4 ms·
The theory of weaker led on severance is: 1 - If you make it too hard to let people go, companies will be less willing to hire. (You’ve added a cost to the emp
by mathattack 6y ago
The theory of weaker led on severance is:
1 - If you make it too hard to let people go, companies will be less willing to hire. (You’ve added a cost to the employee)
2 - If you make the cost of severance too high, it will kill companies that might otherwise have a chance to squeak through.
There are plenty of good arguments on the other side (companies offloading social costs to the govt, etc) but these two are consistent with economic theory on labor supply and demand.
- neuronic 6y agoYea, economic theories that all assume that consumers are rational actors. Thank you, next.
- have_you 6y ago>>Thank you, next. So have you run a business where you had to hire employees?
- jazzyk 6y agoYeah, but because it is o easy to fire, some companies (especially startups which just got some VC money) over-hire and then are forced to let people go. This creates a never-ending hamster-wheel of hiring-firing - not good for the employee and not good for the company. Also, if paying 1 month of severance is too much for a company, then perhaps it is not run well and should be allowed to fail?
- devin 6y agoToo reductive on your last comment. I want to agree with you, but the world is complex. Money doesn't grow on trees, and there's only so much that even a well run business can do. Particularly in the early stages of a company.
- tarsinge 6y agoI must admit that as a small business owner in France unfortunately I am unwilling to hire because it's so hard to let people go, so putting the weight only on companies is maybe not the answer.
- gigatexal 6y agoI agree. There has to be a balance. Companies need to be able to let people go who are hurting the company overall. The balance comes in in making it expensive enough that they won’t go firing people without cause as it now being expensive means it has to be worth it to do so.