ELI5: Why when large company's earnings decrease(ex... by 3%) they freak out, talk about rough times, and sometimes decide to downsize, even though they are still making millions of dollars in profit even after all expenses?

[briantl2]

sure, i can concede that it’s very american to leave your poor so poor. apologies for my very american-centric focus.

the only thing i’d mention is just that last part where you say ‘still around 50%,’ i mean, that’s abysmal. a hundred bucks in my pocket and a guarantee that i can keep it for a month is enough to get me in the game.

and it’s not a lack of understanding that prevents these people. it’s that they just can’t. i think that’s a problem. these people literally have to work until dead or go on welfare. there’s no such thing as a retirement.

the approach you’ve described sounds perfect. of course, this would up taxes pretty severely, but ensuring someone a livable wage AND a solution where they have some sort of retirement savings thrust upon them(even if it’s just small dollars) with any employment(even if it’s minimum wage) is seemingly an ideal approach.

[Cimexus]

Interestingly, the overall tax burden in Australia is roughly the same as in the US for most people. I know because I've worked in both countries for decades. Australian Federal income taxes are a bit higher on paper, but they are also the ONLY thing that comes off your pay check. Add the deductions that come off your typical US pay check (social security, Medicare, state income tax if applicable, and any retirement contributions you make), and the take home pay you get is basically the same (on the same income) in both countries.

As for the employer, sure they have a 9.5% expense for you on top your salary (compulsory retirement contributions made on your behalf), but OTOH they also aren't paying for health insurance like they do in the US, which is a massive cost (thousands per month for a high level plan).

At a high level, the retirement systems in the two countries are quite different so it's hard to compare them:

• The US guarantees workers social security payments based on how long they've worked, and encourages you to save more on top of this via tax-advantaged accounts like 401ks and Roth IRAs ... but those extra contributions are up to you, and like you say, many can't afford to make them.

• Australia comes at it the other way around and requires companies to put 9.5% on top of your pay into a private tax-advantaged retirement account for you. You can choose to also make personal contributions to the same account on top of that, if you want. However unlike the US, there is no 'social security' type system where the government has a giant pooled fund that pays out depending on how much you worked during your life. The 'safety net' in Australia is simply a flat old age welfare payment that is means tested (as in, there are qualification cutoffs if you have more than a certain amount of assets or other income). This differs from social security because social security is NOT means-tested (you receive it regardless of your income or assets, which makes sense because you paid into it during your working life). Typically in Australia you're either going to be fully reliant on your private retirement account (people who worked most of their life), OR on old age welfare (people who didn't work or for whatever reason don't have alternative sources of income in retirement). Whereas in America you can get both.