I think this is a great idea, but it has its risks. The risk I would worry about is that a person would adjust their life style 'burn rate' to their salary. Then, when they lost their job there isn't any other job in the area that will pay them what dhh was paying. So now they have to scale back in a radical way. Can they? Will they?

What is perhaps a similar challenge that I do have direct experience with are people who have been at a company and had a series of raises and gotten to a healthy salary. Then they get laid off or lose their job for other reasons and now they are looking for work. But the jobs they can find aren't paying what they need to make to support their current expenses. Sometimes I've seen people hold out for that higher paying job and burn right through all of their savings. Leaving them vulnerable to future economic shocks.

I admire Basecamp for making this decision, I hope it doesn't screw things up for people.