I got this in an email today. I read it and said “Hmmmm”.
Can someone explain why this wouldn’t work?
*There are about 40 million people over 50 in the work force. Pay them
$1 million apiece severance for early retirement with the following
stipulations:
They MUST retire. Forty million job openings - Unemployment fixed.
They MUST buy a new American CAR. Forty million cars ordered –
Auto Industry fixed.
>3) They MUST either buy a house or pay off their mortgage – Housing Crisis fixed.*
The small matter of taxing everyone to spend 40,000,000,000,000 dollars and not getting it back, unlike the stimulus given to the banks etc? Or the government printing up this magic money and destroying the dollar with inflation? Or how a temporary peak in auto sales or home sales isnt sustainable? So you get a few months of temp jobs and thats it?
(1) The position vacated might not be filled by an American. The last time a position like mine became vacant, it was filled by a German citizen.
(2) I’d buy a car if I had to to get $1 million, but I’d sell it immediately, because I’d be leaving the country.
(3) I’d pay off my mortgage, but I’d sell my house as fast as I could because I’d be leaving the country.
One more factor: my retiring would leave a big gap with my employer for my skill set at a time where we have deadlines looming. I suspect that when I got back to Australia I’d have a phone call from my ex-boss asking if I’d work as a consultant – being in anbother country doesn’t matter when so much can be done on the Net.
We do well to be skeptical of plans that aim to achieve prosperity by requiring large numbers of experienced & productive people to start doing nothing.
Right - it would cost $40 trillion, when the entire US economy only generates $14 trillion a year and it’s already about $13 trillion in debt.
It would also cripple the economy almost immediately, because those unemployed people probably wouldn’t have the expertise to fill the jobs that become open. You’d have people who are under 40 and currently unemployed taking charge of every major company and bank in the country. Some of the best scientists, engineers, professors, doctors, surgeons, politicians and judges in the country would have to retire, among countless others, to be replaced by much younger people who are currently unemployed. Is that really a good idea?
Not to mention plans that assume we as a country have enough money sitting around unused that we could fund the entire 2009 US federal budget ($3T) plus pay off the entire US national debt ($11T) and still have $26T left over afterwards.
That email (I’ve seen it before, always with the same order of magnitude error between billions and trillions) might as well say “Give Valgard One Hundred Hillion Gazillion Squillion Dollars and he MUST spend it all on products made in the USA. Economy - Fixed!”.
Is 50 a realistic retirement age? That seems…young. My parents retired at 56 and 58 and they are considered to have “retired early” by all of their similarly-aged friends.
I think if no one who was over 50 worked, we’d have one hell of a bored population.
I don’t see it happening like that. If (for example) the CEO of a major corporation retired, he or she would not be replaced by someone with no experience. They’d probably be replaced by someone in their 40s, and already employed in a fairly senior management position. Then (ideally) there would be a chain of people being promoted up the line, until you got to a fairly junior level, where the vacancy might be filled by an unemployed recent college graduate.
But I agree that there would be a big loss of job skills and experience with such a scheme.
A lot of these people would still need to work. If I retire at 50 and live to be 75, that 25 years I cant work thanks to this deal. Say I have 500k left over after car + house + taxes, that leaves me 20k a year to retire on. Err, that’s really not a lot, especially if Im used to making 100k+. Assuming these people dont blow this money immediately, they’ll be resentful that you wont let them work. They’ll be forced to move abroad, start competitive companies, and take jobs from the US via competition.
Not to mention, a lot of these people are skilled and if given the chance, enterprising. Id rather see lots of low or no interest small business loans for the guy who can start a company and employ 10 others than just paying him off to retire. In this scenario you’ve created 12 jobs.
There are ways this might be done without coming up with all that money, for instance offering 10 tax free years ahead if you retire this year and buy a new US built car in the next 3 years and do not work for pay for that 10 years. You could of course work for charity, for fun, whatever and vacation all you want. This assumes the person would have pension and investment income of course. In other words get 10 years worth of retirees to do it in 1 year, thus create jobs fast and increase car sales too and tourism. That might work.
Apart from all the other points raised above, the median age of practicing US physicians is 46. Removing over a third of the country’s physicians at a stroke would leave us with 250,000 job openings. 94% of new residency graduates find jobs within 3 months, so it’s doubtful that we’d have more than 30,000 people around to fill all those new jobs.
It would be a nightmare that made the current healthcare crisis seem like a wet dream by comparison.
Apart from that, there are significant numbers of people - particularly among the 50+ crowd - who owe half a million dollars or more on their homes. After they pay off their houses and buy cars, what are they going to live on?
Not to mention that the GDP and tax base would collapse for the forseeable future; all the young people being hired to do the old people’s jobs would be hired at entry-level rates, or at any rate at lower salaries than their predecessors. Assume they all take a 10% pay cut - it’d probably be much higher than that. Now assume that every job opening is filled - not that there are 40 million unemployed people to fill them, of course. Even in this mildest of scenarios, the amount of income tax collected by the federal government (and state governments for that matter) just shrank by at least 3%.
The number of people who could retire tomorrow and live comfortably on just their private investment, pension and annuity income, without also drawing Social Security retirement benefits, is miniscule.
The biggest problem is it would induce anarchy as the people not getting the money overthrow the government and do all that goes with complete anarchy.
Our company used to offer “retirement incentives” to avoid layoffs, when the economy went south. There were up to 2 years pay (or later, top-up pension). Eventually they found that people were hanging on waiting for what they hoped would be the next announcement. Then they were hoping for just the next severance package. It didn’t help that a year after saying there was no incentive coming, they offered a medium one.
From Laverne and Shirley:
Some Guy:“If I offered you a quarter, would you go away?”
Squiggy: “Why would I go away from someone who’s giving me money?”
Ressurecting this to say I just got this forward from my mother in law so thank you for giving me the info to be able to deconstruct it for her. I love this place.