Labor Day Special: Will Harris Focus on Mass Layoffs?

When "price gouging" plays out, Democrats should push to save jobs by curbing stock buybacks

Labor Day must mean more than sales events and a last day at the beach, right? Well, 10,000 hotel workers are on strike, which represents progress of sorts. And I figured I’d use the holiday as an opportunity to return to the Q and A format I often adopt. My old friend Les Leopold is the author of a fine biography of the late labor leader Tony Mazzocchi and four books on how Wall Street is abusing its power and hurting workers, most recently, “Wall Street's War on Workers: How Mass Layoffs and Greed Are Destroying the Working Class and What to Do About It.” Les explains here exactly how stock buybacks cause unnecessary mass layoffs — indirectly subsidized by the government — and hurt workers, towns, and, ultimately, the Democratic Party. First, we discuss Shawn Fain, the ebullient and effective UAW president—the most impactful since the legendary Walter Reuther—who might pull Kamala Harris over the finish line.

JONATHAN ALTER:

How important is Shawn Fain’s “Trump is a scab” chant at the DNC? Will it catch on and move votes?

LES LEOPOLD:

I’m a bit skeptical that the phrase will travel far beyond the Democratic faithful. “Scab” is a very potent word within the labor movement. But I fear the traditional labor strike culture may wane, with unions representing only 6 percent of private sector workers. In 1969, there were 412 strikes involving 1,000 or more workers. In 2023, there were only 33.

Fain, however, can move worker votes. His unabashed critique of corporate power could make a substantial difference in the Midwest. I think Fain’s efforts already are putting pressure on Sean O’Brian, the “reform” Teamster president, to stop playing footsie with Trump. If the Teamsters finally come around to endorsing the Harris/Walz ticket, you can bet that Fain is significantly impacting working-class voters.

UAW President Shawn Fain speaking at the DNC, August 19, 2024

JON:

How important is the Elon Musk interview when Trump comes out as a strikebreaker? 

LES LEOPOLD:

That depends on what the Democrats do with it. It would need to be turned into a powerful ad to be broadcast widely in the Blue Wall States. Also, I would broaden the attack by emphasizing Trump's statement to Musk, “You’re the greatest cutter.” Here, Trump is not just attacking unions but singing the praises of a billionaire who brought mass layoffs to Twitter. Praising mass layoffs should hit a very raw nerve among working people.

I would love to talk with those gearing up the ads for Pennsylvania, Michigan, and Wisconsin.

“I would broaden the attack by emphasizing when Trump says to Musk, “You’re the greatest cutter.” Here, Trump is not just attacking unions but singing the praises of a billionaire who brought mass layoffs to Twitter. Praising mass layoffs should hit a very raw nerve among working people.”

JON:

Price gouging is a good issue — and totally misrepresented as “price controls” by Trumpsters — but it will be played out soon, like “weird.” In general elections, good campaigns have new attacks or initiatives every week or so. Is preventing mass layoffs a good new issue for Harris in the fall? 

LES LEOPOLD:

I think mass layoffs could become a vital issue for the Harris campaign. As my research shows, since the 1990s, mass layoffs have been driving voters away from the Democrats, especially in Pennsylvania, Michigan, and Wisconsin. Harris would greatly benefit if she showed up at a facility scheduled to be shut down by a corporation conducting stock buybacks. John Deere factories in the Midwest would be a perfect backdrop. Deere spent over $7.2 billion on stock buybacks in 2023 and is now laying off 1,000 workers.

Harris could expand a plank currently in the Democratic Party platform, which states, “Taxpayer money should not be used to pay out dividends, fund stock buybacks and give raises to executives.” The platform only refers to Covid relief funds, but Harris could expand that and say, “Taxpayer money should not be used to lay off taxpayers and payout stock buybacks.” That would apply to the $700 billion per year that the federal government gives to private corporations via federal spending. Harris should make clear that corporations receiving taxpayer money could still reduce their payrolls, but not through compulsory layoffs. Instead, they could use stock buyback money to create wage and benefit packages encouraging voluntary layoffs. (It is not unusual for management employees to be offered voluntary packages).

With more than $770 billion going to stock buybacks in 2023 (and $1 trillion projected for 2025), corporations have more than enough money to provide ample voluntary buyout packages for workers when necessary. By supporting this policy, Harris and Walz would let workers know that they understand that involuntary layoffs are traumatic events. They could make clear that creating new jobs in the future is essential but does not address the harm caused by mass layoffs. It’s nearly impossible to make ends meet if you don’t have a job, even if a new [worse one] might come along.

So, if Harris wants to hit a home run, she should find a mass layoff that can be stopped through state and federal pressure and incentives. Do what Trump and Pence did with Carrier Corporation in 2016-17 to prevent it from shifting 800 jobs to Mexico. That government intervention was wildly popular across the political spectrum. If they could find a pending shutdown in Michigan, for example, Whitmer, Harris, and Walz could team up to prevent it. Maybe an October surprise?

JON:

Will Harris match Biden’s 57 percent of union households? Does she have to?

LES LEOPOLD:

I don’t see any reason why she can’t. Unless something new comes out, there aren’t any anti-union issues in her background. “I worked at McDonald’s, and he’s a billionaire,” should help her connect with union members. Trump/Musk strike-breaker ads would also help. Does she need to do as well? She must come close to Biden’s support in Michigan, Pennsylvania, and Wisconsin. Those states are just too crucial, and that’s where union members matter. She has a chance to do even better in Arizona and Nevada, too, where many, if not most, of the union service sector members are women and of color.

There’s also a chance she will do well with the construction unions, given that the Biden infrastructure investments have created an employment boom for those workers. Although the new building trades jobs are not permanent, many construction projects will last several years. I think that will translate into solid support for Harris.

If she could stop a unionized facility from shutting down in the next two months, she could do even better than Biden.

JON:

It’s frustrating how many people don’t understand the real issues.

LES LEOPOLD:

It's not just about bringing jobs back. It's about stabilizing jobs that are already here. We estimate that thirty million people have gone through a mass layoff. Last year alone, a quarter of a million people in high-tech, a booming industry, went through mass layoffs, and another 50,000 have been laid off this year. Bringing jobs back doesn't deal with this incredible instability, which didn’t exist on this scale before 1980. The idea of layoffs during good times and bad times is new. Corporate executives once viewed mass layoffs as a sign of failure — now, they view them as part of their success.

JON:

You mention in the book the stress of being laid off, which people who haven't been laid off may not quite understand. What does it do to people?

LES LEOPOLD:

Besides being a financial wrecking ball, the stress of a layoff is so severe that it causes an increased incidence of fetal damage. It's the seventh-most stressful event that can happen in your life. It's more stressful than an event that causes rapid hearing loss, vision loss, or divorce. It increases the suicide rate, increases the likelihood of drug problems, and creates an enormous amount of tension.

I started every chapter in the book with a quote from a laid-off worker — because they felt so let down, so hurt after twenty or thirty years of service. This has been going on for decades, and we've accepted it fatalistically as something that just happens in a modern economy due to technology and global trade. But that just isn't the case.

JON:

Before Reagan caved to Wall Street on stock buybacks, there were limits.  A company could not devote more than 2 percent of its profits to stock buybacks. What is the average in big companies now?

LES LEOPOLD:

It’s about 70 percent. Some companies do more than 100 percent. They go deep into debt to do stock buybacks.

JON:

So, if that law was changed back to 2 percent, and if Democrats prioritized that, would that address the problem?  

LES LEOPOLD:

It would address a good piece of the problem. The other piece of the problem is leveraged buyouts. Before the 1980s, leveraged buyouts were frowned upon. They just weren't done. It wasn't like suddenly, someone invented the idea of a leveraged buyout.

JON:

Can you offer a quick definition for Old Goats readers unfamiliar with it?

LES LEOPOLD:

A leveraged buyout is when you buy up a company using only 10 percent of your capital and borrowing the other 90 percent [the percentages can vary]. You then place that 90 percent as debt on your purchased company. Now, the company has a huge debt load to service, and you first lay off workers.

There is a famous late1980s case involving RJR Nabisco — chronicled in the bestseller Barbarians at the Gate — when it became clear to Wall Street financiers that this wouldn't be stopped or regulated. Rep. Dan Rostenkowski, the chair of the House Ways and Means Committee in the ‘80s, wanted to stop it. He said, “Hey, all this debt servicing is tax-deductible — we're financing these leveraged buyouts.” He was a powerful guy, but they crushed him when he brought that up. He was on to it.

We’ve got to put a stop to it. There have been tens of thousands of leveraged buyouts since then, and [most] lead to an unnecessary mass layoff. The main purpose is to service the debt and enrich a few people.

JON:

They're not called LBOs so much anymore — that word is kind of out of fashion. What we're talking about is private equity. Some of these investments strengthen companies; many do not.

LES LEOPOLD:

There are now comprehensive studies. For example, the bankruptcy rate for these LBOs or private equity entities is 20 percent. For the average company, it's 2 percent.

JON:

According to your book, the year 1982 is crucial because that’s when stock buybacks become the norm. Then, after Clinton came to office, he had an opportunity to do something about it. What should he have done that he didn't do?

LES LEOPOLD:

He should have put a lid on leveraged buyouts and stock buybacks because that was the next wrecking ball. That would have stabilized the employment market. He then proceeded to take off all kinds of guardrails and allowed for mergers and acquisitions on a vast scale, which, until then, had been mostly prohibited in insurance and banking. As my Wall Street friends have taught me, you will lay off people when you complete a merger and acquisition. You don't need two bookkeeping departments. And with mergers and acquisitions, borrowed money is always involved. Clinton could have slowed it down.

JON:

But isn't it hard to make that argument, either in the 1990s or now, when the economy is doing so well? The economy lifted millions of people out of poverty in the 1990s. If you look at the establishment of the black middle class, it's a product of the unbelievable economic dynamism of the 1990s. So it's a complicated story.

LES LEOPOLD:

It is, but many analysts underestimate job instability. It's one thing to have low unemployment. But if there's a mass layoff or plant closing in rural Pennsylvania, and you have 1,000 people looking for jobs, it's a life wrecker. You're competing with your neighbor for the next job at the Dollar Store. If you consider what's happening to the average working person going through this, it's horrendous. We've had meetings with steelworkers where I've asked how many people have gone through a mass layoff. In a class of fifty people, forty-eight raised their hands. How many had gone through more than one? Ten, twelve, thirteen. We asked them to write down how it made them feel about politics, and those who wrote comments always said they felt betrayed and let down by Democratic liberals. Nobody cared about what happened to them. That story is buried beneath the good news that you described about the rising middle class.

JON:

Can you give an example of how this looks for the average American worker?

LES LEOPOLD:

Sure. In 2022, a Siemens plant shut down in Olean, New York, a rural, formerly industrial area. Nearly 500 workers lost their jobs. Sure, there's a chip plant being built up in Buffalo, but not for them. How do these workers benefit from the new economy? Maybe their kids will. Perhaps they'll feel better about the economy someday, but when I interview them, they're bitter. Why did this plant that was open for a hundred years suddenly go down? Why is the government giving this company a $750 million defense contract to do something else? Why was the president of Siemens at the signing of the infrastructure bill when she laid off 1,700 American workers and none in Germany? It's a puzzle to people, and they blame the people they thought were their friends.

JON:

In your book, you focus intently on the Blue Wall states and what you call the WWC, the white working-class voters, who are crucial to the 2024 election in battleground states. I found the following statistic fascinating — a 31 percent loss in manufacturing jobs since 1990 in Pennsylvania, Michigan, and Wisconsin. One in three white working-class counties has suffered massive layoffs. In contrast, half as many have suffered layoffs in managerial counties, which helps explain why those suburban counties that used to be Republican are increasingly Democratic. 

LES LEOPOLD:

Exactly.

JON:

But I did wonder — quite a bit of this is simply foreign competition, right? If you can build a cheaper factory in Asia, you will do it. And there's not that much that can be done about that.

LES LEOPOLD:

I want to challenge that assumption, Jon. Take Carrier Air Conditioning as an example; Trump made that one famous. His effort to save those jobs — I believe he saved 800 of the 1,100 jobs — was wildly popular in the polling among Democrats, Republicans, and independents. What's the story behind that? It's fascinating. United Technology is the parent company of Carrier Air Conditioning. A hedge fund raid of United Technologies by 50 or so hedge funds bought lots of United Technology’s stock and then demanded a stock buyback of $5 billion. United Technologies announced a $5 billion stock buyback and then proceeded to try moving Carrier from Indiana to Mexico to save $60 million to finance the stock buyback. It had nothing to do with foreign competition, and it was their most profitable division. But they saw that they could save $60 million a year — not chicken change — and could use that to help finance the buyback.

JON:

Trump made a lot of hay on that one. Did he do anything else to protect white working-class workers?

LES LEOPOLD:

Some steelworkers thought he did a good job putting tariffs on steel. But the problem was not just Trump. The problem was the trade union movement. I was hollering at them to round up every laid-off worker they could find, union and nonunion, and bring them to Washington with signs saying What about us? They could have found 1,000 similar cases, but they let it drop. They thought it was terrible for the Democratic Party to let Trump be seen as successful, but they should’ve put his back against the wall.

JON:

What can the Dems do going forward to beat Trump on this issue?

LES LEOPOLD:

Whatever politician puts mass layoff front and center in their platform will be popular. Many mass layoffs could be prevented by stopping or slowing leveraged buyouts.

That was the secret of what the German workers did with their “codetermination” system with Siemens. Four thousand people were supposed to be laid off in Germany, and six plants were supposed to go down. Because of their codetermination system, the workers have half the board. They did a year-and-a-half-long investigation, bringing in experts to see what impact the closures would have on the workers and their communities, and slowed it down so that some workers near retirement could retire. Then, they got the company to agree to no forced layoffs. They had to buy people out voluntarily. Well, is that so hard? If you want to lay off workers, do it voluntarily unless the situation is dire.

JON:

A lot of white-collar companies do that.

LES LEOPOLD:

Yeah, but it should become the norm.

JON:

You argue that WWC voters are not more conservative on social issues. They're not clinging to their guns and religion. That's a myth. What they care about is the economy.

LES LEOPOLD:

There were two significant findings of this book. One was that mass layoffs drive a lot of the politics of Blue Wall states. The second is that white guys have gotten much more liberal on critical issues like homophobia. I was shocked to see this. Should gay couples be able to adopt children? Support for that shot up from 30 percent to over 70 percent.

But you've got a slew of counties that happen to be whiter, poorer, and less educated in those three states, which have suffered mass layoff rates above 30 percent. A  third of their workforce has gone through layoffs, and they are the ones that have gone increasingly to the right.

JON:

They’re also the ones who have been suffering from deaths of despair and the fentanyl epidemic.

LES LEOPOLD:

Absolutely.

JON:

Do you have an aggregate figure on the number of mass layoffs in 2023?

LES LEOPOLD:

The only figure I trust is 130,000 layoffs in high tech in 2022 to 360,000 in 2023.

JON:

Now that it's Democratic elitists who are starting to get laid off, maybe it'll get the attention of the party.

LES LEOPOLD:

I hope so. But there’s a distinction to be made. The software engineer who gets laid off can get another pretty decent job. But Amazon shift workers who get laid off — where do they go? They go to another crummy job and get laid off from that. Working people commit to their employer and their coworkers. It’s human nature to try to make a good product. The first thing workers see after a stock buyback or leveraged buyout, and I get this firsthand from steel workers, is that goal being compromised. You start seeing the company do strange things. They start to cut back on health and safety, environmental controls, they're not replacing workers when they should, they’re stretched thin. You start feeling this tension at work build up, and then, bam, you get an announcement. If you're lucky, as a union person, you get sixty days’ notice and some severance payments, but you're out. If you're out in a rural area, you are really out. Economists say, “Oh, move to where the jobs are. Pick up and move to the suburbs.” But those who've had to move know it's difficult.

 JON:

It sure is. Thanks, Les.

Note: My new book, “American Reckoning: Inside Trump’s Trial — and My Own,” out on October 22, is much more than what you read in these pages last spring. It’s a part memoir, part barbed trial diary, and part cri de coeur for democracy, with war stories from my interviews with presidents and new details about Nancy Pelosi’s brilliant efforts to get Biden to stand down. See blurbs from Stephen Colbert, Lawrence O’Donnell, Judge George Grasso, and more. Please pre-order it!