Workers accept the “Wimpy” argument often. How well does it work out for them? (More)
J. Wellington Wimpy was Popeye’s friend, and anyone’s friend if there was a hamburger to be had. As someone who has worked his entire adult life for large corporations I can tell you from experience that they over-promise and over-promote the potential benefits of 401(k) plans to their employees. I believe they do this to build up a benefit in your mind that suggests if you work hard now for less but put aside this money with Wall street, you will have more money when you retire (if you live that long).
This trick and trap works very well to distract workers from the fact that they are ultimately agreeing to a deal that means they are paid less today in exchange for the promise of a future benefit. Future benefits that get lost and stolen, just as pension accounts are under attack during this economic downturn by law makers who would rather go after pensions than tax the wealthy.
According to Bloomberg the average American has less than $70,000 dollars in retirement savings. Unlike 401(k) plans, pension plans payout until death. Take a onetime payout on your 401(k) and you might as well plan on going back to work after a few years off. Bloomberg also had a poll that said most Americans believe that in order to retire comfortably without a drastic reduction in quality of life, they will need at least one million dollars. When you do the math, you see very quickly most workers’ 401(k)s will not allow them to retire with dignity.
Businesses benefit by paying less today for their labor while offering a future (potential/not guaranteed) faux benefit. And what happens when we have an economic downturn? Workers lose what should have been paid wages (wage theft) and are laid off, which forces most of them to withdraw what little they have saved to live on until they find another job.
Armed with this knowledge, you would think that if workers are going to agree to any type of deferred pay they would insist that deferred pay be in the form of more stable, longer lasting, and predictable defined pension benefits instead of a 401(k) plan. Unfortunately though, pensions have been under attack for so long by special interests who want to control that money that they are almost non-existent. There are also political motives from anti-union and anti-government groups who see this as a way to further weaken their opposition.
It never ceases to amaze me that some political movements in this country see working men and women as a threat.