Hacker News Reader

Comment by geofft | Hacker News Reader

> 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.

View on HN

> 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?

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.

> 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?

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.

> 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.

But then how is the problem not already being solved through contract law without needing anything separate?

And sometimes you don't want that, e.g. you may have to stay in a hotel for an indeterminate period of time because your house was damaged by a storm, but still want be able to check out whenever you want instead of having to give two months notice.

> 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.

Rents being sky-high actually is a sign that landlords are unwilling to participate in the market, but it's more likely caused by restrictive zoning (causing new construction to be unwilling/unable to participate in the market) than some kind of lease requirements that may or may not exist there.

> But then how is the problem not already being solved through contract law without needing anything separate?

Contract law only really works for two people in similar bargaining positions. Good luck to you if you have poor credit history or are barely making ends meet and have to rent from whoever will take you.

If that's the only protection, then it's precisely the people who can't afford to be kicked out suddenly who won't have protection against it.

Contract law works for everybody. People in a better bargaining position get a better deal, but the contract didn't create their bargaining position.

There are two lease contracts the landlord can offer you. One has a lower rent but allows them to evict you at any time without notice, the other has a higher rent and gives you two months notice. You can pass a law against the first one, but then you're left with the second one. And then the person barely making ends meat has to pay more in rent.

That's an academic distinction, honestly nearing the point of bad faith. What's that line - the law in its majestic equality forbids rich and poor alike from sleeping under bridges?

I would rather a situation where people actually can't afford housing, which forces a solution, to one where we can pretend people are fine until they aren't. A similar argument is used against minimum wages, and yet the poor are almost universally better off in countries where minimum wages are high.

> What's that line - the law in its majestic equality forbids rich and poor alike from sleeping under bridges?

Which is why passing laws against things generally hurts the poor. The rich don't need to sleep under a bridge, so who does a law against it affect?

> I would rather a situation where people actually can't afford housing, which forces a solution, to one where we can pretend people are fine until they aren't.

Only it hasn't actually forced a solution. But rents sure are high now.

> A similar argument is used against minimum wages, and yet the poor are almost universally better off in countries where minimum wages are high.

The unemployed youth in France are not having a good time.

But more to the point, these kinds of laws tend to follow prosperity rather than the other way around.

> Which is why passing laws against things generally hurts the poor.

That's not a reasonable conclusion. Laws against usury protect the poor. Laws against dangerous workplaces protect the poor. Hell, laws against slavery and debt prisons protect the poor.

> Only it hasn't actually forced a solution. But rents sure are high now.

They may be high, but it hasn't increased homelessness. Homelessness is barely above a ten year minimum, lower than during the GFC. [1]

That's sort of my point, at this stage people just barely get by, which is exactly the sort of situation legislators can ignore.

> The unemployed youth in France are not having a good time.

Cherry picking, but also not obviously related to the point. Are the unemployed youth in France unemployed due to minimum wage laws? Would they be better off if such laws weren't in place? Citation?

> But more to the point, these kinds of laws tend to follow prosperity rather than the other way around.

I'm not making an argument for maximising prosperity. A country with one quadrillionaire and everyone else broke would be the most prosperous in the world. I'm making an argument for protecting the poor.

[1] https://www.hudexchange.info/resources/documents/2018-AHAR-P..., page 10

> Laws against usury protect the poor.

Laws against usury subject the poor to illegal loan sharks who will break their kneecaps for non-payment rather than paying a high interest rate to a payday loan place that will merely ding their credit score and try to reclaim their loan money using the legal process.

> Laws against dangerous workplaces protect the poor.

Laws against dangerous workplaces protect shareholders from losing their investment when somebody gets hurt and sues the company. And give the company cover because they had their inspection done when somebody gets hurt regardless, so it's more difficult for the poor to sue them after an injury as long as their paperwork is in order.

Moreover, the compliance cost for companies that were not operating an unsafe workplace to begin with imposes overhead on small businesses and reduces competition, which can lower wages.

It's likely that they don't cause a major harm because there is no good reason to be operating an unsafe workplace regardless of whether there is a law against it, but they're still pretty close to breakeven.

> Hell, laws against slavery and debt prisons protect the poor.

Laws binding the legislature from instituting slavery or debt prisons, i.e. laws against certain laws, are not really canonical examples here.

> That's sort of my point, at this stage people just barely get by, which is exactly the sort of situation legislators can ignore.

We made things worse, but only by increasing inequality, not to the point of increasing homelessness. So we should make things even worse, that way when everything is really on fire someone will have to notice? What if we only get even more inequality and malaise?

> Are the unemployed youth in France unemployed due to minimum wage laws? Citation?

As part of a broad framework of high-overhead labor laws that discourage employers from hiring.

https://digitalcommons.uri.edu/cgi/viewcontent.cgi?article=1...

> I'm not making an argument for maximising prosperity. A country with one quadrillionaire and everyone else broke would be the most prosperous in the world. I'm making an argument for protecting the poor.

The best way to protect the poor is to get them out of poverty. Giving all the money to one quadrillionaire doesn't do that, but neither does binding everyone's hands or making it more expensive for anyone to start a small business.

To steel-man your point, I agree that legislature that amounts to surface level micromanagement is almost always counter productive. I like your macroeconomic approach to these issues.

Still, I found your counterexamples here dismissive but unconvincing. Loan sharks and kneecappings are precisely the things we need legislature against. Contract law by itself can't prevent desperate people from signing loan-shark contracts. "No good reason to be operating an unsafe workplace" is still enough reason to use children in coal mines until actual labor laws get passed. Anti-slavery laws are pretty plainly laws against powerful individuals enslaving weaker individuals--not sure what you mean with the "laws against laws" card there.

I would like law to fix their bargaining positions, because I think that's a place that law is capable of working effectively and that it would be good for society for it to do so. I am not personally a believer that the law should treat the status quo as something sacred / "fair" and avoid interfering unless necessary.

> I would like law to fix their bargaining positions, because I think that's a place that law is capable of working effectively and that it would be good for society for it to do so.

There are ways to do that, but some of them are better than others. For example, institute a UBI and the person barely making ends meat will be doing better and be able to afford the lease with the notice.

In general, the policies that work are the ones that don't try to micromanage anything or prohibit anything. If people are choosing something, assume it's not because they're idiots. Give them more choices, not fewer.

For example, a great way to help the poor is to have tuition-free community colleges, or encourage anything that lowers housing prices. But we don't really have that. Instead we subsidize student loan interest and mortgage interest, because that's more profitable to the banks who lobbied for it and the for-profit colleges and existing landowners it allows to inflate prices into the sky.

The problem with programs to help the poor is that the ones that actually do are expensive and don't pass, while the ones that pass will claim to but really do something else that most of the time makes things worse, completely by design from the perspective of the people who proposed it because they profit from it.

Better to have a UBI than subsidized loan interest, but better to have nothing than subsidized loan interest. Many "solutions" produce negative progress.

Instituting an UBI will only make rents more expensive and above the UBI level. It happened with government guaranteed housing credit in certain EU countries. The credit upper threshold was max 60k euros, so good luck finding cheaper options because everything starts at 60k now, even old apartments. If the gov't screws too much with the economy, it will screw people back.

That's because it's a housing credit instead of a UBI. If you give people money they can only use for housing, they use it for housing and the price of housing increases relative to the price of everything else (including wages).

If you give them money they can use for anything, it doesn't increase the real cost of anything in particular, it only reduces the relative disparity between the rich and the poor.

> 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?

In laws and in government I look for measures to maximize my liberty. I think the purpose of government is to defend me from you and you from me.

I am ultimately responsible for my happiness. I don't think governments can make people happy and I don't think they should try

> 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."

If landlords are in the business of doing things like this, I would like to start a company that doesn't treat it's customers like garbage and take money out of the pockets of such landlords

I'm not interested in arguing primarily in the discussion at hand, but you seem to have a position based in some philosophical/ideological claims that I think may hold up to scrutiny very well.

> I don't think governments can make people happy.

The government does positive actions (i.e. not merely preventing bad actors from doing bad stuff) for maintaining national parks.

I chose this example because the happiness of enjoying a national park is very direct, and the government's positive actions in maintaining these parks (e.g. controlling burns) is very uncontroversial.

So it turns out that the government can make people happy.

> I think the purpose of government is to defend me from you and you from me.

Does the government have a duty to defend its citizens from natural causes and from itself? If you agree with this, the there should be some guarantee by the government that the disabled veteran should be no less able to qualify for a job that someone not disabled can qualify for, with the difference in productivity compensated by the government.

>[...]there should be some guarantee by the government that the disabled veteran should be no less able to qualify for a job that someone not disabled can qualify for[...]

Doesn’t the ADA(A) cover this? Doesn’t it specifically ensure that disability can’t be used for qualification?

>[...]with the difference in productivity compensated by the government.

Wouldn’t that undermine the fact that people with disabilities shouldn’t be evaluated based on their disability and ‘reasonable’ accommodations should be made?

> Doesn’t the ADA(A) cover this? Doesn’t it specifically ensure that disability can’t be used for qualification?

What I'm saying is one step further, and more unreasonable: that if the disability disqualifies the person, then the government should compensate them for the marginal loss in wages that they could have earned from that job if they were not disabled (against a lower-paying job that they are still qualified for).

The ADA only prevents discrimination by employers against disabled people where the disability does not disqualify them from the job.

> Wouldn’t that undermine the fact that people with disabilities shouldn’t be evaluated based on their disability and ‘reasonable’ accommodations should be made?

This is a good general rule of thumb for the everyday treatment of the disabled, in terms of integrating with society. But I think this is insufficient to bring justice to the disabled. But you have a point and I guess the following may be a better way: with respect to disabilities arising from government service, there is a point in time when the government's actions have caused an individual to be disabled. Thus the disabled individual may be compensated for the amortized future loss in wages at one go; thereafter the law should not actively discriminate (positively/negatively) the disabled based on their disability. If a society should then decide to be more magnanimous, this may be done, too, to the naturally disabled, once they become of age. (not while they are too young, or this would create a perverse incentive)

> I think it's good for society as a whole

people thought communism was good for society as a whole.. turns out it isn't

Key insight is that you have to consider the bigger picture and the incentives that your proposed rule creates.

> good for companies and good for investors for companies to be careful and intentional about hiring

how careful though? So careful that you rarely hire or fire anyone at all? So careful that it's impossible to disrupt an industry like Tesla is doing? Who should decide these things? Ever wonder why innovation mostly happens in the US rather then Western Europe?

I think there are sensible rules to regulate corps BUT I don't think these rules should be of the form of giving out freebies (which is what you want here). Regs for corps in dealing with individuals should be focused on creating a level playing field, such as laws against companies having too large a market share (because a person can almost never have a large market share), laws penalising unclear or confusing contracts, etc.

>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.

Then people need to form guilds and demand this be standard practice in contracts.

Forcing this kind of thing through the middleman of a government seems like a great way to make a lot of people upset and not really get the progress desired.

Historically, there have been plenty of companies that tried offering terms like "neither party can end employment without significant penalties without a year of notice" – for example, see non-competes in finance, which require the employer to keep paying the employee while they're on leave.

Employees in the US tend not to prefer such agreements. It seems like most people prefer job mobility to guaranteed tenure.

> 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%.

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.

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.

>They'd take it into account when deciding if they could afford to hire them.

Sounds like a great way to incentivise companies to discriminate against old people and people with preexisting conditions.

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.

> 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.

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?

Reply on news.ycombinator.com