If you have the luxury of a safety net or in-demand skillset, then yes, getting laid off is not a risk. If you have less means, and the costs (both monetary and social/emotional) of needing to relocate to find another job turn into something much more daunting. In that kind of situation, loss of a job is a very negative event, much more than, say, a 10% decline of a wealthy person's portfolio would be.

re why work for an employer when you could take your own risk: generally speaking the odds of losing a job due to layoff are still less bad than the odds of a bootstrapped business failing, even if attempting to start a business was a realistic option, which it is not for many people.

Losing a job is a negative event, the parent is not disputing that. The parent is disputing that there is minimal risk for an employee, they are getting paid month to month for their work.

California has very generous unemployment benefits. I also strongly doubt any former YC-employee will have a very hard time finding a next job.

Except it's not upper management bleeding income, it's the company. They still get their golden parachutes and massive bonuses, then they downsize other parts of the company in order to claw back the costs. They don't have to worry about losing their healthcare or having to survive. Hell they don't even have to care about keeping the company alive, they can just straight up kill it and still reap the benefits like we've seen with Sears and the scumbag Eddie Lampert.

That's the risk. They destroy the bonuses and benefits of their workers to fuel their own rat race.

Employees also usually get bonuses, and stock options. Your point is possibly true for companies as big as FAANG ones, but for a startup invested in by YC, it's highly unlikely the founders are getting any real bonuses. They might get some money about in series B or C, but that's already less than 99.9% of startups that get to that stage probably.

You are simplying the situation by thinking about everyone as successful unicorns. Most companies and founders are not.

The employee working under someone and doing work according to their requirements. The employee should not bear the risks of the decisions.

(naturally this is all meant for F500 companies which post a lot of profits, start ups need a different mindset.)

If it were “for nothing” you might have a point.

So are you saying that, in the multi-million VC-fuelled start-up climate of the last couple decades, founders haven't made sure to pay themselves at least the same salary as their employees?

If you are, I'm not buying it. And if you're not, i.e. if you admit that they did, your point falls to pieces.