Private Equity Firms, Our New Corporate Masters?
Workers returned Tuesday to the job at Stella D’oro Biscuit Co. in the Bronx after a judge ordered the company reinstate the 136 employees who had remained strong throughout a brutal 11-month strike. But before they could even walk through the doors, they were greeted with the anti-union response by the company’s private equity firm owners, the 21st century’s mutation of the robber barons: Brynwood Partners announced it would shut down operations in October. (”Private equity firms” is the euphemism those leveraged buyout corporations adopted after leveraged buyout got a bad name in the 1980s.)
Established more than 75 years ago, Stella D’oro is a nationally known maker of specialty baked goods and until recently was a family-owned business. But a series of corporate buyouts ultimately resulted in Brynwood’s 2006 purchase of the company. And a private equity firm’s only reason for existing is to make money-lots of it. Even robber barons ultimately had to ensure they had enough workers on the job because those companies made money by making things. Not so for today’s private equity firms. Closing shop and making off with the profits is what they do.
Wal-Mart: Recession Profiteer
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Bank and insurance CEOs aren’t the only ones getting rewarded for horrendous behavior in this recession. There’s Wal-Mart, whom Newsweek now has anointed as “Our Corporate Savior.” (Hat tip to dakine01.)
“Wal-Mart recently announced that its same store sales in January were up 2.1 percent, which was more than forecast. With the company’s huge network of stores and ability to strong-arm suppliers, Wal-Mart offers shoppers good merchandise at prices which becomes more and more attractive as the downturn continues.”
The brutal truth is that Wal-Mart is profiting in the midst of misery because of policies that, like those of the financial services industry, fueled the nation’s economic disaster. While banks rolled up and peddled collateralized debt packages like cheap tuna wraps, Wal-Mart’s assault on America’s economy came from another angle–everyday low wages. By paying the vast majority of its workers little more than the minimum wage and offering health care plans most can’t afford, Wal-Mart shifted its corporate expenses to taxpayers.
If CEOs Take Our Money, We Can Limit Their Pay
We applaud—big time—the move by President Obama to limit the pay of CEOs on the taxpayer dole. If they can take our money to survive, they can cut back on the yachts and third homes. The Obama plan would cap salaries at $500,000 for top executives at firms that accept “extraordinary assistance” from the government.
As the Economic Policy Institute noted, the financial services industry pays its CEOs more than any other industry—in 2007, those salaries averaged nearly $18 million. Even the median salary—the typical CEO salary, with half of all CEOs earning less—is massive, with median CEO pay in financial services roughly $16.5 million in 2007.
Contrast this with the average wage in 2006 of a U.S. worker—$37,078. The median wage is even lower—$24,892.
