Debt “R” Us: Corporate Takeover Kills 33,000 Jobs

The Toys “R” Us mascot—Geoffrey the Giraffe—is streaming tears down his long neck.

A Sad “Toy Story.” Once the nation’s leading toy retailer, Toys “R” Us has remained profitable, selling one of every five toys purchased in the U.S. last year.

  • The superstore brought in $460 million in operating income before making its debt payments.

 

  • But now, it’s filing for bankruptcy, closing its 730 U.S. stores, and laying off 33,000 American workers.

 

  • Parents and kids are asking: Why?

Buying the Company with Its Own Money. Don’t believe the easy explanations—that Amazon and online commerce are solely responsible for bankrupting this iconic company.

  • The real culprits are the corporate-takeover specialists, including Bain Capital (co-founded by former Republican presidential candidate Mitt Romney), which bought Toys “R” Us for $6.6 billion in 2005.

 

  • In an all-too-typical Wall Street maneuver, these investors bought the toy store with its own money. Bain and its partners paid only 20 percent of the cost out of their own pockets. They borrowed the rest, sticking Toys “R” Us with more than $6 billion in debt.

 

  • In short, “Toys R Us” went bankrupt because it had to fork over $450 to $500 million a year in interest payments, eating up its earnings as a successful retailer.

After Year’s Delay, Trump Takes Action on Steel

After more than a year of delays, the Trump administration is taking action against the tidal wave of imports that is overwhelming the U.S. steel and aluminum industries, destroying high-wage jobs, devastating communities, and damaging our national security.

U.S. Industries Imperiled: U.S. steel jobs have fallen by 35 percent since 2000, and only three surviving companies operate 13 blast furnaces running continuously.

  • In the aluminum industry, 58 percent of U.S. jobs were wiped out between 2013 and 2016, and only five smelters remain.
  • Steel and aluminum are essential for modern industry and infrastructure. Aluminum is indispensable for civilian and military aircraft. As these U.S. industries decline, we are at the mercy of other economic and military powers—particularly, China.

U.S. Didn’t Start “Trade War”: The U.S. steel industry is among the most efficient and least polluting in the world. With investment in infrastructure on the way, domestic demand is increasing—and the industry should be prospering.

  • Instead, China enjoys unfair advantages because its government subsidizes its steel industry, provides underpriced or free raw materials, and “dumps” these products on global markets at artificially low prices.
  • As the Economic Policy Institute explains, the administration’s response—tariffs of 25 percent on steel and 10 percent on aluminum—isn’t unprecedented. These steps can spur international action and protect American producers until comprehensive answers are developed.

Clumsiness…and Cronyism. More than one year of delay has been costly, with imports increasing at least 19 percent over 2016.

  • Trump billionaire supporter and friend, Carl Icahn, dumped $31 million of shares in an steel import-dependent company days before the tariff announcement, making millions for himself and raising questions about “insider trading.”
  • At least 25 percent of the Keystone Pipeline’s pipes are being supplied by a steel company largely owned by a Russian oligarch.

Shareholders Get a Windfall. Workers? Not So Much.

President Trump promised $4,000 raises and millions of new jobs. The real results: stock bonanzas for top executives, and layoffs for frontline workers.

Buybacks, Not Bonuses. Over the past two months, corporations announced plans to buy back $178 billion of their stock. That’s more than 30 times the $5.6 billion in bonuses and pay increases that were announced with great fanfare.

CEOs Win, Workers Lose. Since buybacks boost share values, the winners are the wealthiest one percent (including corporate CEOs) who own 40 percent of all stocks. But buybacks come at a cost: plant closings, layoffs and cutbacks in research and development. For instance, the drug-maker Pfizer is buying back $10 billion of its own stock, while halting research on treatments for Parkinson’s and Alzheimer’s and laying off 300 employees.

Productive Workers Betrayed. The conglomerate Kimberly-Clark racked up $3.3 billion in profits last year. Now, it’s laying off 5,500 workers.

  • At K-C’s plant in Fox Crossing, Wisconsin, machine operator Jessica Schiessl recalled, “Three weeks before, we had a meeting, and they said we’d beaten and exceeded all the goals. Three weeks later they called us back in the same room and said we were shutting down. It was shocking. It made you want to vomit.”
  • With 25 years’ service, Paul Luebke said, “We took nothing and built it into a billion-dollar business. This is our reward.”

Overworked Americans Need a Real Raise – and a Nice Nap

Are you working longer hours—or even two jobs—just to make ends meet? Are you missing your kids’ soccer games to meet demands at work? Or, worse yet, are you having trouble finding enough work to provide for yourself and your family?

All of these problems may have the same root cause: Wages (adjusted for inflation) just aren’t going up. According to a recent study by the Economic Policy Institute (EPI), even with the so-called economic recovery, most Americans have gone way too long without getting a real raise.

  • Working Hard for the Money. If you think you’re making more money than years ago, you should be proud of yourself for working longer and harder. With inflation-adjusted wages practically stagnant, almost all the increase in annual earnings since 1979 (!) has been because Americans are working longer hours. On average, working-age adults put in 7.8 percent more hours per year in 2016 than in 1979.
  • Low Wages, Long Hours. Adults from their 20s through their 50s who earn the least have increased their work hours the most. That’s because they need to work many more hours to afford basic necessities.
  • Many Workers Still Losing Out. The share of young and middle-aged men who have not found jobs has nearly doubled since 1979, while the share of women in these groups who did not work for wages has declined.

Why Older Americans Are Plunging into Poverty

For Roberta Gordon, retirement is an impossible dream. At 76, she works for $50 a day at a grocery store in Corona, California. Over the years, she’s worked at many jobs that didn’t provide pension benefits. Some employers didn’t even pay into Social Security, leaving her with only $915 per month in benefits. Now that her roommate has died, her monthly rent went up to $1,040. She has run up credit card debt and sometimes gets her meals from food banks.

Seniors in Poverty: Roberta Gordon is the human face of two sobering statistics. Among Americans who are 65 or older, 12.4 percent are still in the workforce, up from three percent in 2000. Additionally, between 2015 and 2016, the share of Americans over 65 who are living in poverty rose by 14.5 percent—in just one year!

Post-Pension America: Retirees used to count on a “three-legged stool”: pensions, savings, and Social Security. However, many private-sector employers have switched from “defined benefit” plans, with guaranteed benefits, to “defined contribution plans,” shifting investment risks to workers. With stagnant wages, workers have a hard time saving.

Counting on Social Security: Many retirees count on Social Security as a major portion of their retirement income. Women get an average of $4,500 less in annual benefits than men, which is attributable to factors such as making less money than their male counterparts (and therefore making smaller Social Security contributions) and taking time to care for children and aging parents. Now, with millions more Baby Boomers getting ready to retire, President Trump and congressional Republicans are threatening to cut money from the program to pay for $1.5 trillion in tax cuts for the rich and large companies.

Companies Forced to Reveal CEO Megabucks, Job Offshoring

Your CEO could pocket more in one workday than you earn all year, setting the example for huge pay inequalities throughout your company. That’s the message from the first large US corporation to comply with a new federal rule requiring companies to reveal how much they pay their CEOs, compared to typical workers.

Not the Worst, Just the First. Manufacturing technology giant Honeywell paid its CEO $16.7 million in 2017 – 333 times the pay of its median worker who earned $50,286. So far, only about 20 companies have complied with the regulation, which is based on the 2010 Dodd-Frank financial reform law, signed by President Obama, but just went into effect. As more corporations release annual reports, look for more megabucks disclosures. And INN will report on exorbitant executive salaries, offshoring of American jobs and other outrages.

Uncovering Another Secret: The rule also encourages companies to spill the beans on another secret: how many jobs they’re shipping offshore. That’s because they don’t have to factor in these low-wage jobs when computing their typical workers’ salaries. Therefore, Honeywell revealed it has 86,092 workers overseas, compared to only 57,027 here in America.

Pay Gaps Keep Growing:  The gaps between CEO salaries and workers’ wages just keep widening. The Economic Policy Institute estimates that CEO salaries were 271 times the average workers’ wages in 2016. In this video, Money Magazine explains how CEOs rig salary structures in their favor. 

Trump’s Budget Makes Working Families Pay for Tax Cuts

In December, President Trump and the Republican Congress pushed through $1.5 trillion in trickle-down tax cuts, with big business and the super-rich pocketing 82 percent of the benefits. Now we know who Trump wants to pick up the tab: YOU.

Working Families Forgotten. In next year’s proposed budget, Trump cuts $1.5 trillion from core government programs, like the ones that help working families afford medical care, educate their kids from kindergarten through college, find and keep new and better jobs, and put a roof over their heads and food on their tables.

Let’s review that again: Under the Trump plan, corporations and the super-wealthy get to pocket nearly $1.5 trillion—that’s TRILLION—and pays for it by cutting $1.5 trillion in programs that help average families.

Americans Oppose These Cuts—What Will the Republican-Controlled Congress Do?  By overwhelming margins, Americans oppose cuts in these programs, especially Social Security, Medicare and Medicaid, which Trump promised not to harm. Now, Congress will have the last word on the budget.  Will they stand with working families or the billionaires?