“Today I cut my pay to $0. I'm committed to laying off 0 of our employees.” (opens in new tab)

If a 50% drop in expected revenue _growth_ causes you to default on your debt you are either a startup that had trouble raising money, in which case now you know that you do not have a viable business plan, or you are running a completely unsustainable business that only existed because of easy access to cheap debt the past couple of years.

If you pay your employees and you pay taxes then saving your company is already a worthwhile investment for the taxpayer. Governments are typically not very good at owning companies.

> Half of our expected revenue growth

I am guessing that restaurants would be pretty happy if that's all they were facing.

You may be a good CEO but is there any clause that prevents employers from firing everyone and taking the loan for themselves?

> A small stake in each company, for instance, that we have the option of buying back at cost later. Because if society is supporting my business, society should have a stake in its recovery.

If businesses can buy it back at cost later, is this not a textbook example of moral hazard?

Now I in no way believe you, or business people like you, are responsible for this debacle any more than the average person on the street - rather, it is these gigantic but incredibly fragile corporations that have optimized for profitability at the expense of stability/resiliency who have put the entire country in an extremely precarious place. Again. 12 years after the last one, which a lot of "non-expert" people saw coming, while the "expert" economists and policy makers poo-poo'd these warnings, patting these people on the head as if they were children who are unable to think on the same level as them. Technically, they are right, in a way - us regular folks truly do not think on the same level as them, in that we tend to not posses the magnitude of arrogance and self-confidence it requires to drive straight into a clearly visible wall at top speed, while ignoring all warnings.

Will we learn anything this time? I predict we won't, and I speculate that the core reason is that we have a fundamental problem in our culture. Our cultural axioms (the way we believe reality is, the way we believe society and commerce should be structured, etc) contain imperfections. Until we are willing to consider this possibility, and then proceed with a serious[1] post incident analysis, with a goal of honestly identifying shortcomings and setting out to fix them for good, I'm afraid we will repeat this whole process over again within 20 years.

Think about the magnitude of the aggregate intelligence that exists within the HN community, with broad expertise across many domains. And not just HN, but all the various communities out there. Imagine if these "non-experts" were to one day say: "We have had enough. Let's stop fighting among each other, put our heads together, and start writing policy papers of how this should be done, go through a standard process of review, criticism, refinement, etc (just like we do on any engineering project), and then publish and publicize the results of this work widely. Let's use our combined minds, and voices, to once and for all put some detailed and implementable ideas out into the public domain, and shine a light on them for all to see. Then, when "the experts" come up with their self-serving plan, we can start a process of compare and contrast, pointing out in extreme clarity, in words understandable to both layman and domain expert[2], exactly where they have hidden their backdoors."

Granted this is no small task, but is it impossible? And if we don't do it, what are the consequences of that choice (because doing nothing is a choice).

[1] By serious, I mean: no restrictions on access to information (and therefore no restrictions on who can get involved in an analysis - "many eyes"), no restrictions on speech, no single entity (corporations, lobbyists, mainstream media) dictating the narrative to citizens). The post 2008 analysis is not what I would call serious. A more appropriate word for that would be "theater", not unlike many other rituals our society engages in.

[2] Ideally, the information would be presented in various levels of detail, catered to different demographics, not that dissimilar to those who do contribute documentation to open source projects.

Unfortunately there's little visibility into this, so we can raise our pitch forks and go after companies with angry mobs, but at the end of the day we don't really know what's going on inside every company.

The law makers are the ones who write the cheques and make the system the way it is. The real problem is how laws are made and how the government functions.

It kinda happened with Gamestop here. They tried to classify themselves as essential business first ( I kinda bought the argument btw. - there are people who don't handle isolation well; entertainment helps ), but after backlash all of a sudden delivery @door came into being.

I will add that all of a sudden, I have way more respect for Amazon ( not for their employee practices ; it is a separate can of worms ). Their website just works. I tried to do similar things yesterday on BestBuy I did on Amazon and it was just made purposefully difficult.

In my darker moments, I want some of those companies to fail hard now so that something better may be ushered in. But then I remember people don't behave in a civilized manner then.

I doubt there will be any serious backlash or even a non-trivial amount of reporting about such cases. Also, not sure what kind of backlash there really was over war profiteering - plenty of American companies collaborated with Nazi Germany, and plenty of Nazi companies are still around and going strong today. Grassroots campaigns to boycott 'bad' companies seem to start, fizzle out and disappear all the time these days. There is no support for such boycotts from mainstream media or the powers that be.

In these times of every significant company employing a PR firm to manage its public image, I doubt that's going to happen.

The max loan is $10M though. And the amount of the loan is based on 2.5x the average monthly payroll costs for the year prior to the application date. So it seems like there are a few loopholes:

a) If you have monthly payroll that is higher than 4M a month (2.5x4m=10M), than you can cut payroll and not have your total loan amount impacted (although it might impact the amount of loan forgiveness)

b) If you hired a ton of people over the last year, your average monthly payroll costs is going to be lower than your current payroll costs. And seeing as how the comparison period for forgiveness is the first half of 2019, this gives companies a free pass to cut employment to those levels without punishment.

So yeah, not all companies would benefit from layoffs (particularly smaller companies that have no little or no employment growth in the past year), but it seems like at least some could. The caveat here is I am not very familiar with the bill, so I may be missing some clauses that protect against the above scenario.

EDIT: Also, its not clear to me how the 25% salary cut exemption and the max $100k clause play into this. It seems like the payroll ratios that are used to adjust the loan forgiveness amount don't get adjusted. So in the above loopholes, instead of laying off employees, you could cut salaries without penalty. Alternatively, you could cut salaries by 25% but add more employees to the payroll to get the same monthly total in order to qualify for the full forgiveness.

Just following that section is this:

-----------

(3) REDUCTION RELATING TO COMPENSATION.—The amount of loan forgiveness under this section shall also be reduced by the amount of any reduction in excess of 25 percent of compensation in the most recent full quarter in which the employee was paid in compensation during the covered period of any employee who was compensated—

(A) in an amount less than $33,333 during the period beginning on March 1, 2019 and ending on June 30, 2019; or

(B) not more than $100,000 on annualized basis during 2019.

------------

IANAL, but that sounds like employers can reduce employee compensation by 25% without any reduction in loan forgiveness, for any employee making less than $100k/yr.

Also, unless the individual workers are being tracked, they could also fire the existing workers, and hire replacements at a 25% reduction in compensation. Especially at the more easily replaceable sectors of the labor force, there are a lot of people desperate for employment right now.

EDIT: The Application section states:

-------------

(e) Application.—An eligible recipient seeking loan forgiveness under this section shall submit to the lender that originated the covered 7(a) loan an application, which shall include documentation verifying the number of full-time equivalent employees on payroll and pay rates for the periods described in subsection (d), including—

(1) payroll tax filings reported to the Internal Revenue Service;

(2) State income, payroll, and unemployment insurance filings;

(3) financial statements verifying payment on debt obligations incurred before the covered period; and

(4) any other documentation the Administrator determines necessary.

-------------

So it says they are interested in the number and fulltime-equivalent employees and pay rates, but nothing about the replacement of existing workers, although that information should be available in the payroll, state, and unemployment tax filings. With all likelihood, they are just looking at totals, just for efficiency's sake in processing the number of loan applications. This seems to leave a loophole open for unscrupulous employers to dock employee pay 25% without cause.

This is all an emergency drill of course. We're all going to see how this shakes out.

Why does this rationale apply to businesses but not to individual employees? The government forced them to stop working.

A huge number of folks, perhaps an overwhelming majority of americans, are living paycheck to paycheck[1]. When they get "airdrop" money, these folks tend to pay their outstanding bills or make large purchases that they would otherwise need to save up for. Who's getting that money in the end? Businesses whose services are in demand. This, in turn, incentivizes hiring and maintaining capacity to deliver their services.

But what's happened when we've airdropped money on businesses? They pocket the cash. Executives get bonuses, companies buy back stock and cut dividends to their shareholders. And to show their commitment to belt-tightening, they punish consumers and lay off workers. Trickle-down economics does not work. Paying companies does not help the workers as much as paying the workers directly.

[1] https://www.forbes.com/sites/zackfriedman/2019/01/11/live-pa...

Businesses that are crucial will be recipients of that air drop spending, as will the employees of those businesses. Cat litter task management SaaS apps? Not so much.

The U.S. could give each household ~$15k instead of trying the trickle-down experiment again.

This is not a bailout, it’s another transfer of wealth using the same model that was prototyped during the last financial crisis.

I don’t know how this works in the US, but in Iceland they are offering loans with 50% backing from the state. Meaning that if they fail to pay back the state will pay 50%. This is effectively a grant in all but name since the company has no intensive to pay, but full incentive to have have the state pay.

Private profits, public risk.

First, this is nothing like 2008, to which it's being compared.

In 2008 you had misbehaving companies taking huge risks with the (correct) assumption that they were too big to fail.

But what we have now is the government forcing businesses closed. It only makes sense that the government provide some assistance to those companies.

It feels great to quote Chomsky and to feel morally pure, I've certainly done it. But the truth is you would not like the result of that purity should the government follow that advice. The Federal Government and Federal Reserve acted in a ideologically pure fashion in 1929, and it caused a depression and hurt working people the most.

Secondly, we do have assistance programs for workers that have been laid off.

God damn, I love Chomsky.

To Chomsky's point, in America we don't even have capitalism- we have "socialism for the rich," and when you propose "real capitalism" the capitalists run for their pitchforks and knives. My favorite fact about capitalism, is that in a truly free market society, there's zero economic profit. What most people consider "profit" (or as I know it "the cream") is actually a sign of market manipulation whereby those profiting are paying less than they should for their labor, rent, and/or supplies.

Recommending socialism in America is always met with resistance, but I have no idea... Workers who claim to be capitalists, and I would think want to maximize their realized revenue, don't want to be paid what their worth going against their own philosophy. They accept the market as it is as pure and perfect when that is empirically not the case. Right now "socialism" would be a market correcting force, returning a lot of power and money to labor.

I could literally go on for hours... so I'll stop here.

people in this forum pretty much control if any SaaS live or die.

if we care enough we can compile a simple list of layoffs happy companies to boycott.

They have a gun pointed to the government, we'll lay off 12,870 employees, unless. And so on. So it's not always that easy.

That’s a straw man. Big corporations that love regulatory capture and government bailouts rarely make free market arguments. They tout things like important regulations for their industry and how closely they work with the government to ensure a safe society or whatever.

Surprised, no. But if you listen to the talking heads on the TV they will tell you a different story about how great this is for everyone.

In the meantime, what do you propose people do who have been displaced from their jobs? Or who are unable to work due to social distancing and stay at home orders? Sure, some billers have stated “we will not disconnect/cancel due to nonpayment” but what answer do you have for those people?

This corporate welfare is garbage, and they’re then being stingy with what they’re giving to individuals? Fuck the politicians.

"Bad idea" vs. "Good idea" seems too restrictive to me. I think there are pros and cons to it and the sum total of those pros and cons may be different depending on your circumstances, finances, and personal beliefs. There are some people who need economic relief now and not a moment later. Giving money to 'the people' can help with this but also carries long term consequences like inflation of the currency. Not to mention, the range of people getting money may be too broad - for example, I'll be receiving a check but I don't think I need it at all. Creating a more restrictive or specific criteria for the delivery of this relief though would likely become somewhat of a bureaucratic nightmare and would inevitably slow things down. We've had similar stimulus packages in the past and whether they were effective in their goals is up for debate.

https://taxfoundation.org/did-2001-tax-rebate-checks-stimula...

https://www.thebalance.com/bush-economic-stimulus-package-33...

> My opinion is most people are going to buy thing they don't need.

That's... kind of a large part of the point as far as I understand. It doesn't matter where the money gets spent (rent, necessities, luxuries, hobbies, whatever) - the important thing is to keep the economy moving. When large portions of the economy are disrupted all at once (jobs lost, businesses failed) there's the potential for a domino effect.

As someone who know a lot of people, just giving us food and water and shelter would be good enough.

I think it’s counter-productive. He is making this seem like a huge sacrifice when, in fact, it’s par for the course. I wish if he wanted to talk about it, he would make it less about himself and more about “what it takes to run a business”. In many cases, people pay themselves nothing, take on debt (without having ever made millions of dollars per year), and don’t guilt-trip/lord it over their employees.

(Ok I’ve said my piece, I won’t continue to be a hater :P)

> Good people existing does not imply that everyone else is bad.

It implies that to the immoral who pretend they’re moral. It reminds them of their own hollowness, which provokes a lashing out.

> ...company whose finances are in need of slashing the CEO's salary to zero.

You're only looking at one side of the equation. The CEO wanted to ensure that his employees were all making a living wage. He's so committed to that that he's taking the same wage. To spin that as a foundering business is rather disingenuous.

I wish more executives would take more modest wages. My employer would have a lot more runway if our execs were making the same as the rest of us. Hard to buy into "belt-tightening exercises" where we sack a dozen qualified and necessary employees whose salaries don't add up to a single executive salary...

The article states that he did that in 2015. This tweet is retrospective.

Short answer: yes

Longer answer: it doesn't matter as much as you'd think. These companies making huge layoffs are facing an existential crisis, not slimming down for a revenue shortfall.

The $1 earners put a lot more than $1 on their W2s. Zuckerberg for example has $1 salary, $0 stock, and $22 million "other compensation" including security and jet costs.

I always assumed that it was because they got paid in dividends, which are taxed at a much lower level. Not an expert though.

Someone who is going to such lengths to save their employees should at least be given the benefit of doubt.

He did something similar 7 years ago, so I don’t think he has some ulterior motive with all this or a grand plan. IDK, Seems like a great guy to me.

How are owners of small businesses able to make money while their company fails? I would like to know because I plan on starting a business in the coming year.

I think there is small class of founders who fail and end up better off than their employees but it is not the majority of cases. If you factor in resume/connections/experience, that number is certainly higher -- but that seems fair to me.

There's no less cash in the market than a month ago, so at the right price there should be buyers? But since alongside cash, there's also credit and assets, I actually have no idea how much less cash-like "value" there is, even if the fed or somebody helped turn it all into cash. I suppose the government could always be the buyer instead of giving loans.

Good question ¯\_(ツ)_/¯

Agree completely. It's a nice gesture that the CEO cut his pay but - in agreement with you - there are lots of ways to increase employee pay.