The point is that sometimes you really need less people to do the job or you can find them in other places without affecting the final product or service. There is nothing that can prevent a company to do that, not even employee friendly European legislation.
There's another crucial point: that this need is forecastable many (many) months in advance. If people are joining (or continuing to work at) a company with an expectation of investing in the 'long haul', but the company knows that this 'startup phase' isn't likely to last more than another nine months, there's a strong temptation for executives to deceive their employees.
As you say, 'nothing that can prevent a company to do that', but along those lines, there's nothing that prevents seeing this for what it is: an adversarial relationship where companies are doing their best to trick their employees.
Safe to say I left that place of my own accord not long after.
In periods of "low order" for things like shipping/mining a company may put the employees on leave that the government pay, but this is only temporary. It's a method to avoid hire/fire waves.
Second, specific to SpaceX, they actually succeeded in making reusable rockets. They used to need to build a new rocket for every launch. Then they needed to build their reusable fleet up. Now they don’t need to build hardly any rockets. I think this is what success looks like for them right now. From this point of view a 10% reduction is pretty low, and is only so low because they still have even bigger plans.
As a counterpoint, Germany has much stronger employee protection laws and unions and has a comparable unemployment rate. That said, resizing is still possible there, it just has some lag.
My mom got laid off after a bit over 15 years of employment and got about 2 years salary as severance pay.
On top of that stuff like healthinsurance isn't a "benefit", but a social security and taken care of even in unemployment.
I don’t know if it’s better or worse, just different.
https://www.dw.com/en/debunking-the-myth-of-low-german-unemp...
The ability for companies to take big risks is what pushes the economy forward so that we can all have better lives for a reduced cost, and better jobs too. To “protect” jobs you would hold us all back, we’d still all be working on farms or in factories instead of on computers, increasingly from home. Is that what you want? Why are people rioting in France? Maybe because they feel poorer than their parents. Their laws protecting jobs have removed opportunity from everyone in order to provide stability for some.
Have you ever been to Alabama? Mississippi? Florida outside of the metro areas? They're equivalent to third world countries with infrastructure held together by duct tape and spit. Every time I drive through those states, I feel like I'm in some edgy anarchist's student film about late stage capitalism. Those areas should have been rioting for decades now but US economics is set up in such a way as to deprive the constituency from any practical way of getting involved.
This is deeply hyperbolic.
Wages will not rise if the labor supply exceeds demand. You need more jobs and/or fewer people in the labor force before wages will rise.
The American approach is to provide business friendly regulations and tax policy which incentivize companies to invest and take risks. The “social contract” is not vested with the company, but rather a free flow of employees between companies based on who will hire whom, who will pay the most competitive salary and benefits, and which companies are the most attractive.
The state/Federal government then provides programs that basically provide umbrella protection for all workers like unemployment insurance, short term disability, marketplace health plans, etc.
It’s not efficient for individual companies to be providing welfare to employees they don’t want or need. It’s a drain in the entire economy because the employee is doing less valuable work than they could do elsewhere, and the company has less money to hire workers they actually need.
Could you explain it please?
Even U6 is below 8 percent.
https://www.macrotrends.net/1377/u6-unemployment-rate
the part time part is big of course ( https://fredblog.stlouisfed.org/2015/05/the-many-flavors-of-... ) but that's how it was for decades since BLS started tracking it.
With regards to ethical wages, SpaceX should pay well, so people don't depend on them (they can save enough to be able to sustain themselves for at least a few months while they look for a new job). If SpaceX doesn't need that many workers they should give them prior notice (2 months or more at least, I don't know how they handled this).
There’s basically two Americas. In the other one, 40-60% of adults aren’t working.
Unemployment only factors in labor force participants.
Data: https://www.bls.gov/emp/tables/civilian-labor-force-particip...
Labor force participation rate is also not a measure of employment. It is the number of people who are employed plus the number of people who are actively looking for employment but who aren't employed. If you want strictly what portion of the population is currently working, that is employment to population ratio, which is what I posted.
I believe in worker rights, and the ability of a person to live in relative economic security. But should a company not EVER be able to restructure when it realizes it has too many workers, or too broad a mission?
Is 2 months pay and medical not a decent send-off for workers who provide little value to a company?
I wish healthcare were publicly provided, but besides that, if the alternative were for SpaceX to file bankruptcy or to go broke for lack of competent management, I'll take some laid off workers.
The vision and strategy that lead directly to layoffs? Seems like a reasonable thing to me.
Do you keep the salespeople that you hired, or do you cut management for getting in the situation that salespeople weren't creating any value?
In America it's actually better, close to 30%. Everywhere else it's much worse. In the Middle East, Africa, most of Asia it's at most 10%, and usually less than half that.
That means that you could, not in 50 years when the robots have taken over, TODAY, kill 85% of the population and the net effect on the world would be ... nothing. GDP wouldn't drop by so much as a dollar. Today, 85% of all humans alive are useless for the economy (some are school children and will become useful, but you could assume that to be ~10% and you wouldn't be far off the mark).
So for doing everything we do today, and for guaranteeing the future, we need around 25% of the human race. Everyone else is economically useless.
Note that this figure has been dropping for 40%, and has been for essentially all of history, with only short blips where more of the human race is actually useful (like the 30 or so post-WWII years). Even 15% economically useful population, historically speaking, is actually high, not low. What I mean to say is that the neutral expectation should be that that number is going to drop, not rise.
So: no, a company should not ever be able to restructure. Every month, every day, every second we can keep that number up by even a small amount gives use one more month, one more day, one more second of the society we currently have, where people are actually somewhat useful. The alternative, if you think it through, I'm sure you'll see, is war.
Or to put it another way: we need these people to have a job much more than we need a few extra dollars of GDP.
According to [1] unemployment in the EU-28 is actually 6.7% as of November 2018. Of course, there are some European countries that are not in the EU, but I doubt that including them will cause the figure to rise to 20%.
[1] https://ec.europa.eu/eurostat/statistics-explained/index.php...
> So for doing everything we do today, and for guaranteeing the future, we need around 25% of the human race. Everyone else is economically useless.
No, that does not follow. For example, a stay-at-home spouse who takes care of the kids may be "economically useless" in a very shallow sense (i.e. they do not appear in GDP figures), but that does not make them useless.
But they do not appear in the GDP figures of course.
We live in an imperfect world, and not everything has a utility function that is measured by headline figures
Also why should we artificially extend forcing most humans into agency-less drudgery for 60% of their sentient healthy waking hours? I think the sooner we embrace having 15% of the population producing the net economic output and providing the rest of the society with what they need, the faster we can figure out a significantly better and fulfilling society for everyone.
I find it entirely unconvincing that optimizing for "employee care" is overall more beneficial to humanity, including for the long term well being of the exact same employees and their families, than the alternative.
There are many social contracts tied to the word 'employee'. Expectation of livable vage. Expectation of stability. I liked the way patio11 once explained it (I think, and definitely am paraphrasing): "If you employ people and business is good, you get all of the profits and only owe them their wage. If business is bad, you still owe them their wage."
I am concerned that many companies are trying to weasel out of this unspoken contract. I remember McDonalds document specifying that they assume their employees have second jobs. Or that many game companies fire their QA teams every time a game is shipped.
Like, I get the incentive, I just don't like it.
To be honest, I wouldn't miss Tesla or Space X if it turns out they can't manage their employees.
If you fire 10% of your staff every 3 or 4 years, plus 1% the other years, that means the average employee has decades of job stability. That's probably enough.
This kind of small scale lay-off is mostly a stunt, or just sign of incompetence.
“Don’t want to leave” is good, “can’t get hired anywhere else” is bad, and the presence of the latter makes it more desirable to leave even places which used to be fun.
If you want to roll the dice on a new employee then fire the old one. This kind of 10% cut results in losing your best who don’t wait around and just start looking on day one. Worse, they often leave after your round of cuts as getting an offer is outside of your timeframe.
It may stifle impractical get-rich-quick strategies and customer scamming, but that's not a bad thing.
The idea that upside potential of an organization's efforts can/should never make it into the workforce and the effort to ensure that it remain this way is extremely sad and corrupting and makes for a world where misaligned incentives and exploitation are much more likely than they 'should' be.
Some of the ways to achieve goal X are via layoffs, some aren't. You cut some possible routes to X, but you add more routes.
Not all routes are equal. Cutting a particular employee might mean that a vital convergent point is no longer possible to enter, meaning all routes now lead to failure.
Some of the optimal routes to X may require that management get paid a fair wage (rather than 40+ times the median), and that they reconfigure the company to enable them to keep all employees - everyone gets hours cut by half-a-day, say.
TL;DR - in short you're committing petitio principii, assuming the best way is layoffs, and thus concluding the best way can't be taken without layoffs.
It's not necessary that the number of actual paths available is reduced by the imposition of "no layoffs", it can actually be increased. It seems counter logical. A restriction can lead to greater innovation that is stimulated by the restriction, there were I'd warrant far more places to get an alcoholic drink under prohibition than prior to its institution.
>you have less options, and therefore less paths to success //
A priori it seems right, but the successful paths aren't randomly distributed; perhaps there is a key employee who leaves under layoffs and the business fails (another business succeeding).
You can apply basic set theory to chaotic and complex psycho-temporal interactions.
But I agree, as I think you surmise, that we can't simplistically mathematically impute the "best" route will be with(|out) layoffs.
Such world exists and can be found in most socialist countries. It's not bad per see but not that exciting either. I personally believe the workers should be given more opportunities(i.e advance notice so that they can find another job in a timely manner) rather than social care.
You can also leave for any arbitrary reason, anything else is slavery, simply put. This goes both ways.
>If you create a company, you take care of it and all of its members.
If you create a company, you have a fiduciary duty towards your shareholders. A company only exist when it is profitable (either now or in the future) and it can only continue to exist if it can do so profitably. Companies don't exist to "take care of its members", those are what unions are for ... oh ... wait ...
>Will the 10% of the employees be the ones who are already in the less comfortable financial and social situation in their private life ?
How is this even relevant? You provide a service to the company and they pay you for it, they can decide not to do business with you and vice versa. Empathy has little to no place in business, unless it generates more profit of course.
Being a slave entails more than just having to fulfill your voluntarily agreed-to, contractual obligations. Using the term "slavery" for this trivializes actual slavery – i.e., ownership over a human being.
However, how much stress you can be exposed to in those 8 hours isn't mandated. You can run many businesses understaffed with fairly little impact if you are willing to regularly replace employees suffering from burnout [1]
Barriers to firing also make it harder to justify hiring higher-risk candidates (e.g. former felons, high school dropouts).
At my company I ensure that everyone is always borderline burned out!
"Comfortable" doesn't mean that they have a nice house and are happy with their life at work. Comfortable in this context means they no longer have any concern about their own job performance, knowing they have a "sure thing" and underperform in their duties.
In particular, I'm ranting against the use of the word "comfortable" for describing unmotivated/shitty employees. It's perfectly achievable to have a company that consists of people who are motivated, comfortable, and extremely productive.
It's a ridiculous Americanism that the only way to motivate employees is by making them "uncomfortable" (eg through fear of losing their jobs, like your example, or through other means).
The SpaceX employees that got laid off are going to get other jobs and continue making more money and having more money to spend than their European counterparts.
Edit: A few reasons. One is that, since it's easier to switch jobs, good employees have more leverage. Another is that, since it's easier to fire bad employees, the expected value of a new employee is higher and you can afford to pay them more.
I think a big part of American prosperity is a result of companies being able to fire people. It's probably the most important bit of employment non-regulation that this country has, and it's a big aspect in which America is more worker-friendly than European countries. Other missing regulations, like working hours limits, vacation time regulations, don't benefit workers as much (or at all).
“Western” Europe is on average rich, Eastern Europe is still recovering from Soviet control and brain-drain. But even Western Europe is spikey, old Welsh coal-mining towns are poor, the old universities are rich.
Even apart from the location income variability, what money gets you varies; health costs much less in the UK than the USA, housing is cheaper in poor places than rich places — even PPP exchange rates aren’t perfect because the ratio of two different goods isn’t constant.
There might be multiple things going on here though. While I'm sure there are people who will settle into a job and underperform because they are virtually guaranteed their position, I'm guessing there are a lot more people in a situation where compensation isn't even matching inflation/CoL. In the latter situation the employee may just not care since the company doesn't care enough to compensate them 'fairly'. Depending on a lot of factors it may be difficult for them to find a new job somewhere else, so outwardly it might look like they're just 'comfortable' and underperforming.
The cancellation of a major project also might make a whole department obsolete.
But a blanket lay-off of 10% of the work force for a company which claims to be healthy, that is quite employee-unfriendly.
That is literally the inverse of what arbitrary means:
existing or coming about seemingly at random or by chance or as a capricious and unreasonable act of will
Now:
> I didn't have to wait for the old company to not pay me the agreed upon salary, spend months offering them a "compensation improvement plan", and documenting their failure to follow it in fear that they might sue me for leaving for the "wrong" reason. It's amazing how people pretend at-will employment is somehow equal for both sides when only employees can actually terminate the employment at-will.
Where I live you have (it's the law) to keep on working (and being paid for that work) for a certain number of weeks (depending on how long you have been working at that company). So the company can find a replacement, so you can wrap up things and pave the way for the transition. It's not rare that you can come up with an agreement that let you do that from home (because you are leaving on bad terms) or that the employee takes his vacant days or extra hours to fill up that period.
It's not like he chose the new company because the logo is red.
Do you think that "they cost too much" is an "arbitrary" reason? Or is it the "intrinsic nature of the decision" like in the "I leave because they pay me more elsewehere" case?
A company purpose is to make money, not to take care its member. Its the government job to take care of its citizen. Using basic income, universal health care, cheap/free housing, etc.
In the big picture, your job security as a producer trades-off against your right to be a disloyal consumer.
No. A company doesn't have members, it has employees. Americans should know by now that a company has no loyalty to them and they should have no loyalty to the company. If they don't know this, it is their fault for being naive (or a Boomer).
Also,
> laid off anytime for arbitrary reasons
They are not arbitrary by any stretch of the meaning of that word. There are business reasons, changed or evolved business goals or market conditions. Those are all real objective phenomena which play very important role in the life of a company, ignoring which would be very fundamentally detrimental for companies and for markets in general.
They cut the bottom 10% of weak performers because they weren't up to the standard.
Companies are not created to take care of their employees. They are created to make profit and/or accomplish a societal goal. If a company is non-profit then it's just the latter.
As someone from a post-communist state, it's plainly obvious to me that people on average don't work as well as they could if the threat of termination does not exist. My parents told me anecdotes about their coworkers who were reading books on the job, even playing videogames, and that's in an aero-space design bureau in the 80ies, in less elite organizations systematic alcohol consumption by groups of employees on the job was not something to be surpised by. And that pattern repeats itself in many countries where employment is semi-guaranteed.
If this continues the remaining employees try to hire new employees with a fatal flaw so when the next wave comes they will be the first out.
You seems to imply employees are the resources to be used to achieve goals. I do not see an issue in this arrangement if Employees have the same negotiation power as the employer.
Termination due to non-performance can also hit a performer. Human beigns and hence their social systems are not perfect. N% layoff is performance related termination, because it's an impossibility that all employees pefrorm at the same level, are of the same value to the company. It's absurd to imply that N% layoff is absolutely random, that companies use lottery techniques to choose who to fire next.
>You seems to imply employees are the resources to be used to achieve goals.
They are. Within the constrains of culture and law.
If everyone is meeting the success criteria, then still trying to fire lower 10% is Darwinian view of the world. This also means objective enough criteria exists to judge the poor performers. In reality, that guy in the corner with his head down get fired because he is too busy to make connections and show how valuable he is.
This specific case seems harsher because a lot of these people assembled under Mr. Musk's banner because they thought they were working for a cause. I am sure many of them have took paycuts, toiled above and beyond expectations because they thought they were working for a cause. In my view this is not a fair at all.
> They are. Within the constrains of culture and law.
Agreed but every lawful and culturally acceptable things are not right necessarily.
Says who?
Societies create the conditions under which companies are allowed to exist, therefore societies get to define what responsibilities companies have.
Also, who says that the right of the company to exist >> the rights of the employees?
Not allowing companies to easily shed workers is a way of putting extra fitness pressure on companies, meaning the less fit companies perish and the fitter companies thrive. This is of benefit to society. See Schumpeter, Creative Destruction:
https://en.wikipedia.org/wiki/Creative_destruction
You will note that some of the most highly efficient/competitive economies have pretty strong worker rights. Of course there has to be a balance, excesses in either direction are usually not good. However, in this particular case I don't think any of these SpaceX employees were systematically drunk on the job, or playing videogames instead of working.
Why would someone ever hire if they wouldn't be able to terminate the contract if it's ever needed? And this goes both ways, I do want to be able to quit (with a "short" notice)
Other answers gave plenty of good reasons: employees underperform, projects change, companies close, etc
It's a job, not a marriage, and even those are becoming shorter.
Note I'm not proposing "at-will" employment, I don't think that is good as well (even if employers like it, I don't think it's good for overall labour relations)
If you lay off 10% because times are worse and there is less work, then interestingly you are more or less required to re-hire the same people when you hire again (typically that would be negotiated so you’d buy them out instead).
The 10% you fire also has to be the 10% last hired, you can’t fire the 10% worst performing (again, this can be negotiated so firing an older underperforming hire quickly becomes very expensive - think 1-2 years salary or similar)
Is this perfect? No. But it makes employers think hard about hiring for better or worse, and it means you plan far ahead to ensure you have enough work in bad times, and don’t go on a hiring spree in good times.
It's important to note that these countries (Sweden, Japan) with higher employee protections and guarantees are very different in terms of culture from the hyper-individualistic US.
https://en.wikipedia.org/wiki/Law_of_Jante <- basically an invese of the American culture
That's what you get when you have a high qualified and restricted (in numbers) workforce. But let's see if it keeps being that way or it goes the way of France and Italy
(So how's that idealistic view working out in their real estate market again?)
Again, it's a job, not a marriage. Some stability and regulation is welcome, sure, but jobs for life don't exist anymore.
If you create a company, you take care of it and all of its members. If you have to cut expenses because the company needs to be "leaner" then you cut the salaries starting from the top executives. Eventually you fire management, because the state of the company is in part the result of their decisions in the long-run.
Will the 10% of the employees be the ones who are already in the less comfortable financial and social situation in their private life ?