SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
mass layoffs
After Gorging on Stock Buybacks for Years, Boeing Announces Mass Layoffs
"The corporate cure is always the same—lay off workers," said one critic. "Stock buybacks and layoffs are joined at the hip. It's time they were outlawed entirely."
Oct 12, 2024
The manufacturing giant Boeing, under the leadership of new CEO Kelly Ortberg, announced Friday that it will axe roughly 10% of its total workforce in the coming months, a move that drew attention to the company's massive spending on stock buybacks in recent years.
Boeing, which is currently facing a machinist strike, spent an estimated $68 billion on executive-enriching share repurchases and dividends between 2010 and 2019—spending that critics say refutes the company's claim that layoffs and inadequate worker compensation are necessary.
Les Leopold, executive director of the Labor Institute and author of Wall Street's War on Workers: How Mass Layoffs and Greed Are Destroying the Working Class and What to Do about It, told Common Dreams in an email that "Boeing is in trouble because it became a manufacturer of stock buybacks, not just planes."
"The corporate cure is always the same—lay off workers," Leopold added. "Stock buybacks and layoffs are joined at the hip. It's time they were outlawed entirely."
Leopold has urged Vice President Kamala Harris, the Democratic presidential nominee, to campaign on the pledge that "no taxpayer money will go to corporations who lay off taxpayers and conduct stock buybacks." In 2022, Boeing received nearly $15 billion from contracts with the Pentagon.
"CEO Ortberg has an opportunity to do things differently instead of the same old tired labor relations threats used to intimidate and crush anyone that stands up to them."
Ortberg took over as Boeing's CEO in August following the former chief executive's departure—with a $45 million golden parachute—amid fresh safety concerns at the company after a door plug blew out of a Boeing plane mid-flight.
In a memo to employees on Friday, Ortberg—who stands to rake in $22 million in total compensation next year—announced Boeing will delay its new 777X jet and end production of its 767 freighters. Additionally, Ortberg wrote that "we must also reset our workforce levels to align with our financial reality and to a more focused set of priorities"—corporate-speak for mass layoffs.
"These reductions will include executives, managers, and employees," the CEO added. "We know these decisions will cause difficulty for you, your families, and our team, and I sincerely wish we could avoid taking them. However, the state of our business and our future recovery require tough actions."
The job cuts are expected to impact around 17,000 workers.
Ortberg's announcement came days after Boeing suspended contract negotiations with striking machinists, disparaging the union's demands as "far in excess of what can be accepted if we are to remain competitive as a business."
"The same company spent $68 billion on dividends and stock buybacks over the past decade and gave its last two CEOs multimillion-dollar golden parachutes," former U.S. Labor Secretary Robert Reich wrote in response. "What's unreasonable is Boeing's greed."
Jon Holden, president of District 751 of the International Association of Machinists and Aerospace Workers—which represents Boeing workers who went on strike a month ago—said in a statement Friday that the company's management "keeps walking away from the table" and "using the same old tired tactics of bargaining in the press."
"The path to resolve this strike begins at the bargaining table," said Holden. "An unwillingness to stay at the table only prolongs the strike. CEO Ortberg has an opportunity to do things differently instead of the same old tired labor relations threats used to intimidate and crush anyone that stands up to them."
"Our membership is too powerful for that and is standing on principles," Holden added. "Ultimately, it will be our membership that determines whether any negotiated contract offer is accepted. They want a resolution that is negotiated and addresses their needs. Get back to the bargaining table."
Keep ReadingShow Less
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.
Keep ReadingShow Less
Wake Up Democrats! Trump Is Eating Your Working-Class Lunch
Trump has promised to stick John Deere with a 200% tariff if it outsources U.S. jobs to Mexico; the Dems responded by getting a billionaire to call this “insanity.”
Sep 26, 2024
“The greed of the John Deere company is giving President Biden the perfect opportunity to win back working-class voters. All he needs to do is put up a major fight to stop Deere from shipping U.S. jobs to Mexico.”
I wrote that on June 12, 2024, and the Democrats ignored me. Donald Trump did not. He just called for a 200% tariff on all John Deere imports if the company exports U.S. jobs to Mexico.
How have the Democrats responded to Trump? In the worst way possible. They got billionaire Mark Cuban to say that Trump’s clumsy effort to save 1,000 jobs is “insanity… ridiculously bad and destructive.” Cuban didn’t even mention the plight of the workers.
Cuban’s argument is nothing short of embarrassing. He says that since the proposed tariff on Deere is higher than the one proposed on Chinese imports, Deere will be unable to compete with Chinese tractors and farm equipment. This will potentially lead, he said, to the “destruction of one of the most historied companies in the United States of America.”
The Democrats must decide, and soon, whether they really are the party of the working class. If they are then they must fight hard to save worker jobs from unabated corporate greed.
What exactly is so insane? Trump’s goal isn’t to tariff John Deere out of business. His goal is to keep Deere from exporting 1,000 jobs. Why is it insane to preserve those 1,000 decent-paying unionized U.S. jobs?
Cuban ignores the question of why Deere feels the need to ship jobs to Mexico. Deere argues that it must do so in order to stay competitive. That leads to a Catch-22 proposition: If Deere moves jobs to Mexico and faces a stiff tariff, it will go under. And, if it doesn’t move the jobs to Mexico, it will become uncompetitive and also go under. Cuban is in line with how Deere justifies layoffs to workers: If we don’t cut 1,000 jobs now and move to Mexico, more jobs will be cut later.
What’s Wrong With This Picture?
The big, bigger, and biggest problem is that the Democrats and Cuban are unable to put workers and their livelihoods front and center. They are unable to mouth these words: The 1,000 Deere workers should keep their jobs precisely because Deere, one of the greediest companies on Earth, is loaded with profits and is pouring billions upon billions into stock buybacks. Which is flat-out true.
Last year, Deere recorded $10 billion in profits and it’s CEO was paid $26.7 million. The company also spent $12.2 billion on stock buybacks that enriched its top officers as well as the big Wall Street funds that own loads of Deere stock. (What are stock buybacks? A way for a company to boost the price of its shares by buying them on the open market—a blatant form of stock manipulation that was illegal until deregulated by the Reagan administration.)
And here’s the simple truth: The move to Mexico is designed to cut labor costs in order to finance those stock buybacks. It has nothing to do with competition, Chinese or otherwise. As any Deere worker would tell us, it’s all about greed. The sad thing is that Cuban, a critic of stock buybacks, knows this as well, but refuses to call out Deere.
Mass Layoffs Are Destroying the Democratic Party
My book, Wall Street’s War on Workers, conclusively shows that from 1996 to 2020, as the mass layoff rate rose in any given county in Pennsylvania, Michigan, and Wisconsin, the Democratic vote declined. In the rural counties, on average, one-third of the workforce suffered through mass layoffs. Losing your job in a county that has few decent employment alternatives does not lead to positive feelings about the party that is supposed to be the defender of the working class.
Trump’s intervention in 2017 to stop Carrier from moving an Indiana plant to Mexico was “wildly popular.” And yet the Democrats remain tone deaf to the plight of mass layoff victims.
The question is why?
The answer involves understanding what John Kenneth Galbraith called “the conventional wisdom.” There’s an entrenched sense within the Democratic Party of what kinds of interventions are acceptable in financialized capitalism and which are not. Here are a few of the internalized rules:
- It’s OK to tax stock buybacks, but it’s not OK to outlaw them.
- It’s OK to raise taxes on corporations, but it’s not OK to interfere with their power to lay off workers at will.
- It’s OK to provide taxpayer funds to subsidize corporations to make investments, but it’s not OK to tell corporations that they can’t use taxpayer funds to lay off taxpayers or conduct stock buybacks.
- It’s OK to regulate new technologies so consumers don’t get ripped off, but it’s not OK to protect worker livelihoods from such technologies.
- It’s OK to bail out private big banks with taxpayer funds, but it’s not OK to turn them into public banks.
- It’s OK to go after monopoly price gouging, but it’s no OK to stop monopoly mass layoffs.
- It’s OK to ask for 60-day notice for mass layoffs, but it’s not OK to stop compulsory layoffs when they are used to jack up CEO pay, service harmful leveraged buyout debts, or fund stock buybacks.
On a deeper level what ties all this together is a profound faith in corporate power and efficiency. It will be for the better for all of us if billionaire CEOs are free to run their corporations as they see fit. That faith includes protecting the right of corporations to hire and fire at will. After all, new technologies and globalization inevitably involve the churning of jobs, don’t they? Trying to stop or slow down that process would only cripple the economy, wouldn’t it? And we certainly don’t want a country where government officials tell billionaires what to do, do we?
Therefore, a sober, realistic Democratic Party, trapped in its conventional wisdom, will refuse to intervene in corporate hiring and firing. Instead, they travel down the uninspiring and unconvincing path creating an “opportunity economy,” growing new jobs for the future from taxpayer subsidies to chipmakers and the like.
Not so with Trump. He swings a wrecking ball at the conventional wisdom. He acts as if he actually believes that jobs should not be exported to lower-wage countries, and that puts him in tune with nearly every U.S. industrial worker. To be sure many Democrats believe the same. The difference is that Trump has no built-in guard rails about intervening in corporate decision-making. You move jobs to Mexico, he bellows, and we’ll slap a tariff on your butt that is so high that it will be much cheaper for you to keep the jobs here.
That has to be music to the ears of every Deere worker facing the axe, and it certainly will get the attention of millions of workers who have seen their jobs shipped abroad.
It’s Not too Late for the Democrats to Act
Because Trump has difficulty focusing on a coherent message, the field is still open for the Democrats to put forth a new policy that directly affects the jobs of millions of workers. I’m a broken record on this because it’s so very simple. Harris should give a primetime talk and focus on the $700 billion in tax payer money that now goes to private corporations for goods, services, and subsidies: Here’s the line she should stress:
No taxpayer money shall go to corporations that lay off taxpayers or conduct stock buybacks.
To clarify the point, she should add some pragmatic flexibility:
For those companies receiving taxpayer money, layoffs must be voluntary, not compulsory, as is already the case for many white-collar employees.
That would seem fair and just to millions of workers, even if Wall Street would find it “insane.”
The Democrats must decide, and soon, whether they really are the party of the working class. If they are then they must fight hard to save worker jobs from unabated corporate greed.
Is that really too much to ask?
Keep ReadingShow Less
Most Popular