[cheriot]

> many consumers without savings are at risk of financial ruin

Yes. This is the reason for having a better social safety net. There's no reason a normal business cycle should "ruin" normal people that did not take excessive risks.

[joshstrange]

pulls out soapbox

> There's no reason a normal business cycle should "ruin" normal people that did not take excessive risks.

And this is why I get so frustrated when I hear things like "Well business owner(s) take all the risk so that's why they get all the reward (profits, or most of it)". Bullshit. For smaller companies this is more-so true but not even then is it always true. I'm not sure how many downturns or mistakes have to happen followed by layoffs for the general public to grasp this but I don't anticipate people wising up anytime soon. In a number of these layoffs we hear about "Well we misjudged the market" or "The trends didn't continue the way we thought and we over-hired". Instead of tightening their belts (less profit for owners/shareholders) the answer is always to just jettison people until the books "balance".

I own my own (side) business and I have family members who own full-time businesses, I'm well aware of the risk (and debt) we have taken on but for larger companies the top brass (and shareholders) seem nearly completely insulated from any pain. Compare that to places that have profit sharing with employees which can go down if there is a downturn/etc, this is a much better way to handle it. I'm fine sharing in the risk (which I'm doing just by working for someone, they could fire/lay me off tomorrow without warning, that's a risk) if I'm also sharing in the reward. I'm also fine with the "reward" (profit share) decreases in "bad" times versus laying off a bunch of people. Some companies do this much better than others but I really wish companies were either forced to share the rewards and/or actually feel some pain when they make bad decisions. I think we all know the people responsible for over-hiring don't actually face any repercussions for their mistakes, instead it's the people they hired then laid off. And no, paying severance or feeling bad about having to lay off people isn't really "pain" in my book.

Having a "better social safety net" is sort of a way to force "profit sharing" in a roundabout way and I would greatly appreciate it if losing a job didn't mean loss of healthcare and/or a way to put food on the table, pay rent, etc. I know from personal experience that having a good safety net (aka, my parents) makes a huge difference. Not that I play fast and loose with my money (I have an emergency fund that I could run on for 6-9+ months that I've built up) but you always have a little voice in the back of your head saying "You aren't going to end up on the streets". Not everyone has that and I'd love nothing more than for everyone to experience and have that confidence, it's what allows you to take risks (sane ones ideally, like starting your own business) knowing that failure will not ruin you.

puts up soapbox

[za3faran]

While I agree that we should have a good social safety net, these cycles should in no way shape or form be normal. Something is obviously fundamentally broken.

[stjohnswarts]

Waxing and waning of economies is something that happened since civilization started. No one has fixed it yet, and people a lot smarter than you and I have tried. If the human race was more altruistic than greedy, it would probably be possible, but we aren't. Until that changes, this is just what happens.

[taylodl]

What are you talking about? This cycle is well-known and follows a roughly 7 year pattern and has done so since the start of the industrial era 200 years ago. Even prior to that there were economic cycles in the years 1000-1700. Whether these cycles should leave ordinary people in financial ruin is a completely different matter.

[colechristensen]

Is it though? The social safety net usually doesn’t reach up to help people earning SV tech job salaries. I would prefer to see more friction when it comes to layoffs so we’d see less of tech giants doubling and halving their headcounts in a period of just a couple of years.

[SoftTalker]

Having no savings is not taking a risk?

[AshleyGrant]

It's absolutely taking a risk, but for many people it is an unavoidable risk, and thus would not be considered taking "excessive" risk, as OP mentioned.

[theshrike79]

It takes a _long_ time to save up enough to manage through a year of unemployment.

A social safety net is always there.

[piva00]

Don't victim blame. Not every person or family is able to save, think about it a bit deeper than your personal bubble...

[fnordpiglet]

The relative cost of health care and other benefits makes savings a lost cause for the unemployed. You live one trip to the ER away from bankruptcy and homelessness every minute of every day. It’s foolish to blame savings rates for that situation, almost no one make enough to save at a rate that prevents medical bankruptcy.

[jrnichols]

if you live in California, savings are a dream for so many people. skyrocketing rents, high taxes, skyrocketing gas prices, expensive health insurance, and so on.

it's really hard for a lot of people to build up savings here.

[legitster]

So long as the safety nets don't prolong or worsen the recovery. Moving people out of the labor pool shrinks the economy for everyone - making it worse off for people with and without jobs. Bad policy can turn slumps into prolonged recessions.