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Why Did Trump Win? Because Democrats Aren't Up In Arms Over Mass Layoffs
GM just told 1,000 workers they're jobs are gone. But I haven’t heard Joe Biden, Chuck Schumer, Hakeem Jeffries, or any other leading Democrat say a critical word about it.
Nov 23, 2024
At the same time Democrats and progressives are justifiably enraged at Trump’s gonzo Cabinet picks, they’re all but mute about corporate America’s continued siphoning of economic gains to the top.
Yet this siphoning has created the stagnant wages and insecure jobs that helped propel Trump into the presidency and give Republicans control over both chambers of Congress.
Trump at least gave workers an explanation for what’s happened to them — although it was a lie: It isn’t undocumented immigrants or the “deep state” or transgender kids or any other Trump bogeyman.
It’s corporate greed.
The most recent example: On Friday, GM announced it was laying off 1,000 workers. These layoffs followed another round of GM layoffs in August, which saw 1,500 jobs cut. The cuts affected both salaried and hourly staff, including some United Auto Workers members.
Why aren’t Democrats, who still control the Senate and presidency, moving more aggressively to outlaw stock buybacks — which were considered illegal stock manipulations before Ronald Reagan’s SEC gave them the green light?
Most of the workers being laid off Friday were notified via email early Friday morning. Some had been working for GM for over thirty years.
GM says it has no choice. It must cut costs.
This is what we hear again and again from corporate America. We’ll be hearing even more of this as Artificial Intelligence takes over white-collar as well as blue-collar jobs.
No choice?
GM is on track for making record profits this year, surpassing its 2022 record profit of $14.5 billion. In the third quarter of 2024 alone, GM made $3.4 billion. That’s a $200 million increase from the same period last year.
GM CEO Mary Barra’s compensation for 2024 is $27.8 million. This includes a base salary of $2.1 million, stock awards of $14.6 million, stock option awards valued at $4.9 million, an “incentive plan” compensation (as if she needed more incentive) of $5.3 million, other payment of $997,392, and perks (personal travel, security, financial counseling, company vehicles, and an executive health plan) valued at $389,005.
The ratio of Barra’s compensation to that of the typical GM employee is estimated to be 303-to-1.
In June, GM announced $6 billion in stock buybacks. This means $6 billion of GM’s record profits will be used to purchase its own shares of stock — thereby boosting share prices (and the portion of Barra’s compensation in stock grants and options) simply because fewer shares of GM stock will be in circulation.
Keep in mind that the richest 1 percent of American hold over half of the value of all shares of stock held by Americans, and the richest 10 percent hold 92 percent.
So, in fact, GM’s savings from axing 1,000 jobs will be transferred into the pockets of wealthy Americans (including GM’s CEO).
Why aren’t Democrats up in arms about this? I haven’t heard Joe Biden, Chuck Schumer, Hakeem Jeffries, or any other leading Democrat say a critical word about GM’s latest move.
Democrats have offered no alternative explanation for what’s happened to average working people or agenda for remedying it. Trump's baseless explanation and agenda are the only ones available. So it’s no surprise that many working Americans voted for Trump on Election Day.
Why isn’t Michigan’s Democratic governor, Gretchen Whitmer — who may be in the running for president in 2028 (assuming we have another election) — accusing GM of sacrificing jobs for profits that are siphoned off to big investors?
Why aren’t Democrats, who still control the Senate and presidency, moving more aggressively to outlaw stock buybacks — which were considered illegal stock manipulations before Ronald Reagan’s SEC gave them the green light?
Why aren’t they demanding that capital gains taxes be increased on the super-wealthy, whose stock gains this year alone have made America’s billionaires 30 percent richer?
Why aren’t they moving to increase corporate taxes on corporations whose ratio of CEO pay to their median workers is more than 50 to 1? And impose even higher taxes if the ratio exceeds 100 to 1? (Senate Budget Committee Chair Sheldon Whitehouse, along with Representatives Barbara Lee and Alexandria Ocasio-Cortez, have introduced just such a bill, but no one knows about it. Why isn’t the Democratic leadership loudly pushing this?)
The lesson of the debacle of the 2024 election is that big corporations and the wealthy have shafted average working Americans, whose wages and jobs have gone nowhere for decades and who are understandably frustrated and angry at what they see as a rigged system.
But Democrats have offered no alternative explanation for what’s happened to average working people or agenda for remedying it. Trump's baseless explanation and agenda are the only ones available. So it’s no surprise that many working Americans voted for Trump on Election Day.
Now Trump and his Republican stooges think they’ve been given a license to blow the system up — initially by appointing a bunch of clowns, conspiracy theorists, and sexual predators to key posts.
It’s important to rail against Trump’s appointments. But unless we attack the sources of the outrage Trump has tapped into, working Americans will continue to go along with whatever Trump and his lapdogs want to do.
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Merry X-mas Elon Musk: GM Just Gave Tesla a Free Ride!
You might think that GM would be worrying more about the confidence of consumers, not hedge funds. But apparently not.
Dec 12, 2023
In the spirit of the holiday season, General Motors on November 28th announced a $10 billion stock buyback. What a lovely gift to its top officers, who receive most of their compensation through stock incentives! What a lovely reward for the hedge fund shareholders who will cash in their recently purchased GM stock for handsome profits!
But the greatest gift of all goes to Elon Musk and Tesla as GM decides not to use that money to increase its competitiveness during the historic conversion to electric cars and trucks.
It seems that GM has more urgent concerns than making cars—like toadying up to Wall Street, for example. As CNBC notes, “General Motors is working to regain Wall Street’s confidence in 2023 with several investor-focused initiatives following a tumultuous year.”
You might think that GM would be worrying more about the confidence of consumers, not hedge funds. But apparently not.
How is it OK to siphon $10 billion out of GM as it struggles to compete, but it’s debilitating for GM to provide $9.3 billion in increased wages and benefits to those who make the cars and trucks?
Let’s recall that stock buybacks were once considered a form of stock manipulation and were limited to 2 percent of corporate profits by the Securities and Exchange until 1982. Then, as part of the Reagan administration’s deregulatory efforts, SEC rule 10b-18 was adopted, which made it legal to pour corporate profits into stock buybacks.
Wall Street stock-sellers and top CEOs, who are paid with stock incentives, love stock buybacks because in most cases the prices of those stocks immediately rise. GM’s shares, for example, climbed 11 percent in one day after its stock buyback announcement. Today, companies spend nearly 70 percent of profits on buybacks.
GM is a stock buyback recidivist.
Instead of increasing investments in more fuel-efficient vehicles to match the foreign competition between 1986 and 2002, GM conducted $20.4 billion in buybacks. And since it was bailed out by taxpayers in 2009, GM has moved another $25 billion into stock buybacks, including the $10 billion recently announced. Had that money been wisely invested in research and development, might GM have become a serious competitor to Tesla? We’ll never know.
No problem, says Steven Rattner, the “Car Czar” who led President Obama’s team that bailed out GM during the 2008-09 financial crisis. Rattner, writing in 2018, claimed that stock buybacks are an efficient use of capital:
Yes, [stock repurchases] often bump up share prices. But they are really a consequence of the vast cash reserves — $2.4 trillion and rising — held by American companies. When top executives don’t see more attractive investment opportunities, at least not in the United States, it can be a prudent use of that cash to buy back shares in their own companies.
As companies return capital to shareholders through buybacks or dividends, the money doesn’t disappear. Its recipients typically reinvest it in other opportunities. That’s not short-term thinking; that’s efficiency.
Of course, “the money doesn’t disappear.” In the vast majority of cases, it goes straight into the pockets of ultra-rich stock-sellers and the executives who order the buybacks.
Five years later, during the recent United Autoworkers strike, Rattner, who knew GM was sitting on a pile of cash, wanted to protect it from the workers:
GM and Ford and Chrysler are doing quite well at the moment. They have cash. They have profits. They have the ability to pay them more, but they also have to compete against other companies. And in the South, you have companies like Toyota and Honda that don't have unions at all. In Mexico, you have workers making literally $9 or $10 a day - and are very productive, according to what auto executives tell me. And so, if the Detroit companies have an excessively high burden of wage costs or fringe benefit costs, then they can't compete. They lose car sales. Ultimately, the workers lose jobs, and the jobs move to these other places.
How expensive is the new contract with the United Autoworkers?
GM claims it will cost $9.3 billion. But, as GM moves $10 billion out of the company, Rattner is nowhere to be found.
How is it OK to siphon $10 billion out of GM as it struggles to compete, but it’s debilitating for GM to provide $9.3 billion in increased wages and benefits to those who make the cars and trucks?
For apologists, like Rattner and his hedge fund comrades, that $10 billion in stock buybacks is not a cost and therefore poses no harm at all to corporate competitiveness, not the way higher worker compensation does. That’s because the barons of Wall Street and GM’s top officers believe they earned all that money because they, and they alone, made all the moves necessary to extract that wealth from GM. And besides, doesn’t it turn out to be a win/win? Didn’t both the workers and the bosses get nearly equal pieces of the pie.
Sadly, it appears that a major part of GM’s business model is to produce stock buybacks, not just motor vehicles.
At GM, however, stock buybacks could pose a real threat to job security. Right now, GM’s 56,000 2023 electric vehicle (EV) sales (through August) pale in comparison with Tesla’s sales of 1,137,000 EVs. By issuing massive stock buybacks instead of investing in the development and production of highly competitive EV cars and trucks, GM is risking tens of thousands of jobs and its future.
In the research done for my book, Wall Steet’s War on Workers, we found that stock buybacks and mass layoffs are connected. When corporations loot themselves (pressured by Wall Street hedge funds) by issuing stock buybacks, they often cover the costs by laying off workers. In fact, Reuters reports that GM announced “cuts of nearly 200 employees due to the United Auto Workers strike.” Why is the strike identified as the cause and not the buybacks?
Sadly, it appears that a major part of GM’s business model is to produce stock buybacks, not just motor vehicles. The price of this wastefulness and greed, so lucrative to executives and Wall Street, is likely to be borne by the workers through more mass layoffs.
Thank goodness the UAW has won the historic right to strike over plant closings. They’re going to need it.Keep ReadingShow Less
The UAW’s Game Changer: The Right to Strike Over Mass Layoffs
This historic victory could have significant benefits for all working people.
Nov 14, 2023
The United Auto Workers has scored major victories in its new contracts with the Big Three automakers: GM, Ford, and Stellantis. Not only did the union win massive wage increases and other critical demands, but it also won the virtually unheard of right to strike over plant closures. This historic victory could have significant benefits for all working people.
Since the dawn of capitalism, plant closings and mass layoffs have disrupted working-class lives. The problem rapidly accelerated when Republican and Democratic administrations, starting with Reagan in 1980, freed Wall Street from regulations that discouraged job-killing leveraged corporate takeovers and stock buybacks. While researching my upcoming book, Wall Street’s War on Workers, we found that more than 30 million workers have been subjected to mass layoffs since 1996.
The auto industry was one of the first to institute mass layoffs as mismanagement and stiff competition from abroad in the 1970s cut into the Big Three’s market share. Until this recent UAW contract, unions mostly had been unable to stop mass layoffs. Instead, they only had the contractual right to conduct “effects bargaining,” negotiating to secure severance payments for the workers who would be let go. Even if they had wanted to strike, in most cases it would have been prohibited by their contracts.
The UAW has changed that game. If GM or Ford or Stellantis decide to shut down a facility going forward, they will now be forced to think twice. Is the risk of a national strike that could cost them billions, worth the short-term savings that come with layoffs? Or might it make more sense to find another use for the facility and keep everyone working? The new UAW contracts with the Big Three bring this entirely new financial dynamic into the mass layoff game. Already, Stellantis has agreed to reopen its plant in Belvidere, Illinois, and rehire all 1,200 laid-off workers there.
As Stellantis just demonstrated by reopening its Belvidere facility, large corporations are far more flexible than their public rhetoric suggests.
But doesn’t forcing the companies to keep those workers employed weaken them and make them less competitive? That’s what corporations always claim… at least until persuaded and pressured to do otherwise. However, corporate leaders know that mass layoffs often have little to do with production and sales. In many cases, mass layoffs are used to squeeze more cash out of the company to finance stock buybacks – a legalized form of stock manipulation that enriches top corporate officials and Wall Street stock-sellers (see Mass Layoff Capitalism). For example, in the last 12 years, GM has poured more than $21 billion into stock buybacks. No one knows for certain how many jobs were lost to help finance those buybacks, but the number is certainly significant. In 2015 alone, the company laid off 14,000 employees.
Our research suggests that in many, if not most, cases, stock buybacks and/or leveraged buyouts precede mass layoffs. Companies like Toys “R” Us and Bed, Bath and Beyond have been ruined by that process.
But what if an auto company really can’t sell one of its products? How then could it possibly keep a plant open?
As Stellantis just demonstrated by reopening its Belvidere facility, large corporations are far more flexible than their public rhetoric suggests. They are adept at finding ways to cut costs by outsourcing work to non-union labor, here and abroad. If pressured, they have the capacity to redirect that production to facilities that are being shut down here and re-employ union labor.
An excellent example of this flexibility can be found at Siemens Energy. The company decided in 2020 to quit the oil drilling and fracking businesses and announced layoffs of approximately 1,700 U.S. workers and another 3,000 thousand in Germany. In the U.S., all the layoffs took place and the unions involved conducted effects bargaining. But in Germany, where workers hold half the seats on the Siemens board of directors, the union won an agreement that there would be no compulsory layoffs. Instead, the company was allowed to try to entice workers to leave voluntarily with significant pay and benefit packages. The company also agreed to put new production into the six facilities that were originally scheduled to be shut down.
The UAW is forging a new path to build real union power to stop corporate mass layoffs through the right to strike.
In the U.S., workers do not have that kind of leverage on boards of directors. In Germany, it is mandated by laws urged upon them by the U.S. after WWII. The UAW is forging a new path to build real union power to stop corporate mass layoffs through the right to strike.
Shawn Fain, the visionary and effective UAW president, wants these union successes to spread far and wide. He is urging every union to have their contracts end on the same date—May 1, 2028—the internationally recognized Labor Day, which honors the 1892 Homestead strike for the eight-hour work day. With concerted pressure, perhaps the labor movement would develop broader, basic common demands that support the working class. Stopping needless mass layoffs should be near the top of the list.
Can you imagine if every union had the right to strike over mass layoffs and then succeeded in protecting job security? That might lead to an explosion of workers wanting to join unions. We might even see a repeat of a legendary story from the diary of a union organizer during the 1940s: “Today I organized 12 new local unions,” he wrote. Of course, he didn’t go out and organize each one on his own. They were running into the organizer’s office requesting union charters.
Today, for the first time in a long, long time, there’s a decent chance that workers will be running to the UAW.
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