“It doesn’t have to be this way. It’s the result of intentional policy choices, both public policy and employer policies. Who is getting hurt the most? It’s lower-level workers in lower-level jobs who are mostly women and people of color and that’s not the society we want to live in.”
— Ellen G. Frank-Miller, PhD
That’s what WORC’s Founder and CEO, Ellen G. Frank-Miller, PhD, had to say when she was featured in MarketWatch on January 26, 2023. The article, by Leslie Albrecht, detailed the unfortunate reality of today’s retirement landscape in the United States – some Americans who work for low wages have resorted to creating GoFundMe pages to fundraise for their retirement.
Quality jobs require quality wealth-building opportunities – for all employees, not just for high-earners.
Not all retirement plans are created equal. Employers have choices about how to design their 401(k) plans – and some designs, specifically employer matching contributions, cement inequity into the company culture.
What could possibly be bad about offering matching contributions? Nothing – for employees who are, 1) eligible for the plan and, 2) can afford to contribute. Those employees disproportionately benefit from this plan design.
Many lower-level workers, in particular part-time workers, aren’t even eligible for company-sponsored retirement plans – and when they are, they’re less likely to be able to afford to contribute than their higher-paid colleagues.
So, let’s be clear – a 401(k) matching design disadvantages lower-level workers, who are more likely to be Black and Brown. That’s called inequity.
Employers who are serious about racial equity should consider swapping their match for a safe harbor employer contribution, a 401(k) design that enables employers to make contributions for all employees, regardless of whether they contribute their own dollars. This approach addresses systemic inequities in wealth-building and can provide better retirement security than a GoFundMe campaign.
Check out the MarketWatch article here.
All budgets are moral documents – they reflect our values and priorities. What does your employee benefits budget say about your company’s racial equity values and priorities? Small-but-mighty WORC is determined to put our money where our mouth is – we offer a safe harbor employer contribution in our brand-new, decarbonized 401(k) plan. If we can do it, other companies can do it, too. Read about it here.
