Extended Severance Pay

Solution

   Establish a federal policy that requires companies to provide up to two years of severance pay for their employees upon termination. One year of severance should be provided after ten years of employment. Two years of severance after twenty years at the company.

   Funds contributed to the federally-mandated severance program will be held at the Labor Dept. so that every worker will have their own separate severance account. Employers will contribute to their employees' accounts with every paycheck so it will accumulate throughout year.

   Employers will also have the option to contribute more than just the two-year policy if they wish to prevent the exodus of workers who may seek employment elsewhere after every twenty years or so (for another two years' worth of severance). If so, over the course of a forty-year career, a worker may have accumulated as much as four years worth of severance pay in their federally-protected accounts.

   The primary reason for having an extended severance program is that it will provide an overall positive effect for the nation's economy.

   Most recessions in America last between 1-2 years. Providing severance pay that provides benefits for that period or beyond has the potential of preventing a recession from ever occurring in the country because people will still be receiving a paycheck while unemployed.

   This will soften the economic impact of any recession, and perhaps, even prevent the recession from occurring in the first place. Companies benefit by preventing the possibility of an economic downturn that ensures the flow of revenue for their businesses.