More than 1.3 million Americans have lost their jobs in the past decade as a result of private equity ownership in retail, according to a report to be released today.
As The Washington Post reports, that total includes 600,000 retail workers, as well as 728,000 jobs in related industries. Women and people of color have been disproportionately affected as debt-ridden retailers close thousands of stores, according to the soon-to-be-public report by six nonprofit organizations and workers’ advocacy groups, including Americans for Financial Reform and the Center for Popular Democracy.
Ten of the 14 largest retail bankruptcies since 2012 have been at private equity-owned companies, such as Payless ShoeSource and Claire’s, according to the study. More than 1 million of the nation’s 15.8 million retail workers continue to work for private equity-backed companies, including Michael’s, J. Crew and Neiman Marcus.
Private equity firms and hedge funds have been aggressively buying up retailers since the mid-2000s. The firms pooled money—often from pension funds, wealthy investors and financial firms—and relied on large swaths of debt to acquire companies like Mervyn’s and Linens ‘n Things, with the goal of turning them around.
In practice, that meant they often sold off real estate holdings, cut workers’ pay, and did away with jobs to turn a quick profit for investors, according to Heather Slavkin Corzo, a senior fellow at Americans for Financial Reform and the director of capital markets policy for the labor union AFL-CIO.
Industry groups say private equity firms make significant investments to help businesses grow, and that their returns help support pension funds for teachers, first responders and other government workers. They say such factors as increased competition and the shift to online shopping also have contributed to retail bankruptcies.
But critics say large debt loads from leveraged buyouts make it difficult for otherwise profitable retailers to adapt to industry changes. Read the full story.