Cutting off one's nose to spite one's face

Years ago the biggest companies in the United States - the core of the country so to speak - was found in what is known now as the rust belt. Iron and steel made into building blocks and cars. Aside from disappearing or morphing so dramatically that we don't recognize the "new you", they plainly laid out the math for the current state budget crisis.  It is pure math.

Take company "A".  It starts up with a bunch of 20-30 years old with a nice mix of older folks with 30 years of work ahead.  These guys are long term and hope to retire from their jobs.  For the first 20 years there are still a number of workers who started and are vested in the company retirement so there are a lot of workers per every occasional retired person.... say 7:1. 

As that work force ages that ratio declines 4:1, 3:1 etc. and then things get horrible all of a sudden.  If you have 100 retires a year what used to fund them into retirement was 700 workers  Now it is 100 workers or one of me for every one of you.  As labor intensive companies or governments "age" the ratio goes down to 1:1 or even worse because you just can't keep expanding the work force numbers.  It is finite.

To cut costs, businesses and governments cut jobs - New York for instance wants to cut 10,000 jobs or cut the retirement payout.  That is so wrong. It perhaps is the only way short term but if you cut out 10,000 workers you lessen the retirement contributions into the big pot by 10,000 people and that ratio gets close to 1:1. 

What really kills it, particularly in the public sector, is featherbedding the last few years of work and wildly distorting the retirement payout.  You might work at $50,000 for your entire career and pay in and expect a payout in proportion.  Then, in the last 3 years you grab tons of overtime and cash in your sick days and make $100,000 a year for the last three and then get a pension payout based on your last three years or highest years. You didn't pay in at that rate but you take out at double what you put in.  You suddenly become 2 people.

It is pure math if you want to look at it closely. Numbers don't lie...and it isn't wise to ignore them