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If you think about it, this doesn’t really make sense as a criticism of layoffs. You shouldn’t run a company with less than three months of salaries in the bank

by lacker 7y ago

If you think about it, this doesn’t really make sense as a criticism of layoffs. You shouldn’t run a company with less than three months of salaries in the bank? Well okay, in that case if there’s a downturn and you only have four months of salaries in the bank, you need to lay people off to stay above that line. The result is the same, in a big downturn you may need to make layoffs. The goal of a company is not to minimize the chances of a layoff. If layoffs can increase the company’s chance of survival, they might be a good strategy.

hhsuey 7y ago
That's ridiculous. With that logic, if you're supposed to save X months of cash, then the very first cent you take out of that X months of cash savings, you already fucked up, b/c now you have less than X months of savings. Suppose you wanted to overcome this. So then you decide to start working a second job so you never have to touch the emergency savings. Then that defeats the entire point of the emergency savings, which is to be used when there is an emergency. The company could also be said to be fucking itself over if it can't have enough cash to prevent layoffs of necessary employees. If it doesn't have enough cash at hand, it will need to lose talent and be forced to try to rehire when the economy rebounds. A competitor with a good savings account could instead leap past b/c they could simply dip into their savings and continue to build for the rebound, with all their engineers on board.
- rwmurrayVT 7y ago
  That's very similar to the argument about the capital buffer banks are required to have for the market downturn. Matt Levine wrote about it. It's turtles all the way down.
WilliamEdward 7y ago
The whole point of you saving for 3 months is specifically to avoid the downturn scenario you described in your own post, so you obviously wouldn't have to lay people off because you specifically prepared for it by saving money.

by lacker 7y ago

hhsuey 7y ago

That's ridiculous. With that logic, if you're supposed to save X months of cash, then the very first cent you take out of that X months of cash savings, you already fucked up, b/c now you have less than X months of savings. Suppose you wanted to overcome this. So then you decide to start working a second job so you never have to touch the emergency savings. Then that defeats the entire point of the emergency savings, which is to be used when there is an emergency. The company could also be said to be fucking itself over if it can't have enough cash to prevent layoffs of necessary employees. If it doesn't have enough cash at hand, it will need to lose talent and be forced to try to rehire when the economy rebounds. A competitor with a good savings account could instead leap past b/c they could simply dip into their savings and continue to build for the rebound, with all their engineers on board.

rwmurrayVT 7y ago
That's very similar to the argument about the capital buffer banks are required to have for the market downturn. Matt Levine wrote about it. It's turtles all the way down.

WilliamEdward 7y ago

The whole point of you saving for 3 months is specifically to avoid the downturn scenario you described in your own post, so you obviously wouldn't have to lay people off because you specifically prepared for it by saving money.