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Mass Layoffs Have Our Rich Thriving … and Workers Writhing

BY SAM PIZZIGATI

 APRIL 16, 2024

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Photograph by Nathaniel St. Clair

How do you know when you can finally rate as certifiably super rich?

One simple test: You can look at the menu that greeted the over 100 wealthy souls who gathered earlier this month at the Palm Beach home of hedge fund billionaire John Paulson and understand exactly what you’re going to be feasting upon.

The menu that night, NBC News reports, offered up “endive and frisee salad, filet au poivre, and pavlova with fresh berries.”

The assembled deep pockets would prove to be suitably grateful for both that repast and the remarks that the evening’s special guest, Donald Trump, delivered right before they dug in. By the evening’s end, they had pledged $50.5 million for Trump’s 2024 bid to return to the White House.

But deep pockets need not, of course, journey to Palm Beach for fancy fixings. The “bastions of New York City’s dining elite,” as Business Insider’s Linette Lopez recently pointed out, have emerged into the mid-2020s “louder, prouder, and more extravagant than ever.”

“Wall Street bankers, tech executives, generationally wealthy people, the famous and beautiful,” Lopez adds, are all living large on a “granite island of hungry rich people looking for something to do.”

And these hungry deep pockets are increasingly looking to do that something — that dining — with people just as fabulously fortunate as they happen to be. Restaurants off limits to the great unwashed have become Manhattan’s next big thing. One such private affair, the Aman Club, charges members an annual $15,000 on top of a $200,000 initiation fee.

Average Manhattanites, meanwhile, are struggling to simply get by in a city with a “record-breaking” average rent of over $5,500 per month. And the monthly squeeze these New Yorkers are facing extends far beyond New York’s borders.

Only 44 percent of U.S. adults, analysts at Bankrate reported this past February, have enough savings to handle an emergency $1,000 expense. Some 66 percent of U.S. adults, Bankrate also notes, worry “they wouldn’t have enough emergency savings to cover a month’s living expenses” if they lost their primary source of household income.

And plenty of American adults, the Labor Institute’s executive director Les Leopold reminds us, are losing that primary source of household income, their job. “Mass layoffs” — what happens when a company lets 50 or more workers go within a five-week period — have become “so commonplace” that top corporate execs “do not hesitate to slash jobs whenever they feel it necessary.”

Those execs seem to be feeling that ”necessity” these days on a routine basis. In high-tech alone, Leopold observed earlier this week, mass layoffs cost 60,000 workers their jobs in 2023 and “another 57,000 so far this year.”

Layoffs like these typically get little media or political attention. Why? Leopold’s just-published new book, Wall Street’s War on Workers: How Mass Layoffs and Greed Are Destroying the Working Class and What To Do About It, explores that essential question — and demolishes the standard responses we get from America’s leading corporate and political lights.

Those responses usually depict mass layoffs as the inevitable price we pay “to participate fully” in a “complex, highly technical, vast global economic system.” Our ongoing “digital revolution,” this explanation continues, has “mammoth global corporations” searching the world over for the lowest labor costs. To compete in this new economic world, we need to play along. We have no choice.

But why, Leopold wonders, are technologically advanced nations “far more dependent on global trade than the United States” — think Japan and Germany, for instance — most definitely not experiencing the same waves of massive layoffs that have bedeviled our U.S. economy?

The conventional rationale for mass layoffs, Leopold goes on to show, simply does not hold. This veteran labor movement analyst has a much more compelling story to tell.

During the Cold War, Leopold’s new book relates, established corporate leaders in the United States felt themselves under enormous “cultural and political pressure” to help meet America claim that capitalism could deliver for working people much more effectively than nations in the Soviet sphere.

In that Cold War climate, major American industries accepted the union organizing gains of the mid-20th century as a fact of economic life, and unions went on to bargain contracts — throughout the postwar decades — that significantly grew the economic security of America’s working families.

But by the 1980s the global political dynamics had changed. The global “communist threat” no longer posed a serious challenge to the capitalist world. In the Reagan years of the 1980s, Leopold relates, “the unwritten compact that had entwined organized labor within the corporate order collapsed.” The “restraints” on corporate behavior began unraveling. Mass layoffs would soon become “an increasingly common and highly profitable corporate tool.”

In this new economic environment, figures across the political spectrum would accept and even hail the unconstrained chase after ever-greater profits and wealth as an “absolute good.” This “good,” they claimed, would create “an incentive to take risks and innovate,” in the process “creating more jobs and income for everyone.”

In the real world, Leopold counters, this “absolute good” would enable “the few to make vast fortunes by destroying the livelihoods of the many.” The deregulation of Wall Street would speed this process along. By gutting antitrust enforcement and winking at stock manipulation, federal officials — under both Republican and Democratic administrations — opened the door to a massive wave of corporate mergers and acquisitions and an equally massive wave of mass layoffs.

Corporate CEOs who advanced these massive waves — at worker expense — would see themselves rewarded at levels the global business world had never ever imagined. Dwight Eisenhower left the White House in 1961 with America’s top corporate execs making 20 to 30 times what their workers were earning. Joe Biden would enter the White House 60 years later with top CEOs making 389 times what their average workers were making.

The Biden administration, to its credit, has taken steps to reverse America’s enrich-the-top economic dynamic. But our nation, Leopold argues, could be doing so much more to protect working families, and he lays out a comprehensive gameplan for what that so much more could and should entail.

The agenda that Leopold advances ranges from banning corporations from buying back their own shares of stock — a now-common maneuver that enriches top execs at the expense of investing in workers and the physical surroundings they need to become more productive — to eliminating the stock-related grants that so pump up CEO compensation.

We also, Leopold notes, “need major reforms to prevent investors and corporations from buying up companies with borrowed money and then loading the debt onto those companies, often dooming them” — while the investors walk off with big-time profits.

“For those who suffer mass layoffs in hard-hit areas,” Leopold goes on, “we need genuine job-creation programs that don’t devolve into Wall Street piggybanks.”

Leopold’s agenda for corporate change has plenty more to offer as well — like tying federal contracting to corporate behaviors. What if, for instance, the contracts the federal government cuts with corporate contractors required corporations to bargain with workers they wanted to lay off?

The logic behind this mandatory no-compulsory-layoffs approach?

“If a corporation takes taxpayer money,” as Leopold quips, “it should not be laying off taxpayers.”

Sam Pizzigati writes on inequality for the Institute for Policy Studies. His latest book: The Case for a Maximum Wage (Polity). Among his other books on maldistributed income and wealth: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970  (Seven Stories Press).