That strikes me as a pretty generous severance package.
I was at a company in the UK where a department closed. They offered 3 months, plus a month per year served. And for first round they offered a 6 month bonus for volunteers vs stay and try to get an internal transfer.
I was surprised how few volunteers there were. I don't think I've had a job I wouldn't walk from for a years pay. Those that were chopped second round were pissed.
Apply to a position and hope to be moved over with a L1 visa?
Find an employer who is willing to hire you and go through H1B visa lottery, which is the normal work visa.
Enroll in a US university, ideally a STEM degree, and use the OPT visa extension to get a foothold in the US.
Marry an American?
Probably plenty more options, but I'm not an expert in US immigration.
Immediately apply for a green card.
Preferably be born in a small European country, so the green card comes in your lifetime.
What are you referring to here? How much money buys you? Aka: costs of living?
How much you make, converting EUR to USD?
What industry? IT?
I worked in a leadership position at a multi-national in Berlin for almost five years. I know the salaries the engineers had in CA & Chicago vs Germany.
US was maybe 20% more max. In terms of what it buys you ... not so much. See below.
Cost of living in Munich (one of Germany's most expensive cities) vs. SF.
And then Berlin (one of Germany's cheapest cities) vs. SF.
This comes from a person with EU citizenship who has shopped jobs/interviewed in multiple major cities in Europe; including Munich, Berlin, Amsterdam, London, Dublin and Prague.
It's not insignificant. We're talking 150-220k USD/yr in LA vs 75-95k EUR/yr in Amsterdam (as an example, since it paid the greatest during my search) for a similar seniority role. That's before accounting for nominal tax differences (~37% LA vs ~38-42% AMS; which is significant at that delta).
When I reviewed housing, Amsterdam wasn't significantly cheaper than LA, but it varied wildly based on where you wanted to live in both cities. LA apartments: 1200-4000USD, AMS Apartments: 930-3500EUR. The major plus in AMS being that you could live further from City Center and still reliably account for public transit. There's medical: free in AMS, $38/mo where I opted to work in LA. There's vacation time: 20-24days in AMS, flextime at my company. Etc.
I mean, there are more comparisons to be made; but those were the prime metrics I was interested in.
Wait what?! What kind of apartments are we talking about here?
> $38/mo where I opted to work in LA
What does the medical insurance cover?
How much did your car & car insurance cost in LA and did you need one in Amsterdam (probably not)?
All of them, that was the range from the cheapest to the priciest. Idk why that seems unbelievable, I literally just looked at apartments in AMS now and the range appears the same.
> What does the medical insurance cover?
It’s full medical coverage via a PPO plan. $40 copay, $250 deductible, $1500 max out-of-pocket per year.
> How much did your car & car insurance cost in LA and did you need one in Amsterdam (probably not)?
I already owned a car, and would have sold it if I moved. Insurance is paid semi-annually but isn’t a major expense. Additionally, I included public transit as a benefit for Amsterdam in my original post, so I’m not sure what your point is.
It really seems like you’re grasping at straws to justify the difference. The reasoning is obvious: the tech industry is massive, highly competitive and California is currently the global leader in that industry.
"Cost of living in Munich (one of Germany's most expensive cities) vs. SF. And then Berlin (one of Germany's cheapest cities) vs. SF."
I think these numbers are outdated. Especially Berlins rental and real estate costs are catching up quickly.
That’s not to say it isn’t sensible social policy. It is less disruptive to people who have lived there for a long time. But if you move for work, you will have to either pay a lot more than you would have in 2011, or get lucky.
You can forget it when you are young, healthy and single.
Put a wife and couple of kids into the equation, a sickness here and there plus a small risk to become unemployed and everything changes.
Also, the cost means that it is something you can only afford while you are still working.
So if you do get hurt and can't work or get fired you lose that privilege.
That is also a cost of opportunity that you lose by living in the US and that is not factored into the price of the insurance directly.
There's really not much different in what's available, only who's responsible for it. In America, you earn and keep more and it's up to you to allocate properly (or not). In other countries, the government does it all for you to ensure there's a base level of support for everyone.
If you need to pay for a very expensive medical insurance then you can only afford it while employed which you won't be if you have health issues that prevent you from doing so or get fired.
There are plenty of choices for continued care and coverage, as long as you plan for it. That's the major difference. It requires you to actively plan for your retirement and old age. Other countries just do that for you in exchange for a heavy tax.
Healthcare is free at the vast majority of tech companies in the US.
Remember that there are people outside IT/SV!
I look frequently, because if the pay was equal (or even 3/4) I'd love to live in Europe.
Which basically the average Silicon valley wage is the wage I am making now. However that is with quite a bit of seniority, I've noticed offers from Germany are generally lower than what I make but Germany costs less. If I were starting out right now I would probably make 60% of what I make now.
My guesstimate of the difference has always been that a years pay in Denmark was equivalent to 8 months pay in the better paid parts of the U.S.
Also, they're referring to white collar tech employees. All salaried, all well above minimum wage and most definitively the highest paid (in that industry) in the world, including outside of SF/the Bay.
From a company standpoint, not having to accrue the liability on the ledger simplifies the accounting auditability & ability to close your books monthly.
On the other hand, I understand people who are on tighter budgets who would rather have their revenue better aligned with their expenses rather than having to balance them on their own.
It seems that much of HN has very little knowledge of (and interest in) business operations and employment law in other countries.
I see your question as genuinely inquiring about this stark difference from what is common in Europe and other countries.
Here is my take on the situation:
Let's say I own a widget factory and you are highly skilled at turning paper clips into widgets. We agree on a price for your time and I hire you to start making widgets. Things are going gangbusters, you produce a ton of widgets and I pay you for the time you spend working for me. All of a sudden people stop buying widgets. I no longer need your services so I have you stop coming in and stop paying you for your time.
I don't understand why I should be obligated to pay you for services you didn't provide. It's not like I can go to my customers and ask them to pay me for widgets I didn't sell them.
Most people (who don't own things like factories) need a regular, predictable, stable income to survive, and finding new employment is not always easy.
Therefore, people in most developed countries have agreed that by taking on an employee, it is contingent on the employer to provide some guarantee of stability. This is borne out by laws restricting firing in many cases, and requiring severance pay in the event.
The USA is an aberration in this regard - even the workers seem to value the rights of the employers far above the rights of the employees. I'm not sure why this is.
Is getting hired in Germany more difficult, compared to the USA? And if so, can you attribute that to employee benefits?
You guys act like there's no downside to cradle-to-grave nannying of the labor force. There is.
Like, if you are a PM at FAANG you can probably get a seed round for any kind of nonsense in SF, but in Germany you would need far more proof and preferably revenue (I don't know Germany that well, but it's similar across much of Western Europe).
VC's tend to be look a person in the eye and judge his (almost always) character. They don't like travelling, so most of their investments are made in the Bay Area.
Coupled to this, there's much more availability of angel funding because of the previous unicorns (paypal, eBay, Google, Facebook et al) so it's easier to get started.
There are definitely some cultural issues at play also, but fundamentally the reason that the US has such a high proportion of tech giants (which seems to be what you're focusing on) is the low cost of capital caused by the dollar's exorbitant privilege.
Note that it's per capita, and Israel has a population of 8mn, versus the US's 330mn.
I think it's pretty clear that most VC funding is given in the USA.
And note that the terms are often much better, and funding is accessible earlier. This article explicity states that you want to get seed funding in the US if you want to maximise your valuation. See: https://medium.com/sosv-accelerator-vc/what-does-seed-fundin...
These regulations provide for worker rights, productions and consumption safety, product quality and much more. Something America is lacking in completely.
You also have a government and department of defense that helps a lot of your big multinationals grow and kill it's foreign competitors.
You can look at the acquisition of Alstom by General Eletric as a good example.
And what you call fluid employment I call bad jobs.
I guess that explains why people do whatever they can to migrate from the US to your country.
They do that, right?
If I shoot someone and they fall down dead, is "b....b....but correlation isn't causation!" a valid defense?
For me, it is quit natural to assume that a base level of employee protection causes innovation. And Germany would be a good example, as there are quit some innovative small to medium sized companies. The only thing lacking is tech unicorns and there are all sorts of reasons for this.
There is nothing more to gain here, have a good day.
I could claim that the historic position of the USA after WW2 caused all of these. My claim would be as baseless as yours. A good starting point for research, but nothing more.
To paraphrase a famous quote, in the USA the workers don't see themselves as workers, but as temporarily down-on-their-luck owners.
It's funny how it started out as a criticism of people who think that the government should have more control of how businesses operate, but has been paraphrased so many times that it's now used as a way to criticise people who want to minimize government involvement in business.
It's hilarious applying it here, given the situation described was reversed. Your position is that the worker who doesn't own the factory should dictate what the factory owner should pay because of a power imbalance.
Perhaps the issue is having difficulty telling the difference between workers and factory owners in general.
By Ronald Wright.
You make it sound like employers are all fat rich people smoking cigars while everyone else is in a sweatshop. The reality is that 99% of businesses are very small in size (as in, one owner and very few employees) and it's often much more a partnership than the power imbalance you are talking about. Yet the same laws apply whether you deal with a 10 persons company of a 100000 persons one.
But I agree, people act like the economy is nothing but fortune 500 megacorps and push for laws that make it harder for everyone to survive except for such businesses and their employees.
And people always miss the hidden cost, even when talking about the fatcats. If you require companies to provide a year of severance, then everyone just gets paid (n-1)/n as much on average, where n is the average number of years an employee is expected to stay.
Either way I'd expect fewer americans still work at large businesses than at small and mid-sized businesses combined.
And "small businesses" with fewer than 500 employees represent 99.7% of all businesses and yet they represent less than half the total workforce.
Also, it's not because a company is small that the owners are small time business people. The owners might be independently wealthy.
Being an entrepreneur means getting things done with what you have. You don't need to be wealth and instantly go from 0 to 1000 employees. Most people start with modest means and build up from there.
So not only do most Americans do work for multinational companies (53%) but on top of that, 80,5% of the ones working in SMEs are themselves the owners and don't have any employees to speak of.
Which leaves a whopping 19.5% of American SMEs which actually employ workers.
So you're dead wrong.
It also helps make it easy for entrepreneurs to start companies and create jobs in the US and is a direct reason why we don't see the same innovation in regulation-heavy regions.
If you're talking about why we don't see more visible commercial innovation from European countries then it's more about access to the enormous amounts of capital to build a big name startup like Uber etc.
Nobody notices the legions of small bootstrapped or seed to profitable software businesses across the EU.
German companies with more revenue than Amazon: Volkswagen, Daimler, BMW, Allianz, Siemens, Deutsche Telekom, Uniper, Bosch.
On the smaller end, Germany also has a comparable number of employer firms per capita as the U.S.
Empirically it largely is a myth that worker protection and consumer protection stiffles enterprises or innovation.
Valuation reflects market sentiment and potential but perhaps I should have left it out. The real focus is the "world-changing" aspect of the products produced.
What have been the recent global innovations produced by those German companies? Anything turned into a household name?
I'm actually not quite sure what you mean with the "global innovations" part, though, could you expand on that? What is it that makes e.g. Microsoft innovative?
What I see is the your big four all sell consumer product/ services and thus are more visible. E.G. Bosch is developing electric powertrain components, produces radar/lidar and video sensors for autonomous driving. Bosch also produces the robots used in those mostly-automated factories.
That's why they're called a "hidden champion".
We've had gyroscopes for a century. The iPhone is innovative because it used that to implement a new device that changed mobile computing.
I would think that since innovation and growth (caused by innovative use of resources or increase in efficiency or novel products and services) in general should be relative to the population and its state to begin with, nominal GDP growth per annum would be a reasonable metric as a proxy for the wildly non-measurable "innovation in terms of GDP"; for reference, here's the data for 2018:
Ireland: 8.2% (not a typo, likely explained by expansion of business services from NA into EU)
Germany is at 3.4% of GDP spending on R&D and the USA at 2.8% France is also right up there at 2.2%
I'm going with the OECD definition here:
Pivotal products are a better milestone than vague estimates of R&D spending.
Little known German company ZF has almost double the revenue of Tesla. They also make the transmission for the Porsche Taycan EV that's outselling the 911.
Tesla sales are a fraction of any of the big three in terms of sales or revenue.
They sold 192,000 vehicles in the US in 2019. Each of the Big Three sold well over three million.
Tesla currently loses $2500 on every vehicle they sell
People always seem to compare Tesla technology of tomorrow with what its competitors are doing right now. That's why Volvo "only" has level 3 self-driving, while Tesla has a fleet of robotaxis that are earning you money on its ride-sharing app while you sleep.
I joke, but a large portion of the Tesla fan base has no clue what is going on in the autonomous driving or auto manufacturer world outside of Tesla. Tesla has been a big innovator, but they aren't leaders in everything....not even close.
The thread is about innovation, so that's what counts. And what other manufacturer matches what Tesla has driving on the roads today? The closest realistic challenger is the expensive Porsche Taycan which is still missing all the functionality and usability features.
Tesla has sub-1% market share in the global auto market and rapidly declining energy product deployment (they deployed 4x more MW 4 years ago than the did last year). Let's not pretend Tesla has taken over anything yet.
Seriously? Should they eat cake as well?
The ability to hire and fire fast is undeniably helpful for companies, and being able to quit and move to new jobs is just as useful for personal career development. It might not be for everyone, but it's not any less valid.
Adding more regulations will bring equivalent trade-offs because that's the reality of economics. Do you disagree?
If you want to get bogged down in technicalities and anecdotes though, then sure life isn't fair. I worked manual labor before and now own multiple properties. I guess it's just magic.
There are outliers, but we’re talking about broad systemic patterns.
You evidently went to an okay UC - you probably had supportive parents. Be it emotional or financial support. Perhaps both! Perhaps your family life was reasonably stable. Perhaps you had three square meals most of your youth.
The point is that you are in a position to access capital that is markedly different from a lot of individuals born into lower socioeconomics striations in society and the statistics are weighed :heavily: against them.
This is often through no fault of their own.
Thank your lucky stars the world aligned for you as it did. Where and with whom you started that life made a far bigger difference than any perceived grit you might think you exercised.
I guess eventually owning a factory is just impossible right?
Getting loans is hard, especially if you're one of the working poor. Starting a company that doesn't die after a few years is harder. When you're one of the 40% of Americans who can't cover an unexpected $400 expense, if you company fails you're fucked. The social safety net in the US is a joke.
I was simply stating that truth, not defending it nor saying other realities can't exist. But there is always a trade-off. What part of that is so controversial?
Perhaps things have changed and the balance needs to be shifted now. That's a great discussion to have, but let's actually have a discussion then.
That the other side of the coin is misery for those, who have not the means to exercise these freedoms, that is the problem your comments ignore.
There is always theoretical freedom and practical (real) freedom. It is not evident, that the USA offers more freedom to the average person.
Whether you (can) take advantage is completely orthogonal to the original question of why the USA is "an aberration in this regard", and I would rather not devolve into yet another rehash about fairness and opportunity.
in europe at least that part is gone, you start your own company not out of necessity but out of motivation.
America just chooses more freedom than government mandated security. There's some slight trade-off but it is nowhere near as problematic as media makes it seem.
But yes, different places are different and life isn't fair. No need to cutoff any discussion of various economic systems and environments for the same basic retorts.
https://youtu.be/xXze8_SzW28?t=431 <---Granted he's got Youtuber money and other gun-sales related money to help, but the concept is the same....he's bootstrapping a factory after purchasing the relevant capital infrastructure using his own money.
This is the difference. Most Americans don't have access to this capital, or access to means of borrowing this capital, and if they do have the means then they might not necessarily be able to shoulder the risk.
It's not for everyone. Sure, most people have no appetite for the level of risk involved even if they can scrape together the money to buy some revenue-generating asset (I know a guy who left the Marine Corps as a truck driver...moved back to Japan, bought a truck, and then opened a moving company). Most people don't have access to capital....nor will most people ever have the intellect to write tight software code, no matter how many government-backed Code Bootcamp Initiatives there are.
To bring this back to the original point though, telling someone to bootstrap a factory, which is demonstrably doable in the American economy even today (for flexible definitions of "factory"), shouldn't ever be a "controversial" piece of advice. Especially on an pro-entrepreneurship site like YC/HN.
VCs might be interested in your app but not in a random bakery which is also a business of a type that is probably more common.
Also VCs take a share which makes them the owner as well but oh well.
There are 10s of millions of business owners in America. Ask any of them how they did it.
But really? The thing most preventing you from starting a factory today is... because you can't find the land? Alright then.
Finding and controlling land to expand your business is not a serious limiting issue. You have effectively infinite headroom before you need to worry that you can't own a factory on Earth because too many other factories already exist.
I do think there are a few places where this policy breaks down. For example, the additional transaction cost makes hiring decisions "stickier." I think this hurts the employee as well as the employer.
I don't quite understand the power imbalance here. My employer requires my labor and I am willing to trade my labor for money. If I'm not happy with the arrangement I'm free to find someone else to trade with.
There's only a power imbalance if workers are prevented from organizing, or if they (for whatever reason) refuse to organize. Or if they workers are very easily replaceable.
Obviously, if you're one of 200 workers, you can't negotiate evenly with the ownership as 1/200th of the company's workforce. Same goes if you're an unskilled worker who is easy to replace. However, even then, if you organize with all 200 of your co-workers, you are closer to a balance in negotiating power since it would be hard for said company to replace all 200 workers at once.
You want to balance the power? Make it easier to be an employer, not hinder it.
Swedish worker unions sees the success of the business as success of the employees and will help get there for example by fair to both sides collective agreements.
This means for example that unreasonable demands from employees will be blocked, and if the employer needs to cut down employees cannot refuse.
Why not, for instance, make the loss of a job be covered by saved union funds that are generated by the union as a whole? The only reason the business is tagged as the responsible party in Europe is historical cruft.
No one has a right to payment if they do not provide services.
The main difference, of course, is that in countries that require this sort of thing, it's required - but requiring certain implicit terms in employment contracts is a regular thing in the U.S. as well - there's all kinds of regulations and case law on what sorts of employment contracts are valid. Saying that something like severance is a necessary requirement is a difference of degree, not of kind.
I live in the UK. Here the obligation is symmetric. All my recent work has been on 90 day terms. That is, if either I or the employer wish the contract to end normally that requires 90 days of notice unless both parties agree otherwise.
My most recent employer decided their costs were too high compared to projected income, so they gave me 90 days notice back in 2019.
At that point I knew that in 90 days I won't have a job. I could start looking for a new job, able to tell any prospective employer that I can start on day D+90. I would still get paid, as usual, and my employer was entitled to insist that I continue to work as usual.
In fact of course they gave me garden leave, I guess that's probably an alien term in the US too? Garden leave means that the 90 day term still applies, you still work for them not anybody else, and they still pay you fully - but your employer thinks it would be best (for example because they're scared you will sabotage things, poach customers, or steal trade secrets) that you do not come to the office or use their computers and thus you cannot do your job.
I'm very awkward so I pointed out that they're short of cash, rather than having too many engineers, and so since I wasn't doing anything else I kept working, although I will admit I wasn't exactly the most motivated team member since I knew I was terminated. They had to go re-enable my git access, AWS access and so on, which had been severed when I went in to be told I was fired. Very amusing.
Now, let's roll back to my previous job. I'd been essentially head-hunted, I informed that employer that I'd be leaving, triggering the 90 day notice. I was actually at their offices at the time, (I usually work from home) and I informed them that I'd be available until close-of-play to negotiate the exact details. They got right down to the wire but eventually sent someone to work it out, and we agreed I would spend the notice period spinning up people who'd been brought in to learn what I do, and that I wouldn't take my vacation days, but I would actually leave on D+85 not D+90.
Paying out a notice period is very different from severance pay. I can assure you that AirBnB does not have a 14 weeks notice period.
(American companies also pay you out the notice period, and some send you on gardening leave, if they want you out of the office. But notice periods in America seem to be generally shorter, like 14 days, for most more junior jobs. In the UK one month seems to be more standard?)
Most contracts with a notice period still allow the company to just pay it out and send you home on the spot.
You even have a contract when you are buying a piece of candy at the newsstand.
(At least in the common law world. In eg German law technically you have one contract for the piece of candy, and one contract for each individual coin you are handing over. See https://en.wikipedia.org/wiki/Abstraction_principle_(law) Germans are a bit crazy.)
> At-will employment is a term used in U.S. labor law for contractual relationships [...]
Emphasis on contractual.
Or am I missing something?
A contract that can be dissolved at will is still a contract. Just like you can cancel your Netflix subscription at will, and it's still a valid legal contract.
Why is it a good idea?
Employees less likely to leave without notice.
Employees stay longer because the safety net grows.
Less likely to speak poorly about you after leaving
More secure in their job. More emotional invested.
What are your reasons for not? Even if google stops selling at home they will keep the server alive for a grace period.
I had a friend who ran a bitcoin market. When the market shutdown he was responsible for customer records for 7 years and had to pay a company to secure access in case of requests.
But they are no reason to legally require severance pay.
Voluntary severance payment and contractually agreed ones are fine, if people want those.
You may have bought raw materials, hired people, set up a warehouse and stocked it with products anticipating my orders, but I don't understand why I should be obligated to pay for your products if I no longer need them.
All contracts generally include terms for termination of the contract. The tone of indignation is in the US, employers determine them unilaterally and employees don't have the bargaining power to do anything about it.
Employment law in Europe, for example, frequently requires the severance terms to be determined at the time the employee is signed up. The employment agreement is a contract, and will be signed by all positions in the firm. In many cases, the severance terms are based on law.
Among other differences, for example, a German President is personally liable for the financial obligations of their company. If the company goes bankrupt, so does he.
I would imagine if a director breaks the law, only then he could be personally liable. And in that case I would imagine Germany does have higher standards than US.
"If the company is in crisis special obligations arise for a managing director the breach of which may lead to a personal liability of the managing director."
I'm not saying you are wrong, just that Germany doesn't really support your point.
Not really. Directors are not generally held liable for debts incurred by their companies in Germany. However, they can be held liable if they are found to be in breach of their duties as directors. Also, the onus of proof is reversed in some cases (e.g. the director needs to prove he wasn't in breach of his duty).
In US new enterprise have a very high failure rate, how do entrepreneurs survive in such environment?
A CEO (and other company execs) can be held personally liable only if there is fraud or other illegal acts. Mismanaging a company, or even simply working hard and not succeeding, are not illegal.
American firms can take on much more risk, so we tend to see both many more failures and many more successes.
the UK is one week's pay for every year, but with a maximum of £538/week and a maximum of 20 years for length service.
given that a software engineer who's been at AirBnB for two years is going to get 16 weeks of pay and probably makes _at least_ 180k/year, they're probably getting around $55k.
This compensation does not sound "vastly more generous", but not bad for those that were less than 5 years employed.
So yes, when you collect the deferred salary it feels generous. But you were getting less salary up until that point in order to make the system solvent.
One may well prefer this arrangement, but one can't evaluate the generosity of the payment without also accounting for the cost that made it possible.
The baseline is decently middle class with a solid safety net but there's a lot more room at the top than you're making out IMHO.
As always, to make cash as a "working" dev you have to get as close as you can to a gigantic money funnel of some sort. The main difference from the U.S. is that there are fewer and different money fountains, especially missing unicorn and VC money. Finance, FAANG outposts and doing specialised things for huge real-economy companies still pay well.
The safety net argument has no legs. Australia and Canada both have social benefits that far exceed the majority of EU nations, yet pre-pandemic there was no shortage of $150k+ dev roles.
> And I have colleagues who make £450k+
Just as there are American devs pocketing 7 figures annually. Again, the number of European devs making >$100k is a fraction of a percent. You can be making $100k in the US after a 6 month bootcamp or in AU/CA with a couple of years experience.
I doubt that $100k is the 99th percentile for London developers, maybe it is for European in general.
I promise you, the market for developers does not top out at anywhere near $100k.
That's closer to a starting salary (assuming a university degree).
London finance attracts a crowd that I had very little in common with. To be honest I only interviewed to see what it was like. It wasn't for me.
Mainly worked with high traffic Ruby apps but also done production C and Rust. Side interests in VMs and compilers.
These positions exist if you're good, experienced and most of all, not a complete asshole.
Which country do you live in? Is it common practice for all employees to have severance negotiated as part of an employment contract? What happens if the employee decides to leave the employer before the contract expires?
- somebody who makes 5000 euro gross per month who's 20 years with the same company would get ~15 months severance.
- somebody who makes 3000 euro gross who's 5 years at a company would get 7 months of severance.
Interestingly enough, the age of the employee is a factor of the equation!
When it's the employee who decides to leave the company, the company can require them to stay on for many months, again depending on how long the employee was with the company. Or the company can agree to release earlier, but it will still be on the hook for a significant amount of months of salary.
Let's just say that the decision to hire an engineer isn't done lightly.
Because it's set by the government, it caps out at well below a typical tech worker's burn rate, so it's little more than a brake on the depletion of our savings. When a tech company offers severance it's typically much, much more than what the government guarantees.
You also get the full amount regardless of how long you're unemployed, so e.g. if you get laid off with 7 weeks severance and find another job in 3 weeks, that's a free month of salary.
In our case, the payout is defined as 4-12 weeks of salary (plus 1-4 weeks notice), based on length of tenure. Since this scales with what people earn, there's little need for tech companies (or other well-paid fields) to offer anything extra.
On a related note, Australians are also entitled to 4 weeks paid leave per yer, which accrues if not taken. Employers are also required to pay out any leave balance (even if the employee leave voluntarily), which means most workers will have at least a couple of additional weeks paid out on top of the severance.
It's the same here, in that you get the full amount regardless of how long you're unemployed after they let you go.
No idea how common it is, though.
Benefits vary greatly. It has been awhile since I worked with this stuff, but IIRC Massachusetts is the highest payout ($750+) and places like Alabama, Florida, Mississippi and Arizona are <$300.
Severance is usually part of an employee contract (if one exists) or commonly part of an agreement at separation where the employer gets some benefit (waiving the right to sue, etc).
We can see from the priorities how workers have been left out of the decision making for decades in the US.
Just like, for example, there's no legal requirement to pay employees bonuses, so bonus pay is at the employer's sole discretion. In fact, salary itself is at the employer's sole discretion other than complying with minimum wage and overtime laws.
It's been my experience that severance for rank-and-file employees is rarely offered and is very miniscule if it is paid.
Grow fast and flame out? That’s ok. Shut it down as gracefully as possible and try again.
Severance pay is voluntary. So of course they can decide how much they want to pay.
You spelled weeks wrong.
The severance package is the core metric to judge a company that is doing layoffs. In this case, it sounds like Airbnb did the right thing. Airbnb fired people well in advance of when they were actually forced to. This enabled them to provide an ethical severance.
Some companies wait until the last minute and then provide two weeks or similar. These companies should be publicly shamed for all time.
4x12 = 48 weeks of compensation disbursed by the entity. Restated compared to some nightmare no severance scenario meant they effectively terminated 4 FTEs to achieve slightly less than 3 FTEs of cost savings (adjusted for healthcare costs).
I'm not arguing against AirBNBs approach btw. Their CEO had a wonderful podcast on the Masters of Scale pod roughly two weeks ago.
However the Rawlsian philosophy on that marginal employee that got terminated effectively to fund the severance for herself and her colleagues is a tricky ethical consideration.
So if AirBNB went out of their way to mention COBRA, it likely means they're covering it.
So it can be expensive if your employer was paying a lot for it.
Edited to add source: https://www.swissinfo.ch/eng/society/new-method_health-insur...
A COBRA plan is just continuation of the same plan, at the same cost (except that the ex-employee now covers whatever part was paid by the employer), as you had when employed.
> Some folks are better off on the private markets, especially exchanges.
Rarely for an equivalent quality plan if they were in a large group plan, which are usually better than individual plans, even exchange plans, on a cost/benefit basis. Excluding, of course, consideration of exchange subsidies if the ex-employee would qualify based on their reduced income.
So you basically get 90 days "free" COBRA, but your deductible is 1, 2 or 3 months premiums.
That just means that it is available to you -- not that they are going to subsidize it.
> In the midst of a global health crisis of unknown duration, we want to limit the burden of healthcare costs. In the US, we will cover 12 months of health insurance through COBRA. In all other countries, we will cover health insurance costs through the end of 2020. This is because we’re either legally unable to continue coverage, or our current plans will not allow for an extension. We will also provide four months of mental health support through KonTerra.
What they left out was that the company could reject you as a customer if you had a pre-existing condition. (This was before the ACA took effect.) They can legally do this because COBRA does not apply to grad students.
Fortunately, Oregon at the time had a state-subsidized health insurance plan called OMIP for people that were rejected by private health plans. The premiums weren't cheap, but they weren't worse than equivalent plans. Eventually OMIP was superceded by the ACA marketplace.
However, my Cobra eligibility died when the acquiring company cancelled their health care and moved everything to India.
Comparatively I got 0 severance from my small company but am grateful for the unemployment insurance.
It is some how hard to believe that they will start starving within a year after a layoff (perhaps if they plan to maintain their expense levels unchanged, but still sounds very improbable)
What are the calculation that lead you to this conclusion ?
Even people who are employed can go broke, declare bankruptcy, and not being able to pay for their previously-enjoyed lifestyle anymore.
The financial security ladder has many steps.
Hard to imagine that programmers, product managers, SREs that had successfully passed AirBnB interviews would be so close to the bottom of that ladder, that their children will go hungry within months of stopping to receive the severance.
"Eating into savings" is what saving are made for.
But what's the window to exercise once you leave the company? I doubt it's until expiration.
1) the usual employed by the company for a certain period of time
2) some qualifying liquidity event (ipo / sale)
This is to avoid employees needing to pay taxes after #1 even though the stock can’t be sold. However for tax reasons there has to be time limit when they either vest or expire worthless. Depends on which lawyer you ask how long that can be, but generally most are less than ten years.
Imagine, for example, an initial option grant of 180K shares at $2.00, which expire 90 days after you leave. Then fast forward two years: The valuations have doubled every year, and half are vested, so you have 90k options priced at $2, but that last valuation puts at $8 each. Sounds like you have a lot of potential money right? Maybe, but not if you leave. If the company isn't public, you either have to rely on some secondary market that might be really shady, or have to hold your shares until IPO. To do so, you need to spend $180K, and prepare for an AMT tax hit of, roughly, 28% of the gains. 90k shares, with $6 a a share paper gains, means $135k in taxes that year.
So barring that secondary market for the shares, we are talking about spending $300k exercising the options. Few people can, or are willing, to put that much money in, even if on paper they are up hundreds of thousands of dollars.
RSUs will demand action at IPO, as you can't delay the exercise forever, but it's far better than, in practice, letting a majority of options lapse, even when you are pretty sure they'll be deep in the money at IPO.
Tough choice to make right when you just lost your job. The tax bill could be tens of thousands of dollars or more.
I don't see it as a tough choice. Airbnb will IPO, it's just a question of when. It's a safe investment to make. This is a company operating all over the world that had $4.3B in revenue last year. If not COVID-19 they would've probably IPO'd very soon. They will get through it.
If you received options at a strike price at the peak valuation, then the current valuation may be below that level.
Usually you get more options than you would RSU’s to compensate for this, but there’s still a risk/reward tradeoff. I have had stock options that ended up worth $0 because they were underwater. RSU’s would have been worth $non-zero.
The fact that RSU’s retain some value when the stock price goes down is highly relevant to a company like AirBNB which is undoubtedly struggling with the current situation. Also relevant may be that AirBNB isn’t a public company yet, making their shares relatively non-liquidifiable. This can pose problems both ways: if you get RSU’s in that situation you’ve received “taxable income” in the form of a non-liquidifiable asset and if you get options, you have to choose whether to buy stock in a travel accommodations company in the middle of a pandemic that just laid off 1/4 of their workforce, hence potentially incurring a very strong risk of loss.
As long as there's a real risk of loss you can avoid the taxable income and private companies with high valuations will do this to help employees avoid the bad tax situation on an illiquid asset (without need to have huge amounts of cash to exercise options).
Options similarly must expire after 10 years for similar risk of loss tax reasons (as I understand it).
I was told the RSUs are 'Facebook Style' because they were the first to pioneer this.
Even options with a low strike price can be problematic because tax law is dumb and charges tax on the spread before sale when you exercise (so you can end up with a huge tax bill on exercise without the ability to sell the shares to cover it). ISOs were supposed to prevent this, but AMT has not increased to match inflation over time and was never updated to accommodate for this case specifically so you still have to pay tax if you hit it (which you will because it's low). This wasn't considered originally because companies intending to IPO were not private >10yrs so expiration risk was not a serious problem and you could just wait for the IPO before exercise.
So with options even if you save the exercise cash you have to save a large amount for taxes depending on the spread, or deal with a bunch of loan shark like companies that will take a cut to front you the capital.
For most people RSUs are probably preferable unless you get in really early and can exercise all the options when the spread is zero (preferably with an 83b election for early exercise on non-vested shares).
RSUs (even facebook-style) are definitely taxable. With options, you're in control of when to take the tax hit. With facebook-style RSUs, the tax hit comes when the stock gets distributed (taxed as ordinary income) -- usually in the form of withholding some amount of shares.
Important to remember with RSUs in pre-IPO companies: even though you might get shares distributed at IPO, you're usually subject to a lock up. This is unfortunate because if you receive stock at IPO, you have to pay taxes at them -- so if your company IPOs at $50, then drops to $20 when the lockup expires, you have to pay taxes on the shares you received at $50 value even though you couldn't sell shares at that value.
My understanding is they're taxable, but only after they're liquid which makes it easier for the employee. I think most companies doing FB style do something fancy to avoid the distribution tax lockout issue (witholding some to cover tax or direct listing to avoid lockout).
The situation where you have a huge tax bill and no cash to pay it (or worse a huge tax bill and your illiquid stocks have crashed to $0) shouldn't happen, though I guess there's still a chance in the pathological case you describe? Not sure if that's avoidable.
The other thing I forgot to mention is that if you do risk all this cash on option exercise/taxes and your company does go to $0 you do get to take a $3000 AMT tax credit each year until you die (but maybe only if you don’t have kids or something, can’t remember) - it’s not great.
Scenario A: RSUs have an expiration date. RSUs you own expire before the company hits a liquidity event.
Scenario B: RSUs do not have an expiration date but the company goes bankrupt/dissolves and never hits a liquidity event.
Is one of these scenarios taxable and the other one not? One of my biggest fears about joining a startup (pre covid) was scenario A happening.
Scenario A there’s no tax, but the company is failing to hold up their end of the bargain and this would probably lead to everyone quitting or some sort of RSU regrant.
Scenario B I think you’re taxed when they vest. If there’s no IPO then you don’t get any money.
This is why you'll see recently IPO'd companies reporting large one-time equity compensation numbers.
edit: s/vesting/settling. I believe "settling" is the term actually used.
Brokerages will typically set things up so you can automatically sell enough shares to cover your tax liability as soon as they vest.
Typically you have to amend your cost basis on your tax return for this to actually work, for some stupid bureaucratic reason. Probably a conspiracy to make people who get equity compensation buy the more expensive version of TurboTax.
E.g.: you'll get Math.floor(x * (1-bonus_tax_rate)) shares and will owe no income tax (unless your marginal tax rate is over the bonus tax rate). After that point, you'll only owe taxes on possible capital gains from price at the time of vest to the time you sell.
Options, however, can have downside: tax can't be paid with the excerised option itself, because you can't sell the exercised option. So you have to pay the tax out of pocket. Meanwhile, the company can go under, and render the options worthless: you've lost the tax amount. If the company's valuation increases significantly, the taxes can be fairly significant. But you also can't just wait to see if the company succeeds, either: every company I've been at forces you to exercise within a certain amount of time if you leave the company.
It's a call option, with no premium paid, a strike price specified [typically the last 409A valuation or other better proxy of current value], subject to vesting [cannot exercise before this date], but with an expiration some number of years into the future (typically 10 years from the date of the grant).
So you had it basically correct, except they don't expire at the vesting date.
More like a $50 bill or the option to buy a $100 bill for $25
Facebook definitely doesn't have a cliff in 2020.
Some grants (small) once a year
Bigger - quarterly
Large - monthly
It's very similar to a sign-on bonus you can claw back in the first year or two.
I was under the assumption that companies offered severance pay as a means to save face.. and this is not part of the offer negotiation.
But if you're less high-level but rare and desirable, well, some situations, like moving cross-country, might make it a bit appropriate.
Quite the opposite- this is how exec compensation works. It seems less common in startup land but I've dealt with it before
Lots of people are afraid when negotiating, and the original comment shows that even making big demands up front is not catastrophic. You can still cave in later.
Unless you are receiving executive level compensation and/or you have a serious public reputation on the line, no reasonable company would consider giving you that. It would give you the perverse incentive to try to get fired and someone negotiating for that would be a strong negative signal - an economic moral hazard. https://en.wikipedia.org/wiki/Moral_hazard
Sticker price doesn't tell the whole story. I'm not saying that the total benefit is lower, but the cost of earning that $175k is definitely much higher than the cost of that $50k.
And: it’s available for every parent. Not just those in nice tech jobs.
Plus schools like Cal, UCLA, Michigan, UVA and UW are among the best in the world
And you medical coverage might still cover less than the European one.
Depends where you live. There's no reason the 175k employee can't live somewhere "bad" or suffer a long commute. Most major western european cities and their suburbs are by no means cheap to find housing in.
>car & car insurance
Most white collar Europeans with families own cars. Owning and operating a vehicle is astronomically cheaper in the US, even in California which has insanely high costs compared to the median or mean state.
Part of the free (at the point of use, obviously it's paid for by taxes) public school system in the US.
>And you medical coverage might still cover less than the European one.
I don't want to have a healthcare debate but the cost was addressed higher up the thread and the difference in coverage between what American BigCo employees get and what Europeans get (and both those classes of insurance are diverse enough to make comparison impractical without sweeping generalizations) is not going to be meaningful except in the edge cases.
I don't think there are many "bad" places that are cheap around Silicon Valley.
Most western European cities have neighbourhoods that are drastically cheaper than the well-off ones.
> Most white collar Europeans with families own cars. Owning and operating a vehicle is astronomically cheaper in the US, even in California which has insanely high costs compared to the median or mean state.
New cars in America are twice as expensive as the average in the EU.
Average car insurance in America is five times as expensive as the average in the EU.
> Part of the free (at the point of use, obviously it's paid for by taxes) public school system in the US.
Sorry, I meant nursery.* Kindergarten is free in the EU as well.
> I don't want to have a healthcare debate but the cost was addressed higher up the thread and the difference in coverage between what American BigCo employees get and what Europeans get (and both those classes of insurance are diverse enough to make comparison impractical without sweeping generalizations) is not going to be meaningful except in the edge cases.
Well that's convenient. Based on the American medical debt lets go with a lesser coverage for the American workforce.
Also it's not taking into account the cost of opportunity of having medical insurance event when you won't be employed anymore in case of an accident or other reason.
They're not cheap relative to other parts of the country buy they're cheap relative to where most white collar employees are living. The janitor and the plumber have to live somewhere and you can pay what they pay if you don't mind living among them.
>Most western European cities have neighbourhoods that are drastically cheaper than the well-off ones.
And in American cities those neighborhoods are particular suburbs (often cities themselves). Cheap housing that is literally in the city is much less numerous.
>New cars in America are twice as expensive as the average in the EU.
You can't compare car prices without comparing the cars and the associated costs. Americans buy much larger more expensive vehicles because they can because the taxes are lower, the fees are lower and the insurance is cheaper. This topic has been beaten to death. Americans buy $30k crossovers because those $30k crossovers cost $30k out the door. Contrast that to the typical taxes on new cars in Europe and you'll see why Europeans gravitate toward lower purchase prices.
>Average car insurance in America is five times as expensive as the average in the EU.
Citation please. This flies in the face of all my anecdotal experience.
>Sorry, I meant nursery.* Kindergarten is free in the EU as well.
We call that daycare. In the US you have an entire range of options from a high priced daycare with a low child:staff ratio, located in a high end part of town, quadruple extra special background checks on all the employees, etc, etc all the way down to single person cash only operations that people run out of their homes. It's as expensive or cheap as you're willing to make it. Remember, the poor families have to send their kids somewhere too so it's not like options don't exist at every price point. It's rare in tech because the employee demographics result in low demand but many employers offer free/cheap on-site daycare or a voucher to a particular daycare as a job perk. That said, work from home perks that are common in tech can alleviate some of the demand for daycare.
>Well that's convenient. Based on the American medical debt lets go with a lesser coverage for the American workforce. Also it's not taking into account the cost of opportunity of having medical insurance event when you won't be employed anymore in case of an accident or other reason.
I'm done debating with you. I'm not going to get tricked into trying to defend the American system as overall better which is where you seem to be nudging the goalposts toward. All I am saying is that even with it's failings someone making 175k (a pay grade certainly not representative of the workforce in general) is likely better off with it than taking a 100k pay cut for the European system.
It is possible to spend the same amount in medical, car and daycare expenses if you keep a job while being ill, ride a beat-up car and leave your kid to a shady cash-only operating in someone's home.
So explain to me how earning $100K more is so interesting again?
cf: Average American car insurance prices: https://www.businessinsider.com/personal-finance/average-cos...
cf: Average European car insurance prices: https://www.insuranceeurope.eu/sites/default/files/attachmen...
cf: Average American prices for Toyota Corolla: https://www.numbeo.com/cost-of-living/region_prices_by_city?...
cf: Average European prices for Toyota Corolla: https://www.numbeo.com/cost-of-living/region_prices_by_city?...
You spend more on medical out of pocket, but it’s a drop in the bucket compared to the pittance folks make in Europe. Set aside $200k over 16 years of school/daycare and you’ve still cleared in excess of a million dollars more than your European counterparts.
There is a reason the top SWEs in the world flock to the tech companies in the US. The income is drastically better and if you don’t succumb to lifestyle inflation, you can live like a typical European middle class citizen (one car, tiny apartment, little eating out) and retire after a 15 year career.
I can tell you from experience that no developer I have ever met in my career want to move to the US. Sorry to burst your bubble. And it's not even a question of money for most of them.
> The income is drastically better and if you don’t succumb to lifestyle inflation, you can live like a typical European middle class citizen (one car, tiny apartment, little eating out)
That's not a typical European middle class citizen. Typical European middle class citizen already bought a house within that timeframe.
> retire after a 15 year career
Not sure where you're retiring but it's not going to be Europe because you would be way, way off money wise since you don't own anything.
You pay as you go with ceilings of around 100$ for medicines and 100$ for doctor visits, kids are free.
The US short-term unemployment numbers are way up, because the US didn't do enough to help small businesses weather the storm, so they laid off their workforce. In contrast the EU supported their businesses and workers and consequently people are taking leave instead of unemployment.
In any case my comment was about the meaning of having severance in contrast to having a job, not about crisis handling.
Of course, events as far out as late July are cancelled due to COVID-19
In the past, and in fact when I booked my airbnb (late last year), extenuating circumstances would have easily covered an epidemic 2 months out.
The social distancing thing is subtle, it only takes a few outside of the bubble interactions to break the whole thing. Given the 2+ week lag we are still seeing the initial wave propagate and has not yet peaked.
Since the Affordable Care Act, it seems to be cheaper to forego COBRA benefit and enroll in one of the offered options. Lost of job let you do so outside of the official enrolment period.
It is certainly not cheaper to forgo free COBRA and buy insurance on the exchange.
If you are paying for COBRA you are doing it wrong. You take those 60 days to find private insurance. You basically get 2 free months of health insurance since you cancel on that 60 day mark and never pay. If on day 58 you need health insurance you pay COBRA. Otherwise - your new private insurance kicks in on day 60.
[Yes! You could have history of heart attacks and not find cheaper private insurance but I am hoping that isn't you!]
Major medical health insurance in the United States for the individual and small business markets has had community rating since 2008. That means health insurers are not able to take health history into account when setting rates. They can only set rates based on age and tobacco usage.
With that schedule, anyone who worked at AirBnB for four years or less looks to be in a similar position.
in Korea this rule is in actual labour law. One month's salary for each year employed fulltime, for everybody.
In France and Slovenia, employees with up to five years’ tenure are entitled to severance pay amounting to a maximum of one month’s pay; in Spain, the entitlement is 100 days’ pay for the same tenure."
AirBnB is giving laid off workers around 3 months of severance pay. How is that less competitive than what's given in Europe?
Now if they would be firing say 30-50% the rules might be different, this ain't part of any written contract, but they did so for all folks fired for last 10 years. But that's probably the best package I've ever heard of, regardless of location.
After the three months most people will qualified for regular unemployment.
And until you start working at another company you still get healthcare from your former employer's provider.
edit: as it's weeks and not days for Airbnb I guess it's pretty similar then.
You mean France's is significantly worse (12 < 15 at a minimum of 1yr or less)? Did you see the accelerated vesting as well?
EDIT: Read days instead of weeks regarding AirBnB severance pay. That changes a lot, and it makes it a more than generous package by anyone's standards.
How does this mean? As in, it's provided by the state and therefore not a part of a severance package or as in German employers don't provide any? I'm not sure how to take this. If it's that the state provides it, then arguably AirBnb is being even more generous or possibly it shouldn't be included in the comparison. It's about what AirBnb is providing when discussing their generosity or lack thereof.
> IIRC it is something like one month per year.
So possibly way more generous or possibly way less generous depending. Under AirBnb's scheme, it's more generous so long as you've been employed less than 5yrs.
Not sure I'm seeing how German standards are so much more generous. Possibly that's fair under the healthcare standpoint but even then AirBnb is providing for a whole year so not really clear at all that that wouldn't cover an individual until their next role.
I didn't understand well, sorry.
In the Czech Republic, Denmark,
Hungary, Italy, Lithuania, Poland, Portugal, Slovakia and
Spain, employees with service of up to one year are
entitled to severance pay (in most cases one month’s
pay), while in Luxembourg employees have to have a
minimum of five years within the organisation before
receiving severance pay.
Twisting words a bit: most of Europe doesn't get much worse severance than top US corporation. That's impressive.
IT in Europe also gets better severance etc.
Also, not checked in other countries, but in Poland for example: regular salaried employees get 3 month notice if tenure is 3+ years.
does US have an unemployment plan. how long and how much do you get ?
Each state has unemployment insurance. In most cases, the benefit amount per week/month puts you around the federal poverty line for an individual. No state has a severance requirement (although some do require your PTO balance be paid out as wages).
That counts as your usual pay. So during that time you don't get 'unemployment'. After the severance runs out then you collect unemployment, how much that is varies state to state.
Sure, there is a slight PR benefit, and you have slightly more chance of rehiring those employees later maybe, but as a shareholder it really seems to be throwing money away unless the severance package was agreed upfront when the employee was first hired (ie. as an incentive to join the company).
Separated? Is this American english?
Separated almost sounds as if this was consensual.
That being said, Airbnb gets some credit for a decent severance.
In California those can last up to six months.
Employers paying for that kind of benefit is either tax-advantaged, or just consistency of policy between their US, and Canadian offices. Not sure which.
However it is hardly comparable as unemployment benefits would kick in (on average 72% of your previous salary after taxes, maximum duration 24 months with decreasing amount).
For instance if you worked 3 years and your annual salary was 80k, you could get a benefit of 57k over 12 months.