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 will be provided after ten years of employment. Two years after twenty years at the company.

   Funds collected for the program will be held at the Labor Dept. so that every worker will have their own severance account. Employers will contribute to their workers' federally-protected accounts with every paycheck so the amount will accumulate throughout the year. Individuals may access their severance account at any time when they lose their employment and/or retire.

   Companies will also have the option to contribute more than just the two-year minimum 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, then over the course of a forty-year career, a worker may have accumulated as much as four years of severance pay in their federally-protected accounts.

   The primary reason for having this federal-mandated program is that it will provide an overall positive effect on the nation's economy.

   Most recessions last between one to two years. If severance pay provides benefits for that duration or longer, it has the potential of preventing a recession from ever occurring because people will still be receiving a paycheck while they are unemployed.

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