Sign of the Times

Commenter Dhalgren loathes me, and also has a story and a question which I imagine are all too common:

The small business I work for had a nightmare day yesterday. Their AMEX card is frozen. Their bank accounts are frozen. They can't do payroll (payday was last Thursday). They owe hundreds of thousands to various shady suppliers. And one character owes the store money, but his last check bounced, in what might have been a retaliation for checks that bounced in the other direction.

So I ask a veteran salesman here when was the last time he was successfully paid (without the check bouncing). He told me five weeks. He explained that he was patient because he considers himself close friends with the family the owns the businesses.

. . .

Now if a corporation missed payroll, it would be finished. But small businesses can cheat a little. And then there's the unemployment insurance issue. If I go on 'strike' I can't resume collecting NY State unemployment insurance. The company has to go under first.

So here I am, working for free at a small company that seems to be on the edge of Chapter 11, wondering if I can continue to hold on until either my next paycheck or the closing of the store.

Hell, ask for a raise, if you haven't hit the New York State benefits cap.  You won't get any actual money, but it will entitle you to your full $400 a week or whatever pittance they are currently throwing at the unemployed. 

(Have I mentioned recently that we ought to be raising benefits by a lot more than a piddling $25 a week, since the labor market rigidities of generous benefits tend to stem from the duration and ease of qualifying, not the amount.  Oh, I see I have.  Well, you can never say it too often, that's what I think.)

This is the period when panic turns into despair.  There are a lot of companies out there who have been holding on by their teeth since the credit crunch blossomed, particularly small businesses with owners who can spend down personal assets in a desperate last ditch bid.  It's tragic when people gut their savings to save a company that goes down anyway.  But it's criminal when they take employees with them, and in my experience of multiple startups, they often try.   I mean, if your employees want to volunteer to work without pay, well, you must be a hell of a manager, and you probably deserve their help.  But thankyouverymuch most people can't really afford to spend weeks in involuntary servitude.  If you don't have payroll and two weeks severance for your employees in the bank, then it's time to shut down.

In Britain, it's actually illegal to "trade while insolvent"--once your obligations exceed your assets, you're done, and personally on the hook for any further debts incurred.  When I read stories like this, I'm tempted to argue we should import that rule.