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Madison-area companies offer debt relief as a perk

MADISON — Forget the free snacks. Move over, gym memberships.

A Madison company this month launched a new employee benefit — paying off a portion of an employee’s student loan debt — in a move that could become more mainstream as student loans continue to cripple many college graduates facing mountains of debt.

Esker, a Middleton software company, launched student loan assistance as a new employee benefit this month. The company pays an employee’s student loan provider between $100 and $150 per month, depending on how many years the employee has worked there, for up to five years and a total of $9,000 in subsidies.

Student loan assistance is a benefit increasingly being offered in the private sector as companies recruit employees in a tight labor market with low unemployment.

Forbes called student loan repayment assistance the “hottest employee benefit of 2018,” with companies such as PricewaterhouseCoopers, Aetna and Penguin Random House adding student loan payments to its list of employee perks in recent years.

How widespread the benefit has become in Madison, one of the country’s most educated cities, is less clear.

Of Dane County’s five largest employers, representatives for UW-Madison, Epic, Exact Sciences and WPS Health Insurance said their companies do not offer employees student loan assistance. Two messages to Sub Zero-Wolf Appliances were not returned.

American Family Insurance started offering student loan assistance to its employees in early 2018, citing a reduced federal tax rate from President Donald Trump’s administration.

Employees who graduated within three years of their hire date are eligible for a monthly $100 contribution to their student loan provider with a maximum of $10,000 paid by American Family.

“We believe it’s part of an overall employee experience that encourages people to bring their best to work every day, and sets American Family apart as we recruit and retain talent,” American Family Insurance spokeswoman Erin Johansen said.

Across the University of Wisconsin System, about 72 percent of students seeking bachelor’s degrees borrowed money in the 2016-17 academic year, the most recent System data shows. The average amount of debt was $30,771.

At UW-Madison, 53 percent of undergraduate students in the class of 2018 graduated without debt, Chancellor Rebecca Blank said at last week’s UW System Board of Regents meeting.

Offering student loan assistance helps less well-known companies compete for young talent, according to Greg Poulin, co-founder and chief operating officer for Goodly, which developed software for companies to automate student loan payments directly into payroll deductions.

Poulin established the San Francisco-based start-up last April. As a recent college graduate himself, he was working for another company and facing $900 monthly student loan payments. He said existing software on the market was “clunky” and didn’t interact with a company’s software, so human resources departments were manually processing checks to student loan providers for individual employees.

Companies pay between $6 and $12 to Goodly for each employee enrolled in the benefit. Employers have to pay payroll taxes on the student loan payments and employees have to pay income taxes.

Still, it’s an attractive, meaningful benefit to many employers, he said, particularly for those trying to increase diversity among its workforce ranks.

Women hold nearly two-thirds of all student loan debt and people of color are disproportionately burdened by student debt, research shows.

The company is in conversations with other Wisconsin employers, including some in the Madison area, Poulin said.

“With unemployment so low, especially in the Madison area, companies are trying to find different ways to differentiate themselves in a competitive hiring environment,” Poulin said.

Toys R Us plans second act

NEW YORK — Toys R Us fans in the U.S. should see the iconic brand re-emerge in some form by this holiday season.

Richard Barry, a former Toys R Us executive and now CEO of the new company called Tru Kids Brands, told The Associated Press he and his team are still working on the details, but they’re exploring various options including freestanding stores and shops within existing stores. He says that e-commerce will play a key role.

Toys R Us, buckling under competition from Amazon and several billions of dollars of debt, filed for Chapter 11 reorganization in September 2017 and then liquidated its businesses last year in the U.S. as well as several other regions including the United Kingdom.

In October, a group of investors won an auction for Toys R Us assets, believing they would do better by potentially reviving the toy chain, rather than selling it off for parts. Starting Jan. 20, Barry and several other former Toys R Us executives founded Tru Kids and are now managing the Toys R Us, Babies R Us and Geoffrey brands. Toys R Us generated $3 billion in global retail sales in 2018. Tru Kids estimates that 40 percent to 50 percent of Toys R Us market share is still up for grabs despite many retailers like Walmart and Target expanding their toy aisles.

“These brands are beloved by customers,” said Barry. He noted that the company will focus on experiences in the physical stores, which could be about 10,000 square feet. The original Toys R Us stores were roughly about 40,000 square feet.

Barry said he and his team have been reaching out to toy makers and have received strong support. But he acknowledged that many had been burned by the Toys R Us liquidation.

Tru Kids, based in Parsippany, New Jersey, about a 20 minute drive from Wayne, New Jersey, where Toys R Us was based, will work with licensing partners to open 70 stores this year in Asia, India and Europe. Outside the U.S., Toys R Us continues to operate about 800 stores.

US stock indexes end mixed ahead of US-China trade talks

NEW YORK — Wall Street capped a day of mostly listless trading with a mixed finish Monday as gains in industrial companies, banks and energy stocks outweighed losses elsewhere.

Small-company stocks fared better than the rest of the market as investors shifted focus away from the tail end of a relatively strong corporate earnings season and looked ahead to key trade talks between the U.S. and China later this week.

U.S. Treasury Secretary Stephen Mnuchin is leading a delegation set to meet with Chinese officials on Thursday and Friday. The talks are aimed at resolving a trade war that threatens to stunt global economic growth, in part by raising prices on goods for consumers and companies. The situation could get worse when a truce on tariffs expires in early March.

“The problem is, if this trade issue goes on long enough, it will metastasize itself to our economy, “said Sam Stovall, chief investment strategist at CFRA.

The Dow Jones Industrial Average fell 53.22 points, or 0.2 percent, to 25,053.11. The S&P 500 index rose 1.92 points, or 0.1 percent, to 2,709.80. The Nasdaq composite added 9.71 points, or 0.1 percent, to 7,307.90. The Russell 2000 index of smaller-company stocks gained 12.59 points, or 0.8 percent, to 1,518.98. European markets finished higher.

U.S. indexes spent much of the day wavering between small gains and losses on a light day of company earnings news.

Companies have mostly reported better-than-expected earnings for the last three months of last year. Still, concerns have been building about whether profits can keep growing this year, especially after companies’ strong gains in 2018 following a sweeping corporate tax cut.

So far, 66.4 percent of companies in the S&P 500 have reported earnings, with 69 percent beating analysts’ forecasts. Earnings growth comes in at 14.5 percent for the quarter. But some companies have tempered their outlooks and analysts currently expect a 2 percent contraction in the first quarter.

Signs that the global economy is slowing have also added to the market’s worries about earnings in 2019.

Economists’ fears of a global slowdown were given additional fuel from a report Monday showing Britain’s economy had its slowest economic growth since the aftermath of the global financial crisis. Both Europe overall and China are contending with slower growth.

Traders also were keeping an eye on the negotiations in Washington aimed at averting another federal government shutdown.

Democrats and the GOP remained separated Monday over how much to spend on President Donald Trump’s promised border wall. A Friday midnight deadline is looming to prevent a second partial government shutdown.

Even if the government shuts down again, it’s not likely to have a major impact on the stock market, Stovall said.

“While shutdown is certainly a possibility, it’s more of an annoyance,” he said, noting that the market gained more than 10 percent during the last shutdown.

A surge in sales at Tim Hortons helped lift quarterly earnings for parent company Restaurant Brands. The company, which also operates Burger King, posted a quarterly profit that topped Wall Street’s forecasts. The stock added 2.1 percent.

Tesla got a boost from Canaccord analysts, who upgraded the stock from “Hold” to “Buy.” The analysts noted that results for the last two quarters and the electric car maker’s outlook have removed “significant concerns” about the production and profitability of the Model 3, the company’s car designed for the mass market.

Meanwhile, LMC Automotive estimated that the Model 3 was the top-selling luxury car in the U.S. last year, outselling the Lexus ES by more than two to one. Shares in Tesla gained 2.3 percent.

Traders also bid up shares in Chipotle Mexican Grill. The restaurant chain hired documentary filmmaker Errol Morris to create ads showcasing its kitchens, prep routines and partners. Morris is the director of the Oscar-winning documentary “Fog of War.”

The Mexican-food chain is still rehabilitating its image years after a series of food-borne illnesses scared away customers and drove sales lower. Chipotle shares rose 3.5 percent.

Loews’ latest quarterly results put investors in a selling mood.

The commercial insurer tumbled 6.1 percent after it booked a fourth-quarter loss due to higher catastrophe losses.

Activision Blizzard shares sank 7.6 percent following a Bloomberg report saying the video game company plans to announce layoffs on Tuesday, when it’s scheduled to report quarterly results. The report, which Bloomberg posted late Friday, cited unnamed people familiar with the matter.

Shares in rivals Take-Two Interactive and Electronic Arts took a beating last week after the companies gave investors a weak outlook for the current quarter.

On Monday, Take-Two slid 3.8 percent. Electronic Arts, which recovered Friday on strong sales of a new game, declined 0.4 percent.

U.S. benchmark crude fell 0.6 percent to settle at $52.41 per barrel in New York. Brent crude, the standard for international oil prices, dropped 1 percent to close at $61.51 per barrel in London.

Bond prices fell. The yield on the 10-year Treasury rose to 2.65 percent from 2.63 percent late Friday.

The dollar rose to 110.40 yen from 109.77 yen on Friday. The euro weakened to $1.1276 from $1.1324.

Gold fell 0.5 percent to $1,311.90 an ounce. Silver lost 0.8 percent to $15.69 an ounce. Copper dropped 0.7 percent to $2.79 a pound.

In other energy futures trading, wholesale gasoline slid 1.9 percent to $1.42 a gallon. Heating oil declined 0.8 percent to $1.89 a gallon. Natural gas rose 2.3 percent to $2.64 per 1,000 cubic feet.