Hacker News Reader

Comment by AnthonyMouse | Hacker News Reader

> It makes sense for the employees to want to lock in their share of the bag.

That's the problem, isn't it? Suppose that e.g. Wikipedia traffic is down year over year because of AI summaries and then they get fewer donations. Now something needs to be cut. It's a non-profit so "investor profit" can't be that thing.

If you then also make it so that it can't be workers, what's left? It's mostly either spending down savings (which isn't long-term sustainable) or sacrificing things that ought not to be, like infrastructure or servicing technical debt. So now you've put off a given percentage of layoffs for a few years until that catches up to you and sinks the whole foundation.

View on HN

One option would have been to stay small. Keep the yearly spend down where it was in 2010, don't hire too many more people, and save all the donation money they brought in. Build that fund in the good years to pay for salaries in the lean years.

>One option would have been to stay small. Keep the yearly spend down where it was in 2010

And what are the realistic chances of that actually sticking long term?

Same chance as corporations and governments keeping spending, corruption and cronyism under control long term. So, virtually zero.

Wikimedia foundation actually have a rather large endowment¹ set up from donated funds to help sustain the organization through a hypothetical future downturn. I'm sure it wouldn't sustain the current level of spending but it would theoretically cover minimal operating expenses.

There are a lot of things to criticize about Wikipedia but lack of financial planning probably isn't top of the list.

1. https://wikimediaendowment.org/

The US government has been targeting endowments. Wikipedia is far too entrenched in a single country to survive a real attack.

> you then also make it so that it can't be workers, what's left?

What was the core reason that readers gave donations? Probably most donors want employees treated well and to ideally keep their jobs, and yet the main thing they probably had in mind was the existence and continuation of the service itself.

> It's a non-profit so "investor profit" can't be that thing

Non-profits get corrupted through spending on well-connected vendors.

The infrastructure isn't that much. If they need to be less ambitious about other projects I'm not going to worry about it. A union isn't going to make them keep every single project.

If they were paying each employee 10x as much, and that got locked in, and then they didn't have the money to pay them, there would be bad consequences. But that's not what's going on here.

The infrastructure isn't that much is the problem, because labor costs are the largest single expense. When you take that off the table as something that can be cut, you're then stuck needing to make up the difference from the things that never cost that much to begin with, which means the cuts you have to make to them to make up the same amount of shortfall are deep.

> If they were paying each employee 10x as much

They're presumably paying the market rate either way. The issue is, what happens if they need to reduce the number of employees? Or they have too many front end developers and not enough back end administrators or vice versa, and then need to let some people go and hire others with a different skill set?

Labor expenses can still be cut. Just not by screwing up wages. A union doesn't force you to keep the same number of employees forever.

And if there's any meaningful shortfall it's literally impossible to get there with infrastructure cuts. Nobody sane would try it, since the target would be negative one thousand percent costs.

They have the inherent incentive to inhibit you from doing layoffs, and the same incentive to stop you from replacing existing workers with different ones since the existing ones get a vote and the prospective replacements don't.

> And if there's any meaningful shortfall it's literally impossible to get there with infrastructure cuts. Nobody sane would try it, since the target would be negative one thousand percent costs.

You can't make up a $35M shortfall exclusively from cutting infrastructure when you're only spending $3.5M on infrastructure, but you also can't make up a $35M shortfall by not cutting anything. And you can make up some of it from cutting infrastructure, so where does the money come from that didn't come from reducing headcount?

Reply on news.ycombinator.com