Wal-Mart 401(k) Plan Adjustments
Kennon-Green & Co. Global Asset Management, Wealth Management, Investment Advisory, and Value Investing

Given my two Wal-Mart inspired articles a few days ago, I thought this was germane.

[mainbodyad]Wal-Mart is ending its profit sharing plan and upgrading it to include a $1,000 contribution to employee health care accounts so there is a greater cushion before workers have to pay medical deductibles plus moving to a system whereby they will match employee retirement contributions 100% on the dollar up to 6% of pay! This, along with other changes, had a net effect of a 4% raise for employees who have worked for the company more than a year.

Union-backed advocacy groups such as WakeUpWalmart, see this as a pay cut! Why? Because they don’t think low-paid, entry-level sales associates should have to contribute to their own retirement accounts in order to get matching funds!?  You can’t make this stuff up!  In other words, it is only a pay raise for responsible associates that save money.  Those who don’t save money through their retirement account are getting a pay cut. Why the hell are they complaining about this?

Wal-Mart 401(k) Plan Adjustments

Image © iStockphoto/Thinkstock

I love the new system.  Those who do the right thing will get more money and those who do the wrong thing will get less.  It is good and righteous.  That is how the world should be.  But that news story is boring so most newspapers lead with the headline, “Wal-Mart Ends Profit Sharing” instead of “Wal-Mart Increases Compensation By 4% for Average Employee”.  Why?  Because the former sells more papers than the latter and most people aren’t going to look at the specifics of the changes.  Personally, given the tax advantaged nature of 401(k) contributions, I’d much prefer this new compensation plan if I worked for Wal-Mart.

There are a lot of differences in opinion I respect in life.  But to say that it is unreasonable for someone to save money on their own … that is evil.  It is saying they have no responsibility for themselves and we should reward bad behavior.

[mainbodyad]I hope, with everything in me, that every person who works for a living retires a millionaire but only if they did what was necessary to achieve it.  If I were in charge of the world, everything would be pay for performance if possible.

If you have been working for an employer for 10 or 15 years and you are still earning too little upon which to live, you are either lazy, stupid, incompetent, unable to manage your household finances or some combination of the four.  If you took away everything I have, including my college education, and made me start at a retailer, I guarantee you that within a few short years I’d be working my way up the corporate ladder.  It’s just not that hard.  You outperform everybody, you get rewarded.  You underperform, you get punished.  Figure out how to outperform without cheating or hurting people and the rewards flow to you.