Extended Severance Pay

Solution

   Establish a new 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, and two years of severance after twenty years of working at the company.

   Funds contributed to the extended severance program will be held separately at the Labor Dept. so that every worker will have their own severance account that is independent from their employer(s). Employers will contribute to their employee's account with every paycheck.

   Employers will have the option to contribute more than just the two-year policy if they wish to prevent the churn of workers who may seek employment elsewhere after every twenty years or so (for another two year's 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 in their accounts.

   The payout for benefits will be straightforward. When a person loses their job, they register with the Labor Dept. to initiate their claim for automatic weekly benefits. The check will be based on the amount in their severance account. State unemployment benefits may occur concurrently or after the severance account has been depleted (may vary among states).

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

   Most recessions in America last between 1-2 years. Providing severance pay that provides benefits for that time or beyond has the potential of preventing a recession from ever occurring in the country 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. Businesses benefit themselves by preventing the possibility of an economic downturn for the nation.