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Trader Joe’s Cut Workers’ Retirement Benefits During The Pandemic

Workers at Trader Joe’s found out in January that retirement benefits had been cut in half for many employees. The revelation came on the second page of the company’s internal newsletter, The Bulletin, right after an explanation of the company’s No. 1 value: “Integrity.”

“The definition of Integrity is simple … it means that you treat others as you would like to be treated,” the newsletter explained.

The change to the company’s 401(k) plan was not described as a cut, but workers familiar with the retirement plan knew that’s what it was. Employees were used to receiving an annual lump-sum contribution from the company equal to 10% of their wages earned the previous year. But those with less than a decade of service at Trader Joe’s would only receive 5% for their work performed in 2021, the newsletter said. Assistant managers with the same amount of time would receive 7%, while all store managers would receive 10%.

Workers with 10 years on the job could keep their 10% annual contribution, but that stipulation came with a catch. They must have worked at least 700 hours in each of those years to qualify for the higher deposit. So workers with long tenures could end up with just 5% if they had taken an extended leave or reduced their work schedules temporarily years ago, perhaps to deal with personal issues or a health problem.

“Cutting people’s retirements during a pandemic? How is that ‘integrity’?”

– a Trader Joe’s worker in Pennsylvania

The Bulletin noted that it was a “discretionary” contribution, not a contractual guarantee, and the company for years has offered the same caveat in its handbook for “crew” members, which is Trader Joe’s lingo for employees. But according to four workers who spoke with HuffPost, employees felt blindsided by the smaller contributions, especially having worked nearly two years through a pandemic, facing COVID-19, product shortages and angry customers.

“It was really upsetting for a lot of crew members,” said Maeg Yosef, a Trader Joe’s worker in Massachusetts. “I think that’s the trend. The company seems to be moving away from being a place where you can have a career, support your family and feel relatively secure for a job in the grocery industry.”

Yosef is part of a new union campaign that was first reported by More Perfect Union.

Trader Joe’s did not respond to numerous emails and phone calls from HuffPost seeking details on the company’s retirement plan.

But earlier copies of the crew handbook noted a standard 10% annual contribution. (In one version, included as an exhibit in 2016 litigation, the company said everyone would get 10% except for workers under age 30, who would receive 5%.) A more recent copy of the handbook obtained by HuffPost, dated March 2021, did not list any amount, saying only that Trader Joe’s “may make a discretionary contribution.”

Around 62% of private-sector workers are eligible for 401(k)-style, defined-contribution retirement plans through their jobs, according to the Bureau of Labor Statistics. Many employers chip into these plans by matching the contributions the worker puts in, up to a certain share of the worker’s wages, often between 3 and 6%.

Trader Joe’s erstwhile contribution equaling 10% of a worker’s wages for the year appears to have been on the high side for a non-union grocer. And unlike matching schemes, workers receive the company’s contribution whether they put in their own money or not.

Trader Joe's workers said they felt blindsided by the reduction in retirement benefits.
Trader Joe’s workers said they felt blindsided by the reduction in retirement benefits.

Alexi Rosenfeld via Getty Images

But slashing the contribution in half amounts to a significant cut in overall compensation, potentially in the thousands of dollars depending on a worker’s wage and scheduled hours. The change to a worker’s retirement savings over time could be significant, especially once the loss of tax-deferred investment gains are taken into account. It is not clear whether Trader Joe’s might restore the higher contribution for 2022 or subsequent years.

Employees said the change has not only angered co-workers but energized talks about a union beyond Massachusetts.

“Cutting people’s retirements during a pandemic? How is that ‘integrity’?” said one worker at a store in Pennsylvania, who, like others, spoke on condition of anonymity for fear of retaliation. “I was planning on being here my whole career, I was so happy. But they just keep chipping away at things.”

None of Trader Joe’s stores currently have union representation. The campaign in Massachusetts, called Trader Joe’s United, is independently run and, according to Yosef, already gathering interest from other stores. Collective bargaining is common in the broader industry, with the United Food and Commercial Workers representing more than 800,000 grocery workers, including at major chains owned by Kroger, Albertsons and other companies.

Do you work at Trader Joe’s? Email our reporter and share your story. You can remain anonymous if you prefer.

Another Trader Joe’s worker said previous union efforts never seemed to gain much traction at the chain, with the consensus being that “Trader Joe’s is pretty good to their employees.” But the worker said longtime crew members have been bothered by the 401(k) change, as well as an increase to the wage floor that hasn’t translated into meaningful pay hikes for more experienced workers.

“When you start seeing that there are some real backdoor-style things going on, you get pissed and start to think, ‘Well, other grocery stores do unionize,’” they explained.

The worker said they knew of two co-workers who believed they were entitled to 10% contributions for 2021 because of their tenures, only to discover they were receiving 5% because they didn’t carry enough hours at a certain point. A collective bargaining agreement, they said, could head off any such surprises.

“If you have a contract, then there’s nothing they can touch,” the worker said.

It would make sense for an employer to cut a 401(k) benefit as opposed to wages to save money, since a certain share of workers are unlikely to notice or care, especially younger ones for whom retirement is a far-off abstraction. Many grocery workers would be unable to afford making regular contributions on their own end, perhaps making it less likely they’d pay close attention to the plan.

“The company seems to be moving away from being a place where you can have a career, support your family and feel relatively secure for a job in the grocery industry”

– Maeg Yosef, Trader Joe’s worker

According to the company’s handbook, Trader Joe’s gradually vests its employer contributions over time, so that workers are not fully entitled to the money the company has put into the plan until they’ve worked there for six years. Workers who leave Trader Joe’s before then would be leaving behind a percentage of the company contributions. Such vesting schedules are common among employer retirement plans.

One Trader Joe’s veteran said she had envisioned the job only as transitional work, and didn’t expect to work for the grocer for more than a year or two. But eventually several years had passed, and she’d grown more reliant on the retirement plan than she ever anticipated. She was alarmed to see the Trader Joe’s contribution reduced.

She said those who think the plan was generous to begin with are missing the point.

“No one is giving us anything; we are working for this,” she said. “We should not be praising Trader Joe’s for doing the bare minimum. We just live in a place where we’ve normalized not making enough money to survive, and the idea that because you’re working retail you don’t deserve to live a normal life.”




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