Today in The Wall Street Journal, Eleanor Laise and Kelly Green report that many companies that suspended 401(k) contributions during teh depths of the financial crisis have yet to restore them–despite a return to “surging profits and rising dividends.” Among the companies named in the article: FedEx, which last week boosted its profit expectations for the year to $4.60 to $5.20 a share, up from $4.40 to $5 previously, but said it is taking roughly two years to fully restore the employer matching contributions it cut in February 2009; United Parcel Service Inc. raised its dividend more than 4% earlier this year but still hasn’t restored the 401(k) match it suspended in early 2009; and Honeywell, Honeywell International Inc., whose second-quarter earnings were flat compared with a year earlier, which has no plans to restre the 50% cut it imposed last year. “All told, almost one in five U.S. companies with at least 1,000 workers have reduced or suspended their matching contributions since September 2008. Roughly half have yet to restore those benefits,” the article reports. “If anything, more cuts may be on the way. One in 10 employers as of February planned to reduce or eliminate matches within the next 12 months, according to a survey by the Society for Human Resource Management released in late June.” The crazy thing is, as Daniel Gross writes in Slate, “corporate America is sitting on $1.8 trillion in cash, and the business sector’s balance sheets are in rude health.” Sounds like just the sort of thing that could contribute to the deflation trap that Paul Krugman has been warning us about.
