> I'm sorry but that is 0 risk compared to what an entrepreneur does.
Most employees loan the company 45 days of labour. This is an "at risk" investment. If the company goes under, they may lose all of it. When multiplied by a large staff, this can be a very significant investment which would, if borrowed from a venture capitalist, be quite expensive equity. Yet, no equity is given.
Moreover, unlike founders and other investors, the employees are typically left in the dark about finances. When a company is in dire straits, venture asks for a large multiplier as return. Employees, that grant a "free" 45 day rolling line of credit do not enjoy this risk premium.
Where's the 45 days coming from? Very few employers in the US pay less frequently than monthly, and in 30 years, I've never had a W-2 job that paid other than every-2-weeks.
I receive a two-week paycheck with a one-week delay, plus five business days (a week) for the bank to verify my employer actually has the funds to cover it. So that's four weeks already. I'm not sure where the other 17 days come from, but it's important to note that most people would not quit on the spot if their paycheck doesn't clear; there's too much risk in that. This is how employees end up weeks to months behind on paychecks with employers stringing them along.
First, many employers pay bi-weekly, but deposit is delayed one cycle. You work, then at 2 week mark timesheets are submitted & approved, and then following week the auto payment happens.
Second, there is vacation time, which can be as much as 4-6 weeks accrued but not paid out. The average employee probably carries at least a week or three.
I hope this explains. Even though paychecks may be first in line, there is significant amount of the company's risk borne by employees.
That's wild, in Europe you get paid before the 28th of every month for that month's labour. Payment is by EFT direct to your bank account and arrives before the end of the month every month.
Most employees loan the company 45 days of labour. This is an "at risk" investment. If the company goes under, they may lose all of it. When multiplied by a large staff, this can be a very significant investment which would, if borrowed from a venture capitalist, be quite expensive equity. Yet, no equity is given.
Moreover, unlike founders and other investors, the employees are typically left in the dark about finances. When a company is in dire straits, venture asks for a large multiplier as return. Employees, that grant a "free" 45 day rolling line of credit do not enjoy this risk premium.