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Should a company have to reduce their labour force, the "last in first out" means that the latest employee take on is the first to be made redundant.
"First in, first out" would mean that the employee who has been at the company longest is the first to go. Which would basically mean that the employee with the most experience would be lost to the company - which doesn't make good business sense.
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I've since found another phrase that is indeed first in first out:
First in, first out merchandising is a method of stock rotation. The goods that are received first, are sold first. All newly delivered goods are stocked behind older merchandise.
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