Jason Schwartz, United for Respect, [email protected], 347-452-3752
Nearly 600,000 Retail Jobs Lost at the Hands of Wall Street
NEW YORK, NY — Over the past decade, more than 1.3 million people have lost their jobs due to trouble or bankruptcies at retail companies owned by private equity and hedge funds, according to a new study released today. Another one million jobs are at risk among the retailers now owned by this type of Wall Street investor.
The report, written by The Center for Popular Democracy, United for Respect, Americans for Financial Reform, Hedge Clippers, and the Private Equity Stakeholder Project, documents the devastating consequences of private equity’s march through the retail sector.
Pirate Equity: How Wall Street Firms are Pillaging American Retail reveals that in the past 10 years, 597,000 people working at retail companies owned by private equity firms and hedge funds have lost their jobs. These retail closures are also associated with an estimated 728,000 indirect job losses. Another million jobs are at risk at other retailers owned by these Wall Street giants.
Over the past decade, these companies have made substantial controlling investments in 80 retail companies. Other research has shown that private equity-owned companies are twice as likely to go bankrupt as public companies, which has led to significant job loss in the sector. The layoffs at private equity-owned retailers stand in contrast to the one million jobs that the retail sector as a whole added over the same period of time. The effects are disproportionately felt by women and people of color, who hold the majority of the jobs in the retail sector.
A group of federal lawmakers last week introduced the Stop Wall Street Looting Act of 2019, which would restructure incentives for private equity and hedge funds to destroy American jobs for profit, protect pensions from deceptive fund managers, and provide more compensation for workers when their employer enters bankruptcy. Details on the bill can be found here.
“While the retail industry was growing as a whole, a subset of private equity and hedge fund-owned retailers were bankrupted,” said Maggie Corser, senior research analyst at the Center for Popular Democracy. “This is clearly a result of Wall Street greed and predatory business models. Wall Street’s gamble on retail has real effects on the lives and futures of millions of people in this country. The findings of this report highlight the immediate need for federal action.”
Beyond the direct and indirect job losses, Wall Street’s dominance in retail has caused far-ranging economic impacts on states and local communities. Private equity and hedge fund-driven bankruptcies significantly reduce the sales and real estate tax revenue that states need to fund vital public programs. The report details the effect of private equity job loss in four states: California, Florida, New Jersey and Ohio.
“For twenty years, my job at the Toys ‘R’ Us in Chula Vista allowed me to support my family and provide healthcare for me and my son, who has autism. But my family and I were robbed of our livelihood and security when Toys ‘R’ Us was forced to file for bankruptcy. I’ve talked to people from all over the country, people from Sears, from Kmart, from Shopko, and they all have stories like mine. There will be no justice in this economy until we stop Wall Street predators from destroying American companies and our jobs,” said Giovanna De La Rosa, a leader with United for Respect and former employee of Toys ‘R’ Us.
“Wall Street has become the new boss for an ever-growing number of workers across the country and that’s meant lay-offs, shrinking pay-checks, and benefit cuts for millions of people. Wall Street’s relentless pursuit of profits by any means necessary has been especially devastating in the retail industry, resulting in a frightening number of bankruptcies. Without bold action by lawmakers around the country to curb and reform the private equity industry they could again put our entire economy at risk of collapse,” stated Charles Khan, organizing director of the Strong Economy For All Coalition and advisor of Wall Street and Corporate Accountability for the Center For Popular Democracy.
“The predatory practices of private equity and hedge funds are long overdue for a legislative fix that would protect workers and communities, stop private equity executives from looting and destroying companies, and hold them accountable for the damage they cause,” said Heather Slavkin Corzo, senior fellow at Americans for Financial Reform. “Congress needs to act before the list of bankruptcies and job losses grows longer.”
“While thousands of stores were shuttered and hundreds of thousands of retail workers lost their jobs, private equity firms like Cerberus, Lone Star Funds, Sun Capital and the others mentioned in the report took billions of dollars in fees and dividends from retailers that later went bankrupt,” said Jim Baker, executive director of the Private Equity Stakeholder Project.