135.9 Million Reasons Why the Working Class Is So Angry

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:

1. 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.
2. 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.
3. Add two simple clauses to the $700 billion of taxpayer money that goes for federal purchases of goods and services. It should read:
   1. No taxpayer money shall go to corporations that lay off taxpayers or conduct stock buybacks.
   2. 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.