12. ‘Downsizing’ Speed Limit

To help mitigate the negative, often severe effects that mass layoffs can have on an economy, there should be a maximum rate at which companies are allowed to layoff their employees, including employees who are fired and quit. Although employees who quit would be counted towards a maximum allowed quota, no enforced limit would exist on the number of individuals that can quit a company. Compensation for such employees would cease upon there submitting their resignation or at some later time agreed upon by the employee and employer.

Limiting the rate at which small companies can layoff their employees would intrude too much on the flexibility of those small companies. Furthermore, layoffs from an individual small company has a virtually insignificant impact on the larger economy of the region. Of course, cumulative small company layoffs would, and probably normally do, have a very significant impact, but reducing or regulating the rate of those layoffs will prove more difficult to justify and implement practically and would also require too much government micromanagement of the private sector. However, the rate at which large companies layoff their employees can be not only easier to regulate, but can also mitigate negative impacts that are often much more economically noticeable or geographically localized.

Nevertheless, each employer should be allowed to layoff (including firings and quittings) a maximum of 40 individuals per week. This rate is equivalent to laying off about 170 workers per month and 2080 individuals per year. It is also roughly equivalent to laying off one person per hour for eight hours during each official work day of the year, excluding weekends and holidays.

Such a layoff policy would not only limit the economic damage inflicted on an economy during periods of massive layoffs, but would also slightly discourage businesses from taking certain risks, namely risks associated with growing so large so as to create for themselves a potential economic liability if and when the time comes that they need to rapidly reduce their workforce.

Companies engaging in massive layoffs would be allowed to simultaneously tell an unlimited number of workers that they are laid off and could actually prevent them from showing up to work. However, the company would be required to pay each worker up to the day or week that the company is legally permitted to lay them off under this policy’s weekly cap.

Leave a Reply