance. The move is expected to save $40,000 a year for Dow Jones, which has laid off more than 400 people this year.