Boeing has just recently scrapped plans for yet another round of layoffs. While this is good news for Boeing employees, the company isn't out of the woods yet. According to Fox Business, the company had originally planned to cut 10% of its workforce, approximately 10,000 jobs, through 2021. The two rounds of voluntary leave offers (VLOs) came as no surprise in 2020 as the Coronavirus pandemic hit the air travel industry especially hard. Boeing experienced a $641 million dollar first quarter loss, compared to a $2.1 billion profit in the first quarter the year before. The company is looking at all cost-cutting measures as a possibility. Boeing CEO Dave Calhoun has stated that the company would be “engaging in a full-scale enterprise transformation effort, evaluating every aspect of our business for opportunities to improve”.
But will traditional layoffs be enough? Could Boeing be the next company to suspend or reduce their 401(k) matching program?
We have seen a consistent trend which shows that during a recession corporations will decrease or suspend benefits. According to CNBC, 95% of companies offer a company match or some alternate contribution program. However, that same article stated “Don’t be surprised if your employer pauses its contributions to your 401(k) plan during the U.S. economic downturn.” This happened during the 2001 recession when General Motors, Charles Schwab, Goodyear Tire & Rubber, and Ford all decreased or suspended their company match programs. We saw this again in 2008, with Forbes reporting that nearly 20% of companies with over 1,000 employees reduced or suspended 401(k) contributions. Unfortunately, this trend seems to be continuing in the wake of the current recession brought on by the Coronavirus pandemic. According to Market Watch, 16 major companies have suspended their 401(k) matching programs this year including Amtrak, Marriott Vacations Worldwide, and Tenet Health. General Electric & Lockheed Martin also made big news with their announcements to cut benefits in 2019. There have even been rumors on Layoff.com of companies like Fortune 500 considering cutting benefits to hit their target goal of significant cost cuts.
Matching 401(k) contributions is one of the most popular benefits Boeing offers. A recent study showed that on average, employees who don’t maximize the company match leave $1,336 of possible retirement money on the table each year. Clearly, a suspension of these benefits would dramatically change many Boeing employees’ retirement plans.
To get a better idea of what an end to Boeing 401(k) Matching would look like, let’s take a look at corporate benefits for ExxonMobil employees. ExxonMobil announced last year that they would no longer be matching U.S. employee’s contributions to their retirement savings plans. The suspension of these benefits officially began on October 1st, 2020. According to Reuters, ExxonMobil has now experienced, “its first back-to-back quarterly loss in 36 years because of the drop in demand during the novel coronavirus pandemic." ExxonMobil recently announced that it would reinstate benefit match programs, come October 1st, 2021.
ExxonMobil has two savings plans available to corporate employees. The first is the U.S. ExxonMobil Savings Plan (EMSP) and the second is the U.S. Supplement Savings Plan (SSP). The company was matching a 6% minimum employee contribution with 7% of the participant’s pay.
When benefits are frozen, employees in the mid-to-late portion of their career are usually hurt the most. If Boeing's match program does end, it’s a good idea to calculate exactly how much this will affect your retirement savings plan. Forbes recommends maintaining your retirement contributions and even increasing them if you have the funds. This can help compensate for the loss of benefits.
As a Boeing employee, you should consider staying in touch with your HR department to get a better understanding of your 401(k) matching program.
Sources:
"Boeing returns to profitability, drops layoff plans." CNNBusiness.com, CNN, 28 July 2021, https://www.cnn.com/2021/07/28/business/boeing-earnings/index.html
“Boeing Cuts Workforce 10% amid Covid-19 Cost-Cutting Measures - Arabianbusiness.” ArabianBusiness.Com, ArabianBusiness.com, 29 Apr. 2020, https://www.arabianbusiness.com/transport/445902-boeing-cuts-workforce-10-amid-covid-19-cost-cutting-measures#
“The Retirement/Transition Guide for Boeing Employees.” The Retirement Group, The Retirement Group, 11 Aug. 2020, https://defense.theretirementgroup.com/boeing-guide-download-google
Manfredi, Lucas. “Boeing Offers Second Volunteer Layoff Package to Employees | Fox Business.” Fox Business, Fox Business, 17 Aug. 2020, https://www.foxbusiness.com/economy/boeing
