Elon Musk pushes for digital shift in federal retirements
Elon Musk, head of the Department of Government Efficiency (DOGE), wants to digitize the retirement documents of American federal employees. Since the 1950s, these documents have been stored in paper form in a former limestone mine. "The limiting factor is the speed at which the mine shaft elevator can move determines how many people can retire from the federal government," Musk stated during a meeting with President Donald Trump.
During the meeting in the Oval Office, Elon Musk presented an example of inefficiency in the federal administration's operations. He highlighted the retirement system for federal employees, where documentation is currently processed and stored in paper form in a former limestone mine.
Musk noted that the facility appears as though it was transported from the 1950s—it was indeed established in 1955 and hasn't seen significant changes since, according to CNBC.
Musk believes the system is inefficient. It can process up to 10,000 retirement applications per month. However, the head of DOGE did not clarify whether the system was effective or if it processed documents quickly enough. Every day in the United States, 10,000-11,000 people retire, but only a small fraction of them are federal employees.
Elon Musk highlighted the absurdity of a situation where the speed of document processing depends on the operational status of a mine elevator. He suggested that workers, instead of transporting paper files in the mine, could be engaged in more productive work for the country.
The mine in Pennsylvania, located less than an hour's drive from Pittsburgh, stores retirement documentation more than 65 metres underground. The company advertises this location as providing the highest level of security and disaster protection. Currently, over 700 people work there.
Market reaction and prospects
Iron Mountain, the company managing the mine, saw a decrease in stock value following Musk's remarks. Its CEO, Bill Meaney, sees an opportunity for growth in this situation. During a Thursday teleconference he explained that the company's revenues from digitization services and data centres reach $130 (CAD 180) million, while storing physical documentation brings in only $10 (CAD 14) million per year.
Wall Street analysts believe the market's reaction to Musk's comments was exaggerated. Eric Luebchow from Wells Fargo noted that Iron Mountain's revenues are not dependent on a single client. Even if the federal government terminated its contract, the company would receive compensation equivalent to 1-2 years of rent.
Bill Meaney emphasized that Iron Mountain collaborates with over 200 federal agencies as a direct supplier or subcontractor. The company also runs hard drive destruction programs for state administrations. Brendan Lynch from Barclays added that the government has a legal obligation to store documentation, which Iron Mountain currently manages.
