Wall Street Strikes Again With Mass Media Layoffs
There is one real solution to creating a modicum of job stability: Taming Wall Street’s greed.
Mass layoffs are ripping through the news industry. More than 20,000 media jobs were cut in 2023 with many more on the chopping block. Just this past week, the Los Angeles Times announced the layoffs of 20% of its newsroom employees.
- Time Magazine said it will terminate 15% of its unionized editorial staff.
- Sports Illustratedlaid off most of its staff.
- Business Insider cut 8% of its staff and Forbes another 3%.
- The unionized staff at Conde Nast (publisher of Vanity Fair, Vogue, GQ, Bon Appetit, Glamour, Architectural Digest, The New Yorker, and Teen Vogue) walked out to protest looming layoffs, while chanting, “Bosses wear Prada, workers get nada!”
And private equity and hedge funds like Alden Global Capital are buying up newspapers and gutting staffs, again and again.
The reason is obvious, right? Social media is eating into newspaper revenues. Advertisers have discovered that you can reach more people and sell more products by paying influencers and running ads on social media, Amazon, and Google. And many people prefer to get their news for free from their algorithm-informed social media feeds, rather than from the traditional press. At first glance it appears these mass layoffs of journalists might be nothing more than the pain and suffering that goes with technological progress, just like the obsolescence of elevator operators or turnpike toll collectors.
Well, tell that to the workers in the tech sector who create and staff the online mega-stores and build those marketing algorithms, the pride and joy of the new knowledge economy. In 2023, a year in which the U.S. had historically low unemployment, rising wages, and declining inflation, approximately 262,000 workers in the tech industry lost their jobs, and another 24,500 have joined them so far in January 2024. These mass layoffs are taking place even though these companies have been earning record profits and achieving record valuations.
It’s high time for politicians of all stripes to realize that their policy choices created this dangerous and enlarging inequality, and it should now be their duty to protect the livelihoods of the American people, not the enormous profits on Wall Street.
The research for my book, Wall Street’s War on Workers, reveals a full-scale epidemic hitting all sectors of the economy. We estimate that approximately 30 million U.S. residents have experienced mass layoffs since 1996. Add in the indirect effects on their families and communities and more than half of the U.S. workforce has felt the enormous adverse financial, health, and emotional stresses and strains caused by mass layoffs (defined as 50 or more workers laid off at one time for at least a month).
Wall Street’s Two-Pronged War
The “new high-tech economy,” it turns out, operates on a long-established Wall Street value: unabashed greed. And mass layoffs, high-tech and low, media and industrial, are caused by that greed. To enrich themselves, the leaders of Wall Street hedge funds, private equity firms, and investment banks demand that corporations go into the stock market and repurchase their own shares—stock buybacks. This causes their stock prices to immediately rise, since future earnings expectations are now spread over a smaller number of shares. Rising stock prices transfer enormous amounts of corporate wealth to the largest investors and top company officers, who are compensated with stock incentives.
To pay for these stock buybacks that exclusively benefit shareholders, publicly traded corporations cut costs, most often and effectively through mass layoffs of their employees. You’ll find this at all the big-name high-tech companies, including Google, Apple, Facebook, and Microsoft. You’ll also find it in manufacturing (Siemens), retail (Toys R Us), banking (Wells Fargo), pharmaceuticals (Roche), and services (Marriott International). Citigroup just announced the layoff of 20,000 employees. In 2023, it conducted $1.5 billion in stock buybacks.
Leveraged buyouts, which have negatively affected so many journalists, are another form of financial pillage. When private equity firms and hedge funds buy up companies the deals are financed largely with borrowed money, debt that is then put on the books of the company that was purchased. Servicing that debt becomes a major corporate expense, most often paid for by cutting costs through mass layoffs. Again, in almost all cases, there’s a connection between leveraged buyouts and mass layoffs. Just ask the former employees at Twitter, who got X-ed out because of the enormous debt load Elon Musk added after he purchased the company. The same is true for all those working for newspapers acquired in recent years by Alden Global Capital.
The Public Wants Mass Layoffs to Stop
Most policymakers in both major political parties continue to view mass layoffs as a product of the unstoppable forces of technology and globalization. That’s the story their Wall Street donors tell them. But the victims of wave after wave of mass layoffs are not buying this. Americans believe, and rightfully so, that working people should not have to be put in a position of abandoning their communities and move because of mass layoffs. They understand that policy choices inspired by greed, not unstoppable economic laws, are at play.
As recent polling reports: “Seventy percent of respondents preferred a focus on ’helping struggling areas to recover’ while only 30% chose ‘helping people move to opportunity.’ Views were broadly similar across nearly all demographic breakdowns, including class, region, gender, party, and generation.”
Overall, 62% of respondents said they were willing to pay higher prices as a result of policies that “strengthen American manufacturing by ensuring that more of the things I buy are made in America.” Perhaps they would even pay more to see their local newspapers freed from Wall Street vultures.
The real divide that is tearing us apart is between the wealthy with secure livelihoods and those who have seen their entire world turned upside down by mass layoffs.
Nevertheless, politicians and pundits alike continue to ignore mass layoffs. Instead, they attribute working class anger to what they argue is increasing polarization between the educated and uneducated (those without college degrees). Supposedly, the educated, especially in urban areas, are moving more to the Democratic Party, while the uneducated are joining the angry MAGA hordes.
As one think tank leader put it, “The fetish for manufacturing is part of the general fetish for keeping white males of low education outside the cities in the powerful positions they’re in in the U.S.” And when workers objected to the 2024 proposed purchase of U.S. Steel by Japan’s Nippon Steel, former Secretary of Commerce Wilbur Ross dismissed it by saying, “There is no real concern other than xenophobia.”
But, as we show clearly in Wall Street’s War on Workers, the data is extremely flimsy for trashing the working class in this fashion. In fact, working class people are growing more liberal on social issues (including immigration), and do not form a disproportional percentage of the dreaded MAGA base. The same is no doubt true for many of the journalists who are out in the street.
The real divide that is tearing us apart is between the wealthy with secure livelihoods and those who have seen their entire world turned upside down by mass layoffs.
Taming Wall Street’s Greed
There is one real solution to creating a modicum of job stability: Taming Wall Street’s greed. We should:
- Outlaw stock buybacks because they are stock price manipulation, as they were before their deregulation in 1982.
- Curtail leveraged buyouts by limiting the amount of debt that can be used.
- Provide aid to areas devastated by mass layoffs, with direct public investments that offer not just job training, though that helps, but also needed and secure jobs. Every American willing and able to work should have a right to a decent, stable job.
As for the media, the newspaper industry needs a new system like those proposed in Canada and Australia, where companies like Google and Facebook must pay for all the journalistic content they are grabbing for free in the U.S. And artificial intelligence should pay for using news content to train its generative programs.
Such solutions may seem obvious, once we look closely at these issues, but we’re not close to adopting reforms. Neither major political party is willing to support policies that might upset their Wall Street donors. And few politicians are eager to close the revolving door to future jobs in high finance.
The disconnect with the American public is enormous. Another recent poll revealed that 85% of Americans believe that mass layoffs have a negative impact on workers, and 71% believe mass layoffs harm the overall economy.
Clearly, the American people want elected politicians of both major parties to face up to the obvious: Layoffs hurt working people and increase Wall Street’s domination of our economy. It’s high time for politicians of all stripes to realize that their policy choices created this dangerous and enlarging inequality, and it should now be their duty to protect the livelihoods of the American people, not the enormous profits on Wall Street.
It will take guts for the political establishment to wean itself from Wall Street cash. But if our democracy keeps failing to provide a modicum of job stability, our democracy itself will be endangered.
