401k Match Makes a Comeback
Posted
Oct 22 2009, 03:42 PM
by
James Dlugosch
Rating:
Yesterday I wrote about perks for jerks. Today, the little guy gets his due.
While the economy may not be producing jobs sufficient to relieve persistent unemployment, corporations are feeling good enough to reinstate 401k matches to those currently employed.
With times tight and layoffs mounting many corporations suspended 401k matching as a way to preserve capital. No matter that doing so would hurt the very people that corporations depended on for long-term success.
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This was a time for desperate measures. Or was it a way to keep the good times rolling for those at the top?
We’ll never know, but I have my suspicions.
What I do know is that the reinstatement of matches is being done quietly. The reason for doing so is that cutting the matches pretty much happened under cover of darkness.
No sense bringing in the attention when all that attention will do is highlights the ridiculousness of cutting the matches in the first place.
Take American Express (AXP). This financial services behemoth could not pay TARP money back fast enough so as to avoid any scrutiny of management compensation or mishandling of government funds.
Imagine the heat that would come from a revelation of corporate jets and country club memberships at a time when the AXP workforce had its 401k matches suspended. No wonder they are making a come back.
News of 401k matches making a comeback is quite compelling and says much about the health of the economy and the future of the recovery. As worrisome as it can be to say that job growth is a lagging indicator we have evidence now that such is true.
401k matches do indeed cost money and management spending of that money takes a certain amount of confidence. The next step will be for that confidence to grow into downright enthusiasm.
Once that happens hiring will begin en masse. The estimate is that half the companies that suspended 401k matches will return the popular program for employees.
That is a good thing for the market and the economy, even if it is happening quietly.
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