There’s a huge and ubiquitous problem we’re not talking enough about: mass layoffs. The Bureau of Labor Statistics defines mass layoffs as 50 or more workers filing for unemployment insurance at a single company during a five-week span. Millions of workers have experienced them over the past several decades. Mass layoffs are driven by Wall Street’s incessant demand for cost-cutting measures to service debt payments and fund stock buybacks. The consequences of ignoring mass layoffs are enormous. Not only do they cause suffering and trauma for working families who experience them, but they are fueling the growth of far right authoritarianism. However, mass layoffs are not inevitable. They are the products of policy choices, and they can be stopped.
This is the argument of an important new book, Wall Street’s War on Workers: How Mass Layoffs and Greed Are Destroying the Working Class and What to Do About It, by longtime labor educator and author Les Leopold. The book is rooted in extensive research and numerous interviews with workers, and it represents an urgent plea for progressives — and the Democrats — to take the problem of mass layoffs much more seriously.
Leopold is the co-founder and longtime executive director of the Labor Institute, which carries out research, education and trainings aimed at challenging inequality and bridging workplaces and communities. Leopold is also the author of movement classics such as Runaway Inequality: An Activist’s Guide to Economic Justice and The Man Who Loved Labor And Hated Work: The Life and Times of Tony Mazzocchi.
Wall Street’s War on Workers is a must-read for anyone who wants to better understand how Wall Street has driven thousands of mass layoffs, the role of the Democrats and Republicans in enabling mass layoffs, how mass layoffs have boosted the far right, and, most importantly, how we can begin to challenge mass layoffs and build a working-class anti-authoritarian politics. Leopold discusses these themes — and more — in this exclusive interview with Truthout.
Derek Seidman: What are the origins of this book? Why did you want to focus on mass layoffs?
Les Leopold: I’m an Oberlin College alumnus, and I got involved in a fight over mass layoffs at Oberlin during the pandemic. Oberlin engaged in union-busting by subcontracting out around a hundred janitorial and food service jobs. A group of alumni got together and tried to stop it. We weren’t successful, though we were able to dramatically increase their severance pay through alumni donations. The workers were devastated. I start off each chapter of the book with a quote from a laid off Oberlin worker.
At first, I couldn’t understand why Oberlin did this, but I soon realized that the college leadership had completely bought into the Wall Street mindset that turned working people into disposable numbers. That got me thinking about how generalized mass layoffs have become. We’ve just become accustomed to it. I wondered: How big is this problem?
We found a Bureau of Labor Statistics database that included 20 million people who had gone through mass layoffs from 1996 to 2012. In workshops with steel workers, we found out that virtually all of them had gone through a mass layoff, and some of them several times.
We found health studies that showed that mass layoffs are really debilitating events for workers. The Department of Labor says it’s one of the most traumatic things you can experience in your lifetime.
My big fear is that mass layoffs are behind the slide towards authoritarianism. At a minimum, a democracy should provide stable employment, but we’re talking about tens of millions of people who have gone through mass layoffs.
You argue that Wall Street is causing mass layoffs through things like stock buybacks and leveraged buyouts. Can you explain?
Let’s start with leveraged buyouts, which are absolute job killers. When hedge funds and private equity firms buy a company, investor money only covers about 10 percent of the cost. Then they borrow the other 90 percent from financial institutions. They take that new debt and put it on the company’s books. So, the company they just purchased now suddenly must service that enormous debt.
How do you service that debt? The new Wall Street owners say they need to cut costs to make the firm more “efficient.” This means laying off workers. That’s usually the first thing they do.
Before the early 1980s, leveraged buyouts were frowned upon by the Securities and Exchange Commission. But once financial deregulation took place, it was open season. Thousands of companies have since gone through leveraged buyouts.
Elon Musk spent billions of his own money to buy Twitter — now X — but he also borrowed a ton. Then he put that debt on Twitter’s books. Twitter’s debt service went from $50 million a year to 1 billion. He started laying off thousands of workers to help service that debt.
Also, about 20 percent of leveraged buyouts end up in bankruptcy — 33,000 people lost their jobs at Toys “R” Us after a completely botched leveraged buyout.
Leveraged buyouts could easily be stopped. The government could put a cap on the amount Wall Street firms can borrow to buy up companies. After all, the debt service payments are tax deductible, so we taxpayers are subsidizing these job-destroying leveraged buyouts. But opposing Wall Street requires human will. Neither political party is doing anything about it. I believe the political party that has the guts to stop mass layoffs is going to be the dominant political party for years to come.
What about stock buybacks?
A stock buyback is when a company uses its own money to buy its own shares on the stock market. This increases the prices of company shares because earnings are now distributed over a smaller number of shares. Hedge funds and private equity firms pressure companies to do stock buybacks, and they time their buying and selling of shares to benefit from stock buybacks. Everyone on Wall Street and in corporate America knows that a stock buyback moves money from the corporation to the largest Wall Street investors. Actually, they should be called stock-sellers, not investors.
We at the Labor Institute made a list of the companies that did mass layoffs in Michigan, Pennsylvania and Wisconsin over the past several years. In each of these mass layoffs — each one! — a stock buyback happened during the previous year.
Remember when Carrier Air Conditioning said it was moving to Mexico in 2016? Carrier was the most profitable division of United Technologies, a big defense contractor. Six months before the announcement, more than a dozen hedge funds bought stakes in United Technologies and pressured the company for a $6 billion stock buyback. They realized that moving to Mexico would save $65 million a year. A stock buyback motivated Carrier to move out of the country, not international competition or lower wages abroad. It was Wall Street.
Trump used the government to supposedly stop a mass layoff at an Indiana Carrier plant. It was a campaign ploy that didn’t save as many jobs as promised, but 700 workers avoided the mass layoff. Unfortunately, when the Democrats have had the opportunity to stop mass layoffs, they haven’t done it. That needs to change.
Mass layoffs aren’t like individual layoffs. If you lay off a thousand workers in, say, rural New York or western Pennsylvania, what’s going to happen? These areas have almost no other comparable jobs, if any at all. You’re competing with a thousand of your neighbors for the few jobs that exist.
You discuss how, in corporate America today, CEOs view mass layoffs as positive things, and they’re rewarded and lauded for slashing jobs. Can you explain?
We found articles in Businessweek and The New York Times from the early 1980s that show how corporate leaders used to feel embarrassed about mass layoffs. They did them reluctantly, and often made them voluntary, so workers could get buyouts.
But there was a big cultural change after Wall Street took over in the 1980s. Wall Street put pressure on corporations to extract more wealth. Mass layoffs became regularized, not only in down periods but also during good times. The tech industry, for example, has been booming over the last decade, but the tech giants are constantly doing mass layoffs that help pay for enormous stock buybacks.
Shareholder primacy and trickle-down economics became the norm in the 1980s. Greed is good for society, the thinking went. This unleashed a mentality where you didn’t have to think about those laid off workers. They would find new jobs in a booming economy. The only duty was to serve the needs of Wall Street shareholders. Today, most CEO compensation comes in the form of stock awards or stock options, not salaries. CEOs are personally incentivized to raise share prices through stock buybacks.
Your book is very critical of the Democrats and how they facilitated the rise of “mass layoff capitalism.” Can you elaborate?
There have always been mass layoffs, but after World War II they were tied to recessions and were short-lived. Then, first with the Reagan administration and then the Clinton administration, finance was deregulated. Stock buybacks and leveraged buyouts boomed, and mass layoffs became ubiquitous.
The Democrats bear a lot of blame for this, and workers know it. In our conversations, workers showed a tremendous bitterness towards the Democrats, especially around the promotion of free trade. My book made an important discovery: In states like Michigan, Wisconsin and Pennsylvania, when the percentage of mass layoffs go up in a county, the Democratic vote goes down. They feel like the party of working people has let them down.
There’s a powerful link between mass layoffs and the alienation of the white working class from liberal politics. Take Mingo County, West Virginia, population 23,000, which has lost 3,000 coal mining jobs since 1996. The Democrats did absolutely nothing to replace those jobs. No job creation programs, no reinvestments in green energy, nothing that could have created stable employment. The Democrats were in power for 16 of 24 years after Clinton was first elected in 1992.
The job was left to free enterprise, which turned Mingo County into the opioid prescription pill mill of the U.S. People blamed the Democrats for this devastation. Bill Clinton won 69.7 percent of the vote in Mingo County in the 1996 presidential election. Biden won 13.9 percent in 2020. It was a colossal collapse. This was a heavily Democratic state that lost an enormous amount of coal jobs. They turned against the Democrats, blaming them for a “war on coal.”
Right now, the Democrats should take the lead on addressing mass layoffs, but they don’t want to upset their Wall Street donors or their upper middle-class college educated base who work there. Of course, the Republicans are even worse, which leaves many working people without a political home. That’s not good for democracy.
You argue that stopping mass layoffs is closely tied to stopping the far right. Can you explain?
Dealing with mass layoffs is key to fighting back against authoritarianism. Right now, the anti-authoritarian progressive movement is mostly concerned with protecting the democratic process and protecting rights — voting rights, abortion rights, and so on. That’s hugely important, but if the anti-authoritarian movement doesn’t also challenge mass layoffs, it’s going to lose large chunks of the working class, including the white working class. I don’t see how we can stop authoritarianism without involving that population, which still forms a large percentage of the country.
The issue that turns many working people away from democracy is the failure to deal with mass layoffs. A major finding of my book is that most white workers are not particularly conservative on most social issues. In fact, as a group, they have become much more liberal on gay rights and citizenship for undocumented immigrants. But surveys also show that they are very upset about job losses due to environmental and trade issues. If fighting mass layoffs became integral to fighting authoritarianism, these people would join in.
A few years ago, Siemens announced it was laying off 7,800 people worldwide. It shut down a plant in Olean, New York, which used to be a very industrial area. This plant had been there for a hundred years. It employed over 400 people. New York Sen. Chuck Schumer, of course, got upset, but he didn’t try to stop the mass layoffs.
Meanwhile, Siemens also announced 3,000 layoffs in Germany. But in Germany, workers have “codetermination,” where half the board seats of Siemens are workers, including union officials. The workers on the board got the company to agree to no forced layoffs and to put new production into the six plants they were going to shut down. It was the same company in New York as in Germany, but the Democrats didn’t come to the rescue in the United States. And of course, neither did the Republicans.
All this leads to bitterness. The president of the union local from that Siemens plant in Olean is angry. That whole area has gone from being prosperous to hanging on by its fingernails. Most people up there are now Republicans.
The seeds for authoritarianism are there in the concrete. You can hear it when you talk to people. They will tell you that they’ve lost their faith in the Democratic Party. They feel the party no longer cares about them. I believe strongly that the failure to deal with mass layoffs has put the entire progressive movement on the defensive. I’m trying to sound the alarm.
How do we stop mass layoffs and turn the tide on the immiseration of the working class? What kind of politics and policy solutions do we need to forge?
Both political parties have bought into this fatalistic understanding, that’s spilled over into the public at large, that mass layoffs are just normal, and we can’t do anything about them. They are just the result of the unstoppable forces of new technology and global trade. But human agency created specific policies that enabled ongoing mass layoffs, and we can undo that.
First, we should outlaw stock buybacks. They were limited to 2 percent of corporate profits until 1982. Now they account for nearly 70 percent. They should be limited to 2 percent once again.
Second, we should put a cap on loans that can be taken out for leveraged buyouts. Maybe no more than 1 percent of a company’s value could be purchased through loans; the rest has to be investors’ money so that the purchased company would not be loaded up with debt payments. Those two policy changes would help reduce mass layoffs.
We can use congressional investigations. When companies are feeding at the trough of the federal government funds, you can threaten to take away their contracts if they’re doing mass layoffs or stock buybacks. Then, they’ll listen.
This won’t happen until there’s a revived labor movement. No other movements have the same political and economic focus. The fight against mass layoffs has to be driven by a mass organization of working people. Only the labor movement can do it. Right now, only 6 percent of private sector workers are in trade unions, down from 35 percent in 1955. That has to change.
The difficulty we now face, and the reason why I think we’re sliding towards authoritarianism, is because neither political party is willing to take on Wall Street. The day-to-day mass layoff problem is seldom recognized or addressed. But for the people laid off, it’s a really big deal. Not many of them are going to find a better job, if any. So, we have a real problem and there are very specific policies that caused it. Undoing those policies would dramatically help. But very few politicians have the guts to tackle it.
This book is trying to wedge mass layoffs into the political debate and the debates around authoritarianism. My hope is that we can have a discussion about mass layoffs and break through the fatalism, so the issue is understood to be as catastrophic as it really is. It’s like a festering wound that’s being irritated every day that no one is addressing.