4 ms·

> Just to play Devil's Advocate for a minute, what if companies were prevented from firing or laying off employees because of the financial situation of the emp

by geofft 8y ago

> Just to play Devil's Advocate for a minute, what if companies were prevented from firing or laying off employees because of the financial situation of the employee? Should the company be forced to keep paying redundant employees as some form of social justice or obligation? Sure, why not? This is common practice in lots of pretty successful and pleasant countries. It's also common practice in systems like academic tenure. It's got its downsides, but so does at-will employment. The primary reason I can think of to not do it is that it makes life tough for small employers like startups, who simply may not have the resources to pay out people for an extended termination period. So have it kick in once you hire N employees or make more than $M in revenue. (We do the same with plenty of other protections with social justice overtones, like anti-discrimination / anti-harassment laws.) Once you're Tesla-sized, though, you can afford to give people months of pay when laying them off, either as notice or as severance, giving them time to interview for another job and letting benefits like health insurance continue.

ordinaryperson 8y ago
> Once you're Tesla-sized, though, you can afford to give people months of pay when laying them off, either as notice or as severance, giving them time to interview for another job and letting benefits like health insurance continue. Wait, how did you make that determination? In Musk's most recent letter to employees he said Tesla made a 4% profit in Q3 2018 and the forecast was lower for Q4 -- you think companies should be obligated to pay for employees they don't want or need? Just because they're a big a company and it'd be inconvenient for the employee? I don't understand this POV at all, can you explain?
- geofft 8y ago
  Yes, I think that companies should be obligated to pay for employees that they thought they wanted or needed and then changed their minds, just because they're a big company and it'd be inconvenient for the employee. I don't believe they need to be obligated to pay indefinitely, but I do believe that they need to pay some generous severance period. I am not sure how to explain this POV. I think it's good for society as a whole and good for people, and that's what I'm looking for in laws and government. What do you look for in laws? I believe, similarly, that landlords should be obligated to rent out properties that they thought they wanted to rent out and then changed their minds on, just because it'd be inconvenient for the renter, for some generous period in which the renter can look for new housing. I don't believe that a landlord should be legally able to say "Good morning, I'm tired of renting, move out." My apartment is on a yearly lease, and either party needs to give about two months' notice if we want to not renew the lease for another year. That seems like a good thing, and rents are sky-high in my area and the market is very vibrant, so it's clearly not making landlords unwilling to participate in the market. Is this POV comprehensible to you? In that same letter, Musk wrote, "we grew by 30% last year, which is more than we can support". I think that it is good for society and good for people and good for companies and good for investors for companies to be careful and intentional about hiring.
  - ordinaryperson 8y ago
    > Yes, I think that companies should be obligated to pay for employees that they thought they wanted or needed and then changed their minds Wait, how do you determine this criterion? Take, for example, Trump's tariffs on Chinese manufactured goods. Retaliatory tariffs by China have made Tesla's cars far more expensive. That's not Tesla whimsically changing its mind about its employees, that's the financial and global politically situation rapidly changing. You think Elon Musk is morally obligated to pay for employees Tesla can no longer afford because Trump pulled the rug out from under him?
    - geofft 8y ago
      A little subtler than that, but somewhat yes. The global financial / political / market situation can change for the better or for the worse, unrelated to the quality of the company's own work. Musk is exposed to the upside of these changes. We could have had, for instance, a president who cracked down firmly on fossil fuels and made electric cars much more competitive. (Or leave the US out; the rest of the world could have driven up the prices of fossil fuels.) He should be exposed, in turn, to the downside of these changes beyond the company's control. That's how investments and gambles and ventures work. (Alternatively, if we think it's good as a society for him not to be exposed to the downsides, we should find a productive means to insulate / insure him; transferring the risk onto low-level employees seems like a pretty unproductive approach IMO!) Given that this employee was compensated significantly in bonuses and not in base pay ("it was okay that @Tesla didn't pay much because the bonuses were going to make up for it over time"), if he was compensated significantly in stock, then I think it's fine for him to be exposed to the risk because he's also exposed to reward if the company does well. But in such a case, a) they should not have canceled his existing stock grants and b) there should have been no need to lay him off immediately, they should have budgeted his base pay based on forecasts of possible not-great 2018s, and given him the option to continue working for base pay + weaker stock. But if he was compensated in cash, I think Musk should be obligated - not "morally" obligated (I have strong opinions informed by my religious beliefs on moral employment agreements, but that's a different argument entirely), just obligated in the sense of logically necessary to produce robust outcomes that make effective use of the market and place appropriate incentives to maximize long-term productivity for society - to bear the risk of things going unexpectedly wrong in the market.
AnthonyMouse 8y ago
> It's got its downsides, but so does at-will employment. On the other hand, the downsides of at-will employment are basically solved by having unemployment insurance. > So have it kick in once you hire N employees or make more than $M in revenue. The trouble with this is well demonstrated by the instant case -- Tesla has lots of employees and revenue but also major operating costs. It's more likely that a large company can absorb x% in overhead than a small one, but that doesn't mean it's always the case. And it doesn't help anybody for 100% of the employees to lose their jobs instead of 7%.
- geofft 8y ago
  This law would be known to Tesla when they hired those 7% of employees in the first place. They'd take it into account when deciding if they could afford to hire them. They'd know that their budgets for 2019 would include some non-negotiable salary costs. And of course it is possible for any company to make short-sighted decisions that result in bankruptcy. Hiring too many people and being obligated to pay them is just one of several; if we're worried about companies going bankrupt and that being bad for ... employees? investors? society? ... then we should prevent them from making all kinds of bad decisions, not just from having to employ people.
  - AnthonyMouse 8y ago
    You can't solve the problem with only partial foreknowledge. Being required to continue to pay redundant employees is a cost whether you know about it ahead of time or not. And not hiring employees you're not sure if you'll need is a catch-22. If you hire them and don't need them you're screwed, and if you need them but didn't hire them you're also screwed. Which one is the "bad decision" at the point in time when you don't know whether you'll need them or not? The solution is for employees to negotiate their employment contracts. If you want X months of notice before being terminated, demand that it's in your contract before you agree to work there. But that will mean the employer will want to offer less compensation, because they're incurring a cost and it's always a quid pro quo. Putting the rules in the law instead of the contract only prevents you from choosing the other thing -- lots of people would rather get paid more than have more notice when being laid off.
deleted 8y ago
[deleted]
JumpCrisscross 8y ago
> This is common practice in lots of pretty successful and pleasant countries With measurably deleterious effects on entrepreneurship. The solution to lay-offs isn’t hindering labour allocation. It’s socialising survival costs, e.g. through unemployment insurance, universal healthcare and subsistence guarantees.
- geofft 8y ago
  I'm not totally convinced entrepreneurship is the right measure. Research happens in plenty of other contexts; entrepreneurship is just a vehicle that works well in a society that values a free market and rugged individualism. But I don't have enough evidence to say that entrepreneurship is uncorrelated with improving society, so I'll just ask - anyone have recommended studies/articles/etc. arguing either for or against entrepreneurship or even research being a good measure of improvements to society / quality of life?
Justsignedup 8y ago
at-will employment has these exact scenarios we're talking about. So on one side we have redundant or useless employees, on the other employees getting dicked over. So at the end of the day it is all a compromise. I think pro worker compromises at the expense of companies staffing > 50 employees is definitely a positive.

by geofft 8y ago

ordinaryperson 8y ago

> Once you're Tesla-sized, though, you can afford to give people months of pay when laying them off, either as notice or as severance, giving them time to interview for another job and letting benefits like health insurance continue. Wait, how did you make that determination? In Musk's most recent letter to employees he said Tesla made a 4% profit in Q3 2018 and the forecast was lower for Q4 -- you think companies should be obligated to pay for employees they don't want or need? Just because they're a big a company and it'd be inconvenient for the employee? I don't understand this POV at all, can you explain?

geofft 8y ago
Yes, I think that companies should be obligated to pay for employees that they thought they wanted or needed and then changed their minds, just because they're a big company and it'd be inconvenient for the employee. I don't believe they need to be obligated to pay indefinitely, but I do believe that they need to pay some generous severance period. I am not sure how to explain this POV. I think it's good for society as a whole and good for people, and that's what I'm looking for in laws and government. What do you look for in laws? I believe, similarly, that landlords should be obligated to rent out properties that they thought they wanted to rent out and then changed their minds on, just because it'd be inconvenient for the renter, for some generous period in which the renter can look for new housing. I don't believe that a landlord should be legally able to say "Good morning, I'm tired of renting, move out." My apartment is on a yearly lease, and either party needs to give about two months' notice if we want to not renew the lease for another year. That seems like a good thing, and rents are sky-high in my area and the market is very vibrant, so it's clearly not making landlords unwilling to participate in the market. Is this POV comprehensible to you? In that same letter, Musk wrote, "we grew by 30% last year, which is more than we can support". I think that it is good for society and good for people and good for companies and good for investors for companies to be careful and intentional about hiring.
- ordinaryperson 8y ago
  > Yes, I think that companies should be obligated to pay for employees that they thought they wanted or needed and then changed their minds Wait, how do you determine this criterion? Take, for example, Trump's tariffs on Chinese manufactured goods. Retaliatory tariffs by China have made Tesla's cars far more expensive. That's not Tesla whimsically changing its mind about its employees, that's the financial and global politically situation rapidly changing. You think Elon Musk is morally obligated to pay for employees Tesla can no longer afford because Trump pulled the rug out from under him?
  - geofft 8y ago
    A little subtler than that, but somewhat yes. The global financial / political / market situation can change for the better or for the worse, unrelated to the quality of the company's own work. Musk is exposed to the upside of these changes. We could have had, for instance, a president who cracked down firmly on fossil fuels and made electric cars much more competitive. (Or leave the US out; the rest of the world could have driven up the prices of fossil fuels.) He should be exposed, in turn, to the downside of these changes beyond the company's control. That's how investments and gambles and ventures work. (Alternatively, if we think it's good as a society for him not to be exposed to the downsides, we should find a productive means to insulate / insure him; transferring the risk onto low-level employees seems like a pretty unproductive approach IMO!) Given that this employee was compensated significantly in bonuses and not in base pay ("it was okay that @Tesla didn't pay much because the bonuses were going to make up for it over time"), if he was compensated significantly in stock, then I think it's fine for him to be exposed to the risk because he's also exposed to reward if the company does well. But in such a case, a) they should not have canceled his existing stock grants and b) there should have been no need to lay him off immediately, they should have budgeted his base pay based on forecasts of possible not-great 2018s, and given him the option to continue working for base pay + weaker stock. But if he was compensated in cash, I think Musk should be obligated - not "morally" obligated (I have strong opinions informed by my religious beliefs on moral employment agreements, but that's a different argument entirely), just obligated in the sense of logically necessary to produce robust outcomes that make effective use of the market and place appropriate incentives to maximize long-term productivity for society - to bear the risk of things going unexpectedly wrong in the market.

AnthonyMouse 8y ago

> It's got its downsides, but so does at-will employment. On the other hand, the downsides of at-will employment are basically solved by having unemployment insurance. > So have it kick in once you hire N employees or make more than $M in revenue. The trouble with this is well demonstrated by the instant case -- Tesla has lots of employees and revenue but also major operating costs. It's more likely that a large company can absorb x% in overhead than a small one, but that doesn't mean it's always the case. And it doesn't help anybody for 100% of the employees to lose their jobs instead of 7%.

geofft 8y ago
This law would be known to Tesla when they hired those 7% of employees in the first place. They'd take it into account when deciding if they could afford to hire them. They'd know that their budgets for 2019 would include some non-negotiable salary costs. And of course it is possible for any company to make short-sighted decisions that result in bankruptcy. Hiring too many people and being obligated to pay them is just one of several; if we're worried about companies going bankrupt and that being bad for ... employees? investors? society? ... then we should prevent them from making all kinds of bad decisions, not just from having to employ people.
- AnthonyMouse 8y ago
  You can't solve the problem with only partial foreknowledge. Being required to continue to pay redundant employees is a cost whether you know about it ahead of time or not. And not hiring employees you're not sure if you'll need is a catch-22. If you hire them and don't need them you're screwed, and if you need them but didn't hire them you're also screwed. Which one is the "bad decision" at the point in time when you don't know whether you'll need them or not? The solution is for employees to negotiate their employment contracts. If you want X months of notice before being terminated, demand that it's in your contract before you agree to work there. But that will mean the employer will want to offer less compensation, because they're incurring a cost and it's always a quid pro quo. Putting the rules in the law instead of the contract only prevents you from choosing the other thing -- lots of people would rather get paid more than have more notice when being laid off.

deleted 8y ago

[deleted]

JumpCrisscross 8y ago

> This is common practice in lots of pretty successful and pleasant countries With measurably deleterious effects on entrepreneurship. The solution to lay-offs isn’t hindering labour allocation. It’s socialising survival costs, e.g. through unemployment insurance, universal healthcare and subsistence guarantees.

geofft 8y ago
I'm not totally convinced entrepreneurship is the right measure. Research happens in plenty of other contexts; entrepreneurship is just a vehicle that works well in a society that values a free market and rugged individualism. But I don't have enough evidence to say that entrepreneurship is uncorrelated with improving society, so I'll just ask - anyone have recommended studies/articles/etc. arguing either for or against entrepreneurship or even research being a good measure of improvements to society / quality of life?

Justsignedup 8y ago

at-will employment has these exact scenarios we're talking about. So on one side we have redundant or useless employees, on the other employees getting dicked over. So at the end of the day it is all a compromise. I think pro worker compromises at the expense of companies staffing > 50 employees is definitely a positive.