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<< Previous   of   Next >>   ADVERTISEMENT   Related Stories • Ideas for businesses to survive hard times 11/3/08   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Monday, November 3, 2008 Dropping 401(k) help sets scary tone By Mike Benbow, Herald Columnist You don't have to look very far these days to find distressing financial news. Everybody's cutting back and looking for ways to conserve cash as they try to weather what they expect will be a continuing economic storm. Recent news that I found particularly distressing was word that General Motors Corp. is suspending its matching contributions to employee 401(k) retirement accounts. It's intended as a temporary tactic to help the company conserve cash and to stave off any chance of bankruptcy while it tries to remake itself into a carmaker with more fuel-efficient vehicles that people now want. I get it. This is crunch time and the company needs all the money it can get to survive. Temporary things, however, seem to often turn into permanent ways of doing business. And things started by major corporations often turn into a permanent trend for the larger work force. In a recent news story about the GM decision, USA Today noted that Goodyear, Frontier Airlines, commercial real estate firm Cushman & Wakefield, broadcast group Entercom and rental car agency Dollar Thrift Automotive Group had also decided to forego contributing to employees 401(k) accounts. This is a bad idea. A really bad idea. For one thing, it's a major killer of employee morale. It says to employees, "We don't care about you and your future. From now on, you'll have to fend for yourself." Old folks like myself remember the days when most people working for larger companies had pensions. The companies said they couldn't afford to give workers a guaranteed check for the rest of their lives. So they offered 401(k)s where they made a guaranteed contribution to encourage us to also contribute our own money for our future. It was a partnership to help us in our old age, a replacement for pensions. The truth is, studies show that most people aren't contributing enough to ensure a secure retirement, even with their company's help. We don't get it yet, but we're working on it. Experts say company contributions are huge in encouraging people to participate in their 401(k) plans; especially to start on them early enough to amass enough money to be worth something in the workers' old age. We're not ready to have our company say, "You're on your own." We'll screw up without the push we get from a company match. Also, dropping company matches is a bad idea for the work force as a whole. A young co-worker who describes herself as between Generations X and Y has been talking about younger workers recently. As you might expect, they're better at using technology than the members of my baby boomer generation are. They're also less likely to work themselves to death and more likely to seek a balance between work and home life. They also are looking for significant challenges, not just looking to appear busy until it's time to punch out. And they're less likely to be loyal to a company and more likely to change jobs more often. They're not stupid; they're less willing to give to companies that don't give anything to them. We've already dropped pensions for the most part, except for some lucky workers. If we drop help with 401(k)s, what are we telling people about what it's like to work for an American company? For the typically worker, how he or she feels about work will boil down to how challenging the job is, the technology and other resources they have to do it and what they're getting paid. Pride in who will work for and, for that matter, how we do the job, is likely to wane. I really hope GM isn't starting a trend where only a few companies will still help us with our retirement. It's really not a workplace I'd want to join. Mike Benbow: 425-339-3459; benbow@heraldnet.com. READER COMMENTS Be the first to comment. You must be a registered user and verify your e-mail address to post comments to blogs or articles on HeraldNet. To register, click here. To read other terms and conditions, click here. Log out

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