If we told you that U.S. employers spent fewer dollars on employee training this year than they did last year, would you be surprised? Not likely, given the economic state of late. But if we told you that the last time U.S. companies dropped to this investment level was in the mid-'90s, would that surprise you? Well, it's true. In fact, U.S. employers spent nearly $3 billion, or 6 percent, less than last year on developing their employees, according to Training magazine's 22nd Annual Industry Report.

This year marks only the fourth time in 22 years that the total amount of dollars spent by U.S. organizations has dropped, and it is the first time since 1982 to record a back-to-back drop in total training expenditures. Of the $51.3 billion that companies do plan to spend this year, the most noticeable drops came in off-the-shelf materials, down 21 percent from $4.1 billion last year to $3.4 billion this year; and other expenditures, down 31 percent from $1.7 billion in 2002 to $1.3 billion this year. While expenditures on seminars/conferences and training staff salaries dropped 9 percent and 5 percent respectively, the only category that actually increased was custom materials, up 8 percent to $3.6 billion.

The cause of these declines should come as no surprise. Despite preliminary talk of a possible turnaround by the end of this year, the United States is still in the throes of an unstable economy, and countless small- and medium-sized companies continue to disappear at alarming rates. In fact, in the Dun & Bradstreet database that we use to define the "universe" described in our Industry Report, there were an astonishing 17,122 fewer companies matching our criteria. Last year, there were 166,276 companies that met our criteria; this year the number dropped to just under 150,000.

Not only are there fewer companies, there are obviously fewer employees to train in those companies that are still competing for survival. Massive layoffs in the past two years alone have surpassed countless city, regional, and national records, and the unemployment rate has yet to turn the corner. Not surprisingly, then, nonexempt employees received just 35 percent of all formal training delivered this year—or about $3 billion less than last year. Executives and exempt nonmanagers both received slightly greater amounts of training this year, while exempt managers received about 2 percent fewer programs.

Given this backdrop, it should come as no surprise that the majority of survey respondents indicated a massive shift in their preferred delivery methods—a shift that yielded the biggest bang for the buck: e-learning. In 2002, instructor-led classrooms accounted for 74 percent of all training; this year, use of this traditional delivery method dropped to 69 percent of all courses. The greatest increases came in the form of computer-delivered training with no instructor, up from 12 percent of delivered courses last year to 16 percent this year. The use of instructor-led training from a remote location also rose, from 7 percent last year to 10 percent this year.

Respondents reported even greater fluctuations in how computer-delivered training was accomplished. Last year, some 48 percent of computer-delivered courses were self-paced Web courses, compared to a remarkable 61 percent this year. Accordingly, the use of CD-ROM, DVD and diskettes as training delivery media dropped by nearly 10 percent to 32 percent of all computer-delivered courses.

Despite the overall drops in employer-sponsored training levels, there is good news on the horizon. We are on the brink of an election year, and historically, training budgets, like many other aspects of business, have fared well during such times.

In good times and bad, our Annual Industry Report is the best barometer of the extent and nature of employer-sponsored training in the United States—the skills taught, the methods employed to teach them and the dollars invested. As always, our Annual Industry Report details the formal training activity of U.S. organizations with 100 or more employees.

As in the past, we drew on a random sample of Training subscribers to gather the data, beginning with prequalification phone interviews to ensure that each potential respondent was, in fact, the best-qualified person in the organization to answer the questions we posed about employee training. Qualified respondents were then directed to a secure Web site where they completed our questionnaire online. The response rate was an incredible 52.4 percent (1,650 usable responses from a pool of 3,149 qualified respondents), with a precision estimate of plus or minus 2.4 percent at a 95 percent confidence level.

Tammy Galvin is the executive editor of Training. edit@trainingmag.com