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corporate greed
135.9 Million Reasons Why the Working Class Is So Angry
Workers know that when a private equity firm buys up the company at which they work or a stock buyback is announced, they are likely about to get kicked in the face.
Oct 06, 2024
Since 1993, 60.2 million workers who had been on the job for at least three years have been laid off, according to the Bureau of Labor Statistics. Another 75.7 million with less than three years tenure have also been let go.
In total, that's 135.9 million workers who know all too well the pain and suffering of a major disruption to their employment.
Working people understand that the periodic ups and downs of the economy can legitimately lead to job loss. But they also know that in many cases the reason they lost their job was not mismatches in supply and demand. Rather, their jobs were sacrificed to satisfy out and out corporate greed.
Private Equity and Greed
Workers know that when a private equity firm buys up the company at which they work, trouble lies ahead. Just ask the 33,000 workers at Toys 'R' Us, who lost their jobs when that fabled company was driven into the ground by KKR, a huge private equity company. KKR bought the toy giant for $6 billion in 2005. Five billion dollars of the purchase price was financed with debt, which KKR put on the Toys 'R' Us books.
It doesn’t take a rocket scientist (especially not the labor-averse space mogul Elon Musk) to design simple solutions that would provide some protection against needless mass layoffs.
Then the rape and pillage commenced, as Toys 'R' Us slashed costs to service the debt, pay KKR hefty management fees, and quickly fall behind its competition, Walmart and Amazon. Aliya Sabharwal, writing in the LA Times last year, tells us:
KKR and its partners sold off Toys ‘R’ Us real estate, pocketed the money and forced the retailer to lease back its buildings. Along the way, KKR and the other firms paid themselves $250 million in “management fees” and big bonuses to hand-picked executives — right before Toys ‘R’ Us entered bankruptcy.
This kind of corporate looting by private equity has, since the 1980s, happened thousands of times in all sectors of the economy, leading to the needless loss of millions of jobs. Researchers writing for the Becker Friedman Institute at the University of Chicago have found that, on average, employment shrinks by 13 percent when a private equity firm buys a public company. As Forbes notes,
All too often when private equity professionals tout their cost cutting strategies, they do not mention that cost cutting means firing people and taking away their livelihoods.
Stock Buybacks and Greed
Workers are also learning that when hedge funds buy up company stock and demand stock buybacks, there’s job trouble ahead. Just ask the 32,000 workers at Bed, Bath and Beyond, who saw their jobs evaporate to finance stock buybacks, over and over until the company was forced into bankruptcy and liquidation.
A stock buyback, which was essentially illegal until 1982, is a form of stock manipulation. A company uses its funds, or borrows money, to go into the market place and buy up its own shares of stock. By doing so, the number of shares in circulation goes down, while the earnings per share goes up. The stock price rises even though no new value was added to the company. The rise in the share price rewards company executives, who are mostly paid with stock incentives, and moves corporate wealth into the pockets of Wall Street investors.
Starting in 2004, Bed, Bath and Beyond spent $11.8 billion on stock buybacks that, in the short term, boosted the company’s share price and enriched the Wall Street stock-sellers who had pressured the company to buy back those shares. Even as the company struggled in 2022, it spent $230 million on stock buybacks, loading the company up with even more debt to finance them. In April 2023 the company declared bankruptcy. That July, the last store of what had been, in 2011, a chain of 1,142 stores closed
The same thing is happening right now with John Deere, the huge farm equipment manufacturer. Deere wants to move 1,000 jobs to Mexico, ostensibly to remain competitive in the international farm equipment market. But Deere is competitive now. The company posted $10 billion in profits in the 2023 fiscal year and paid its CEO $26.7 million.
The real reason Deere wants to discard workers and flee to Mexico is to finance the $11.6 billion in stock buybacks it committed to over the past year.
Reducing the use of mass layoffs to provide financing for corporate and executive looting would be a big win for working people.
In 2025, Goldman Sachs estimates that corporations will conduct more than $1 trillion in stock buybacks. Tens of millions of jobs will be sacrificed to shift all that money to the richest of the rich.
Solutions Are Easy to Find, But Political Will is not
It doesn’t take a rocket scientist (especially not the labor-averse space mogul Elon Musk) to design simple solutions that would provide some protection against needless mass layoffs. Here’s a list:
- The Security and Exchange Commission, which deregulated stock buybacks in 1982, should basically outlaw them again by limiting stock buybacks to no more than 2 percent of corporate profits. Today, nearly 70 percent of corporate profits go to stock buybacks.
- Debt used in leveraged buyouts should be limited to no more than 10 percent of the purchase price. That would protect workers from being sacrificed to service enormous debt loads.
- Add two simple clauses to the $700 billion of taxpayer money that goes for federal purchases of goods and services. It should read:
- No taxpayer money shall go to corporations that lay off taxpayers or conduct stock buybacks.
- For those companies receiving taxpayer money, layoffs must be voluntary, not compulsory, as is already the case for many white-collar employees.
Reducing the use of mass layoffs to provide financing for corporate and executive looting would be a big win for working people. Alas, we all know deep down that politicians are not about to bite the Wall Street hands that feed them. In the meantime, millions of workers will continue to be sacrificed on the alter of corporate greed.
When no political party dares to challenge Wall Street’s war on workers, there’s only one remaining alternative: working people need to build their own political movement just as the Populists did in the 1880s. There are 135 million reasons for doing so, and soon.
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Dockworkers Suspend Strike After Winning Tentative Deal With 62% Wage Boost
"When we STRIKE, we WIN!" said the AFL-CIO, the nation's largest federation of unions.
Oct 04, 2024
The union representing East and Gulf Coast dockworkers suspended its strike on Thursday after reaching a tentative agreement with shipping giants that reportedly includes a 62% wage boost over six years.
The International Longshoremen's Association (ILA) said in a joint statement with the United States Maritime Alliance (USMX) that the union would suspend its strike until January 15 so the two sides can "return to the bargaining table to negotiate all other outstanding issues."
"Effective immediately, all current job actions will cease and all work covered by the Master Contract will resume," the statement added.
The tentative deal followed three days on the picket line during which dockworkers—who are essential to the functioning of the U.S. economy—cast their fight as a critical struggle against multinational corporations that raked in huge profits during the Covid-19 pandemic and enriched their investors as wages failed to keep pace with inflation.
“These companies... they don't give a fuck about us," Harold Daggett, the ILA's president, said from a picket line in New Jersey earlier this week. "Well, we're gonna show them they're gonna have to give a fuck about us. Because nothing's gonna move without us."
According to one estimate, the dozens of ports affected by the strike handle a combined 25% of the United States' international trade.
The Associated Pressreported Thursday that the two sides reached a tentative deal after "the ports sweetened their wage offer from about 50% over six years to 62%."
The union originally sought a 77% raise, but in recent days Daggett said the ILA would pursue a 61.5% raise for workers over the course of a new contract. Daggett rejected the shipping industry's previous wage offers as "insulting."
"Congratulations to ILA members for making huge strides and thank you to the millions of union members who stood in solidarity with them."
Under the contract that expired earlier this week, starting pay for dockworkers was $20 an hour.
Any final agreement must be ratified by union members, who also demanded protections from automation and other benefit improvements. Reutersreported that automation is among the "key issues that remain unresolved."
"When we STRIKE, we WIN!" the AFL-CIO, the nation's largest federation of unions, wrote on social media late Thursday. "Congratulations to ILA members for making huge strides and thank you to the millions of union members who stood in solidarity with them."
U.S. Sen. Bernie Sanders (I-Vt.) also congratulated "the 50,000 port workers who went on strike against the outrageous corporate greed of the shipping industry and won a historic increase in wages."
"Billionaires in the shipping industry must not be allowed to get even richer by replacing port workers with robots," the senator wrote.
Sanders added that Acting Labor Secretary Julie Su "did a great job negotiating a tentative agreement to increase the wages of port workers by 62% over six years."
The Biden administration declined to intervene on the side of industry to halt the strike, and President Joe Biden issued a statement earlier this week noting that "ocean carriers have made record profits since the pandemic and in some cases profits grew in excess of 800% compared to their profits prior to the pandemic."
"Executive compensation has grown in line with those profits and profits have been returned to shareholders at record rates," said Biden. "It's only fair that workers, who put themselves at risk during the pandemic to keep ports open, see a meaningful increase in their wages as well."
In a statement following news of the tentative deal, Biden said that "today's tentative agreement on a record wage and an extension of the collective bargaining process represents critical progress towards a strong contract."
"I congratulate the dockworkers from the ILA, who deserve a strong contract after sacrificing so much to keep our ports open during the pandemic," the president said. "And I applaud the port operators and carriers who are members of the U.S. Maritime Alliance for working hard and putting a strong offer on the table."
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Amid Ports Strike, Note That Shipping Giant Maersk Spent $6.5 Billion on Stock Buybacks
"The same foreign-owned shipping giants that say they can't find the money for fairer wages and treatment of American port workers managed to find billions of dollars to enrich a small group of wealthy investors."
Oct 03, 2024
Amid a strike that dockworkers along the East and Gulf Coasts argue is about "corporate greed vs. workers rights," a watchdog group is highlighting how at least one shipping giant on the other side of the labor battle has recently poured billions of dollars into stock buybacks.
Around 45,000 members of the International Longshoremen's Association (ILA) walked off the job at 12:01 am Tuesday after unsuccessful negotiations with the United States Maritime Alliance (USMX), a shipping industry group that includes Maersk.
In an analysis released Wednesday, Accountable.US pointed out that as part of Maersk's $12 billion stock buyback program, the Danish shipping company "has spent $6.5 billion buying back nearly 3 million Class A and B shares as of January 2024."
"When the big shipping industry was faced with a choice—share its success with the U.S. workers that delivered it, or go overboard with greed—its executives clearly chose the latter."
When companies pursue stock buybacks—also called share repurchases—they reduce the number of shares available on the market, which inflates earnings per share, enriching shareholders. The practice has fueled calls to hike the U.S. corporate tax rate.
Maersk paused its buybacks in February. CNBCreported at the time that the company "flagged 'high uncertainty' in its 2024 earnings outlook amid Red Sea disruptions and an oversupply of shipping vessels."
Still, Accountable.US framed what Maersk has done so far as proof that the shipping giant and fellow USMX members have the capital to end this strike, as ILA president Harold Daggett asserted this week.
"The same foreign-owned shipping giants that say they can't find the money for fairer wages and treatment of American port workers managed to find billions of dollars to enrich a small group of wealthy investors after riding a wave of record profits," said Liz Zelnick, director of the Economic Security & Corporate Power Program at Accountable.US, in a statement.
"When the big shipping industry was faced with a choice—share its success with the U.S. workers that delivered it, or go overboard with greed—its executives clearly chose the latter," Zelnick added.
The watchdog also took aim at COSCO Shipping Holdings, which last year "announced plans to buy back up to $101 million of its A shares, with plans for further buybacks, after reporting an 'industry-beating' profit of $2.7 billion in the first half of 2023."
Meanwhile, amid concerns about the economic fallout from the strike, the tens of thousands of striking ILA port workers emphasize that they are eager to return to work, but need a contract with wage increases and protections from automation.
"The action is going to give us a fair contract and we can get back to work to get people the goods they need," Joe Mosquera, a crane operator and union organizer with ILA, Local 1235, toldThe Guardian Thursday. "This is for our future generations. To keep automation out is to keep our jobs for the future. And if anything becomes automated, we want to make sure that there's a worker to back it up."
The industry's biggest strike since 1977 is already having an impact. Citing Everstream Analytics, Reutersreported Thursday that "at least 45 container vessels that have been unable to unload had anchored up outside the strike-hit East Coast and Gulf Coast ports by Wednesday, up from just three before the strike began on Sunday."
The workers are backed by U.S. President Joe Biden—who is empowered by an anti-union federal law to break the strike but has signaled he won't—and various pro-worker lawmakers, including the congressional Labor Caucus, co-chaired by Reps. Debbie Dingell (D-Mich.), Steven Horsford (D-Nev.) Donal Norcross (D-N.J.), and Mark Pocan (D-Wis.).
"We stand in solidarity with the ILA workers in their fight for a fair contract with USMX," the caucus said in a statement shared by the union Wednesday. "We've seen unions secure historic contracts for workers across the country in recent years, and now ILA workers—who kept our economy moving throughout the pandemic—are fighting for their share of the profits they helped create."
"Contract negotiations can be difficult at times, but collective bargaining is the best way for workers and employers to come to a fair agreement," the caucus added. "We encourage all parties to remain at the bargaining table and negotiate in good faith to reach a fair contract that reflects the success of the companies."
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