April 28, 2024 • 27 mins
Newt talks with Les Leopold about his new book, "Wall Street's War on Workers". He explains how corporations in the U.S. have used mass layoffs and stock buybacks to enrich shareholders at the expense of employees. Leopold argues that these practices have contributed to the decline in support for the Democratic Party among urban and rural workers. He suggests that the party has failed to address the issue of mass layoffs and has instead supported policies that have led to job instability. Leopold proposes solutions such as limiting stock buybacks to 2% and preventing companies with government contracts from laying off workers.
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Speaker 1 (00:05):
On this episode of News World. In Wall Street's War
on Workers, author Lesleopold shows how healthy corporations United States
have used mass layoffs and stock buybacks to enrich shareholders
at the expense of employees. He explains why mass layoffs
occur and how our current laws and regulations allow companies
(00:28):
to turn these layoffs into short term financial gains. But
how have these US labor practices had an impact on
our social and political life. Democrats, who inarguably lost long
standing support of millions of urban and rural workers and
wall Street's War on Workers explains why here to discuss
(00:49):
his new book, which I think is a fascinating thesis.
I'm really pleased to welcome my guests, Lesleopold. He is
a co founder and executive director of the Labor Institute,
a nonprofit organization. Less welcome and thank you for joining
(01:16):
me on News World.
Speaker 2 (01:17):
Thank you so much for having me, mister speaker.
Speaker 1 (01:19):
Can we start with the initial sense of history of
the Democratic Party, which certainly from nineteen thirty two on
was the party of working class Americans, and gradually that
seemed to change. But can you talk first about what
was the nature of that Democratic Party that at one
time had enormous loyalty from working class voters.
Speaker 2 (01:43):
Well, that Democratic Party was squarely behind the working class
aims and ambitions. The idea of full employment, the idea
of rising wages was essential to that Democratic Party. Should unemployment,
that Democratic Party would find ways to put people to work.
(02:04):
It was unabashedly in support of working people. It was
critical from time to time of corporations, and Wall Street
wasn't hardly even mentioned in those days. But it was
also a party of regulation. That the idea was to
tame the capitalist system so that working people had a
better chance, and it was very clear to working people
(02:26):
I think across the country that that's what the Democratic
Party stood for.
Speaker 1 (02:30):
Well, in that period, being a working person genuinely produced
a pretty decent life and ability to buy a house,
and ability to look forward to a pension and a retirement.
I think my parents' generation, my father was a Democrat,
very loyal to Roosevelt and Truman and felt that the
(02:51):
contract they had was working. And then it began to
really decay. I mean, while Jimmy Carter in nineteen seventy
six is down to fifty two two percent among the
white working class and as you point out, it just
keeps going down, and by Biden in twenty twenty, it's
down to thirty six percent of the white working class.
What happened in that process.
Speaker 2 (03:13):
Well, I really struggled to try to understand that, and
I think the primary determinant was the inability of the
Democratic Party to deal with mass layoffs. Prior to nineteen
eighty or so, layoffs were something that corporate executives were
embarrassed about. It was a mark of shame. They didn't
(03:36):
want to do it. They understood that during recessionary periods
mass layoffs had to happen, but they believed as soon
as the things turned around, they would hire back as
many of the workers as possible. That changed, and what
happened was I think the Democratic Party didn't realize that
many of the policies that it supported, especially the deregulation
(03:58):
of Wall Street, was making mass layoffs something that would
happen in good times as well as bad times, and
they took the blame for it. And I think we
have very strong statistical evidence, especially in the blue Wall
states of Pennsylvania, Michigan, and Wisconsin, that the counties that
suffered the highest degree of mass layoffs between nineteen ninety
(04:20):
six and twenty twelve. This is long before Trump lost
the most Democratic votes, and the counties that suffered the
fewest mass layoffs saw an increase in the Democratic votes.
And those counties tended to be higher income, better educated
counties usually around the wealthier suburbs, and the rural counties,
(04:41):
which tended to be lower educated, lower income, and mostly white,
they got clabbord with mass layoffs. They withdrew from the
Democratic Party. On average, we looked at there were one
hundred and twelve counties that we would call white working
class counties in those Blue Wall states. We found, on average,
thirty three percent of the working people in those counties
(05:05):
lost their jobs due to a mass layoffs between nineteen
ninety six and twenty twelve. And by a mass layoff,
we're talking about fifty more workers laid off at the
same time. That's a calamity on two fronts. Imagine you're
in rural Pennsylvania. Your facility goes down and there's a
thousand of you looking for a job. At the same time,
(05:26):
your friends and neighbors and co workers are all running
around trying to get that last job at Walmart or
the dollar store, etc. It's humiliating and extremely difficult as
a result. One thing we do know now is that
mass layoffs are an incredibly traumatic event. We have studies
now that show this. Losing your jobs the seventh most
(05:48):
stressful event, rank more stressful than divorce, a sudden or
serious impairment of hearing or vision, or a death of
a close friend. So if you put well, we have
to make overall since nineteen ninety six, thirty million people
have gone through mass layoffs. You're talking about a lot
of traumatic events, and that's going to create frustration, anger,
(06:11):
and disappointment. And the Democrats have taken the brunt of it,
and I think they drank the kool aid that if
you just deregulated Wall Street, all good things would happen,
all boats would rise, etc. I think you saw this
even better than I did. That it was a problematic process.
Speaker 1 (06:28):
You quote Senator Chuck Schumer back in twenty sixteen saying,
quote for every blue collar Democrat we lose in western Pennsylvania,
we will pick up two moderate Republicans in the suburbs
in Philadelphia. And you can repeat that in Ohio and Illinois, Wisconsin.
Didn't that actually turn out to be a gamble that
(06:50):
didn't work well.
Speaker 2 (06:52):
Fostian bargain. To be sure, Chuck Schumer, I'm sure regrets
having made that statement, and he's running around toygol. He
had to turn that around, as you could well imagine.
But that statement turns out to be true on one level,
a disaster on another level. In fact, in the states
that he mentions, the data shows that they did gains
considerably in those suburbs. But it's a gigantic mistake to
(07:16):
write off any group of people got off. To tell
you this, mister speaker, it's in your DNA. You don't
write off voters ever. You just don't do that. What
you try to do is understand what are their concerns,
what are they really worried about? And job instability, I
would argue, if not the number one issue in the
country is darn close to it, and you have to
(07:39):
speak to that job instability. And Democrats who have not
written off those voters like Sharon Brown and Ohio and
has targeted Wall Street, They've run way ahead of the
national Democrats in those states that have turned red.
Speaker 1 (07:54):
The classic liberal analysis rejects your economic argument. Hillary Clinton said,
you know to just be grossly generalistic. You could put
half of Trump's supporters into what I call the basket
of deplorables. The racist, sexist, homophobic, xenophobic, islamophobic, you name it.
(08:17):
And unfortunately there are people like that. So their analysis
was somewhere between race and ideology that somehow had alienated
these voters, not economics.
Speaker 2 (08:29):
Right. I'm sure she'd like to take back that statement.
In all due respect, she's wrong. We had to investigate
that for this book. I had to convince myself whether
that argument was true or not, because if it was true,
then my economic analysis wouldn't hold. But what we did
was we were fortunate. As you know, there are these
very large voter surveys that exist, fifty one hundred thousand
(08:53):
voters that they track over long periods of time, and
they ask them a lot of interesting questions, and we
isolated twenty read hot button social issue questions exactly the
kind of thing that Hillary Clinton was talking about, the
deplorable questions. For example, here's one, should gay and lesbian
couples be permitted to adopt children? Right? If you're homophobic,
(09:17):
you're going to say no. Right. The number of people
who agreed that they could adopt children. In nineteen ninety
six or so was thirty five percent. Now it's well
over seventy five percent. Of those twenty three questions, we
could not find any that had gone down, and half
of them there'd been a more liberal direction as opposed
(09:39):
to illiberal. So it turns out that the white working
class is not becoming more deplorable. They're becoming more and
more liberal. Even on the question of immigration. This is
the one that really shocked me because I didn't expect it.
We went and checked the data several times, we thought
it was wrong. Back couple of decades ago, the question
(10:02):
was should illegal aliens, illegal immigrants be permitted to become
citizens if they've been here three years, paid their taxes,
have no felonies. In other words, they're part of our
working economy. You would think people would be outraged against that. Well,
those who agreed with that statement jumped again from thirty
something percent to over sixty percent. Two thirds of the
(10:25):
white working class today believes that we should basically have
a path to legalization for the millions of immigrants that
are here illegally, unlawfully undocumented. It's a shame that Schumer
and Pillary. Clinton didn't look at that data because I
think they would have found that the working class is
not all that different from the managerial class when it
(10:47):
comes to social issues. What they're really concerned about is
job instability. And in this country, if you don't have
a skill that is easily marketable where you can start
a podcast, write a book, or if you don't have
one of those skills and you're subject to mass layoffs,
you're in trouble. You feel economically insecure. You know, this
(11:10):
is the other part of the story. Those workers were
told by both parties that, look, you may be having
it rough because of globalization, technology, blah blah blah blah,
but your kids are going to do better because they're
going to be a bit better educated, they're going to
get jobs in the high tech sector. Well, last year,
two hundred and sixty two thousand workers in the booming
(11:34):
high tech sector went through mass layoffs, and another seventy
five thousand so far this year. There is no place
that provides stable employment anymore. And that is a problem
for American democracy, and it's going to be a problem
for both parties right now. The Republicans, I think are
benefiting from this but they're going to have to deliver.
It's going to be very difficult to deliver because to
(11:56):
stop mass layoffs you have to stop certain practices that
are going on right now, primarily driven by Wall Street,
and that's going to be difficult. As you well know.
Speaker 1 (12:20):
You don't really make an argument, which I think is
a really important argument to look at that automation, whether
it's artificial intelligence or robotic or whatever, is not really
the driving force here, that in fact, it's corporate behavior
that is the driving force. Can you walk through that
(12:41):
just for a second, what your analysis is on why
it's not a function of modernization and automation that is
driving this.
Speaker 2 (12:50):
That particular chapter came about because the publishers said to me, Hey,
I'm reading your book. The first thing I'm thinking about
is AI. I said, wow, okay, let's look at that.
It's always been the case that we've all been fascinated
by new technology. One of the biggest moves towards automation
took place actually doing World War Two, and of course
(13:13):
what followed World War Two is one of the largest
booms ever in American history that your parents experienced all
the way from World War Two, you know, through really
up until the end of the nineteen sixties early nineteen seventies.
So automation has always been something that we've been worried about.
But you know, there's been a lot of studies done
about how long it takes for automation to actually have
(13:36):
a major impact. Of course, look, we don't have elevator
operators anymore. We don't have operators anymore for the most part,
but the change is usually gradual. Challenger and Company does
a report every month about playoffs, and I checked the
report for January and they actually have it out a
little section on has layoffs from AI. This is quite remarkable.
(13:58):
So there were eighty seventh thousand layoffs in January. The
number of layoffs attributed to AI was three hundred and
eighty seven. It's just not a fast process. And meanwhile,
though layoffs that are driven by leverage, buyouts, private equity
deals and stock buybacks, they happen really rapidly. To finance
(14:23):
a stock buyback, and just make sure all your listeners
know what a stock buyback is. The company uses its
own earnings, goes into the stock market, buys back its
own shares, which boosts the price of the stock before
nineteen eighty two, this was considered stock manipulation. You're not
supposed to go manipulate your own shares because they thought
(14:44):
that contributed to the Great Crash. In nineteen twenty nine,
there was a limit to the percent of profits that
you could use for stock buybacks. It was two percent,
and then they lifted the ban in nineteen eighty two.
Today it's nearly seventy percent of all corporate offits go
to stock buybacks. Seventy percent, So that's a lot of money.
(15:05):
And to get that cash, one of the first things
you do is layoff workers, and if you can find
a way to do it, you do it. The second
big thing is when a company buys another company or
a private equity deal takes place. Usually most of the
deal is borrowed money, and that borrowed money is then
placed on the purchase company, like they did on bed
(15:27):
Bath and the Yond I think went through one of
these not that long ago, but anyway, and Twitter, you
put the debt on the company, and then the debt
service becomes the cost of the company to pay for
that debt service. Layoffs begin. When Elon Musk bought Twitter,
the debt service payments went from fifty million dollars a
(15:50):
year to two billion. He laid off half the workers.
He had to because I had to service that debt.
Both these things could be moderated with I think thoughtful policy.
Speaker 1 (16:02):
You spent a fair amount of time talking about Mingo
County in West Virginia. Well, wasn't that a function of
regulation rather than stock buy back? Isn't the collapse of
the coal industry largely driven by the government.
Speaker 2 (16:14):
The collapse of the coal industry is a complicated story.
I used the Mingo County example. That's a very good
point you're making there. I used that story because the
vote for Bill Clinton was sixty nine point seven percent.
The vote for Joe Biden was thirteen point nine percent.
So there was an enormous collapse in a county that
was so democratic. Where the Coal Wars took place in
the early twentieth century, it was basically a war zone
(16:37):
and then an occupied territory. It was only when Roosevelt
came basically to support the United mine Workers that the
siege was lifted, and they were ever thankful that they
voted Democrat forever. What led to the collapse of coal
mining jobs across Appalachia I don't know that we can
pin down our regulation. You certainly can't pen it on
(16:57):
stock buybacks. Either. Has a lot to do with the
shift from eastern coal to western coal. Actually it has
to do with lack of regulation table the mountaintop removal
that allowed huge pieces of equipment to come in. And
there's a case where you have certain kind of I
don't know if you call that automation, but a different
kind of production process lost a lot of jobs. Where
(17:17):
Wall Street does come in, however, has to do with
the feeding on the carcasses. The Wall Street vulture capitalists
come in. They try to buy up the collapsing companies
and then eliminate things like retirement benefits for co workers,
which is a terrible thing to do just to have
rich wall Street. I'm using that example to show that
(17:40):
it can't be racism, sexism, etc. It just couldn't be
that caused the collapse of the Democratic Party of Mingo County.
It can't be that those people are deplorables. The other
part of the story is what the Democrats historically would
do in that kind of situation is come in with
job programs. It would have been possible to go all
over or Apple Achia sit down with people and say
(18:02):
what do you need. Well, we need our schools we built,
we need better roads, we need the rivers cleaned up,
we need internet, we need a lot of infrastructure. Mingo
County lost the most cold jobs of any county. This
county has twenty five thousand people, lost three thousand coal
jobs in nineteen ninety six and twenty twenty. That's the
most of any county in the entire country. So the
(18:23):
Democrats historically would come in and create jobs. Even Jimmy
Carter did that. And you know, we could have an
argument about whether that's the right way to go, but
the wrong way to go was to do nothing. Because
what happened was free enterprise did come in in the
form of drug stores that became pill mills prescribing opioids,
(18:45):
and two drug stores ended up going into a great
free market competition. They figured out a system to put
out one prescription per minute. One of those drug stores
ranked twenty second in the country in the county of
twenty five thousand people in opioid prescriptions. And you're counting
all the big drug stores in New York, Washington, Boston,
Los Angeles. I think about if you lived in that county.
(19:08):
You see cars lined up to buy drugs. You have
very few new jobs being created. The drug stores are
not hiring a lot of people. You've lost three thousand
of the best paying jobs in all of West Virginia.
I mean, despair would be the feeling I would have.
And then that despair turns to anger, and the Democrats
got the anger, and you saw West Virginia flip dramatically.
Speaker 1 (19:44):
What would you do? What are your solutions?
Speaker 2 (19:47):
I would take the stock buybacks back to two percent.
I think we had a very prosperous country that way.
That's number one. And also there's all sorts of tax advantagers.
We're giving Wall Street the wealthiest of the rich. They
don't need them. The second thing I would do is
I would limit the amount of borrowed money you can
do for a leverage buyout. But that's small potatoes in
a way. The big one I would do as you know,
(20:09):
and God, you've seen this better than almost anybody anybody
I've ever met. The government puts out a lot of contracts.
I think it's roughly seven hundred billion a year in
government contracts that go to corporations. How about one little
provision that says, if you're going to take taxpayer money,
(20:30):
you can't lay off taxpayers during the life of this contract.
That provision right there would bring mass layoffs way down.
And I can give you an apocryphal example. You remember
Carrier air Conditioner where Trump intervened and kept the plant
from moving to Mexico. And it was twenty sixteen seventeen.
(20:52):
They asked the CEO of United Technology, which owns Carrier
air Conditioning, why did you go along with this deal.
Here's what he said. He said, I was born at night,
but not last night. We get ten percent of our
money from the federal government. He did not want to
be in the crosshairs of the administration and the administration
(21:15):
because they do a tremendous amount of defense work and
they didn't want that work to go to somebody else. Well,
I think this could be very fair. You don't have
to take that government contract. We're not saying that all
corporations can't do mass layoffs. That would be very difficult
to do. The unintended consequences might be enormous. But you
could tell somebody, look, you're getting seven hundred and fifty
(21:36):
million dollars this year. No layoffs, no mass layoffs. You
can do voluntary mass layoffs. In other words, if you
want to do a layoff, you can provide enough money
so the person voluntarily leaves. You can do that, but
you can't just get rid of them. That then raises
the question do corporations have the flexibility to live that way?
(21:58):
The example I have in the book about Semens, I
think shows that it does. When I went to this book,
I did not think that corporation could prevent themselves from
doing mass layoffs. I really didn't. I thought that it
would lead me more towards the social wage. How do
you help people that are laid off? That's sort of
the traditional kind of do good way of dealing with
(22:18):
the problem. Then I ran into Semens Semens Energy, which
is controlled by Semens in General. Semens in General has
four hundred thousand employees German based company around the world.
Semens Energy has ninety thousand of them, and they decided
a few years ago to get out of the I
think they were making compressors for fracking, and they decided
they didn't want to do that anymore. So they're going
(22:39):
to lay off seven thousand people. Seventeen hundred in the
United States, three thousand in Germany. Well in the United States.
Almost all of them turn out to be union plants.
Two of them were steel workers, one of them in olean,
New York, right above that southern tier of New York,
right above Pennsylvania, very rural, used to be very industrial
with Corning and all these other companies there. Now it's
(23:01):
difficult five hundred steel workers with very good paying jobs
out the doors. And in Germany something else happened there.
They have co determination, something that we sort of pushed
for very strongly. After World War Two. Americans wanted workers
to be on the boards of directors of German corporations
because they felt that the workers would be less prone
(23:23):
to be go fascist again, where the corporation leaders were
very prone to do that. So they thought this was
a nice stabilizing thing. So half the seats of what
they call a supervisory board board of directors are workers.
The tiebreaker is the CEO chosen by the supervisors. That
workers have a lot of power. They did a lot
of investigating of the problem, and they're coming up with
(23:46):
all kinds of different solutions. Finally, this is what seemans
agrees to. No compulsory layoffs, only voluntary layoffs. And the
second thing they agreed to, and this was the stunner
to me. This shows about corporate flexibility. Six facilities in
small towns were going to be shut down. Six they
(24:07):
agreed to put a different product than all the six
plants to keep them open, so it wouldn't cause the
kind of community economic harm that's Semens. And this is Germany,
an export driven economy, where you'd think they would be
loath to do something like this. They did it. They're prospering.
And in the United States seventeen hundred workers lost their
(24:28):
jobs by forced layoffs. Semens in Germany, no force layoffs.
If they can do it the here, they can do
it here, and we should have held their feet to
the fire and we didn't. This is the interesting thing.
Semens in fact, has a very large government contract they
provide I think something like three quarters of a million dollars.
I think that might be a two year contract. They
(24:51):
would have agreed to no compulsory layoffs, Are you kidding?
They would have immediately agreed to that. If that's what
they had to do to sign that contract. They would
have agreed. They didn't Germany, they could do it there
would have be an easy argument to make. These big
companies are really flexible. They have very complex systems that
they can rearrange. For example, in Pennsylvania their layoffs going
(25:11):
on at the UPS. UPS has the ability to move
its delivery around fifteen ways to Sunday. They could avoid
compulsory layoffs. They want to do layoffs, fine, bid up
the price until worker voluntarily goes. And workers are in
all different pages of life. You know somebody in your
retirement might take that package and go readily. It could
(25:32):
be done. I think we're at the stage in America
we have to do something about mass layoffs before it
really tears us apart.
Speaker 1 (25:38):
Do you make a very compelling case? And your book
has both a tremendous amount of information and I think
poses some very important, challenging questions for the next administration.
I think it's a very important book in that sense.
And Lesa, I want to thank you for joining me.
Your new book, Wall Street's Warren Workers is available now
(25:59):
on Amazon in bookstores everywhere. I think it's going to
be a book people going to talk about a lot,
and it raises a whole new set of questions that
affect tens of millions of Americans. I want to encourage
our listeners who'd like to learn more to visit your
website at the Laborinstitute dot org. And I really appreciate
you joining me.
Speaker 2 (26:19):
Thank you so much for having me and for your
kind words.
Speaker 1 (26:26):
Thank you to my guest, Lesleopold. You can get a
link to buy his new book Wall Street's War and
Workers on our show page at Newtsworld dot com. Newsworld
is produced by Gingrish three sixty and iHeartMedia. Our executive
producer is Guernsey Sloan. Our researcher is Rachel Peterson. The
artwork for the show was created by Steve Penley. Special
(26:49):
thanks to the team at Gingrish three sixty. If you've
been enjoying Newtsworld, I hope you'll go to Apple Podcasts
and both rate us with five stars and give us
a review so others can learn what it's all about.
Right now, listeners of Newtsworld, consign up for my three
free weekly columns at gingrishwe sixty dot com slash newsletter.
(27:10):
I'm Newt Gingrich. This is Neutsworld.
On this episode of News World. In Wall Street's War
on Workers, author Lesleopold shows how healthy corporations United States
have used mass layoffs and stock buybacks to enrich shareholders
at the expense of employees. He explains why mass layoffs
occur and how our current laws and regulations allow companies
(00:28):
to turn these layoffs into short term financial gains. But
how have these US labor practices had an impact on
our social and political life. Democrats, who inarguably lost long
standing support of millions of urban and rural workers and
wall Street's War on Workers explains why here to discuss
(00:49):
his new book, which I think is a fascinating thesis.
I'm really pleased to welcome my guests, Lesleopold. He is
a co founder and executive director of the Labor Institute,
a nonprofit organization. Less welcome and thank you for joining
(01:16):
me on News World.
Speaker 2 (01:17):
Thank you so much for having me, mister speaker.
Speaker 1 (01:19):
Can we start with the initial sense of history of
the Democratic Party, which certainly from nineteen thirty two on
was the party of working class Americans, and gradually that
seemed to change. But can you talk first about what
was the nature of that Democratic Party that at one
time had enormous loyalty from working class voters.
Speaker 2 (01:43):
Well, that Democratic Party was squarely behind the working class
aims and ambitions. The idea of full employment, the idea
of rising wages was essential to that Democratic Party. Should unemployment,
that Democratic Party would find ways to put people to work.
(02:04):
It was unabashedly in support of working people. It was
critical from time to time of corporations, and Wall Street
wasn't hardly even mentioned in those days. But it was
also a party of regulation. That the idea was to
tame the capitalist system so that working people had a
better chance, and it was very clear to working people
(02:26):
I think across the country that that's what the Democratic
Party stood for.
Speaker 1 (02:30):
Well, in that period, being a working person genuinely produced
a pretty decent life and ability to buy a house,
and ability to look forward to a pension and a retirement.
I think my parents' generation, my father was a Democrat,
very loyal to Roosevelt and Truman and felt that the
(02:51):
contract they had was working. And then it began to
really decay. I mean, while Jimmy Carter in nineteen seventy
six is down to fifty two two percent among the
white working class and as you point out, it just
keeps going down, and by Biden in twenty twenty, it's
down to thirty six percent of the white working class.
What happened in that process.
Speaker 2 (03:13):
Well, I really struggled to try to understand that, and
I think the primary determinant was the inability of the
Democratic Party to deal with mass layoffs. Prior to nineteen
eighty or so, layoffs were something that corporate executives were
embarrassed about. It was a mark of shame. They didn't
(03:36):
want to do it. They understood that during recessionary periods
mass layoffs had to happen, but they believed as soon
as the things turned around, they would hire back as
many of the workers as possible. That changed, and what
happened was I think the Democratic Party didn't realize that
many of the policies that it supported, especially the deregulation
(03:58):
of Wall Street, was making mass layoffs something that would
happen in good times as well as bad times, and
they took the blame for it. And I think we
have very strong statistical evidence, especially in the blue Wall
states of Pennsylvania, Michigan, and Wisconsin, that the counties that
suffered the highest degree of mass layoffs between nineteen ninety
(04:20):
six and twenty twelve. This is long before Trump lost
the most Democratic votes, and the counties that suffered the
fewest mass layoffs saw an increase in the Democratic votes.
And those counties tended to be higher income, better educated
counties usually around the wealthier suburbs, and the rural counties,
(04:41):
which tended to be lower educated, lower income, and mostly white,
they got clabbord with mass layoffs. They withdrew from the
Democratic Party. On average, we looked at there were one
hundred and twelve counties that we would call white working
class counties in those Blue Wall states. We found, on average,
thirty three percent of the working people in those counties
(05:05):
lost their jobs due to a mass layoffs between nineteen
ninety six and twenty twelve. And by a mass layoff,
we're talking about fifty more workers laid off at the
same time. That's a calamity on two fronts. Imagine you're
in rural Pennsylvania. Your facility goes down and there's a
thousand of you looking for a job. At the same time,
(05:26):
your friends and neighbors and co workers are all running
around trying to get that last job at Walmart or
the dollar store, etc. It's humiliating and extremely difficult as
a result. One thing we do know now is that
mass layoffs are an incredibly traumatic event. We have studies
now that show this. Losing your jobs the seventh most
(05:48):
stressful event, rank more stressful than divorce, a sudden or
serious impairment of hearing or vision, or a death of
a close friend. So if you put well, we have
to make overall since nineteen ninety six, thirty million people
have gone through mass layoffs. You're talking about a lot
of traumatic events, and that's going to create frustration, anger,
(06:11):
and disappointment. And the Democrats have taken the brunt of it,
and I think they drank the kool aid that if
you just deregulated Wall Street, all good things would happen,
all boats would rise, etc. I think you saw this
even better than I did. That it was a problematic process.
Speaker 1 (06:28):
You quote Senator Chuck Schumer back in twenty sixteen saying,
quote for every blue collar Democrat we lose in western Pennsylvania,
we will pick up two moderate Republicans in the suburbs
in Philadelphia. And you can repeat that in Ohio and Illinois, Wisconsin.
Didn't that actually turn out to be a gamble that
(06:50):
didn't work well.
Speaker 2 (06:52):
Fostian bargain. To be sure, Chuck Schumer, I'm sure regrets
having made that statement, and he's running around toygol. He
had to turn that around, as you could well imagine.
But that statement turns out to be true on one level,
a disaster on another level. In fact, in the states
that he mentions, the data shows that they did gains
considerably in those suburbs. But it's a gigantic mistake to
(07:16):
write off any group of people got off. To tell
you this, mister speaker, it's in your DNA. You don't
write off voters ever. You just don't do that. What
you try to do is understand what are their concerns,
what are they really worried about? And job instability, I
would argue, if not the number one issue in the
country is darn close to it, and you have to
(07:39):
speak to that job instability. And Democrats who have not
written off those voters like Sharon Brown and Ohio and
has targeted Wall Street, They've run way ahead of the
national Democrats in those states that have turned red.
Speaker 1 (07:54):
The classic liberal analysis rejects your economic argument. Hillary Clinton said,
you know to just be grossly generalistic. You could put
half of Trump's supporters into what I call the basket
of deplorables. The racist, sexist, homophobic, xenophobic, islamophobic, you name it.
(08:17):
And unfortunately there are people like that. So their analysis
was somewhere between race and ideology that somehow had alienated
these voters, not economics.
Speaker 2 (08:29):
Right. I'm sure she'd like to take back that statement.
In all due respect, she's wrong. We had to investigate
that for this book. I had to convince myself whether
that argument was true or not, because if it was true,
then my economic analysis wouldn't hold. But what we did
was we were fortunate. As you know, there are these
very large voter surveys that exist, fifty one hundred thousand
(08:53):
voters that they track over long periods of time, and
they ask them a lot of interesting questions, and we
isolated twenty read hot button social issue questions exactly the
kind of thing that Hillary Clinton was talking about, the
deplorable questions. For example, here's one, should gay and lesbian
couples be permitted to adopt children? Right? If you're homophobic,
(09:17):
you're going to say no. Right. The number of people
who agreed that they could adopt children. In nineteen ninety
six or so was thirty five percent. Now it's well
over seventy five percent. Of those twenty three questions, we
could not find any that had gone down, and half
of them there'd been a more liberal direction as opposed
(09:39):
to illiberal. So it turns out that the white working
class is not becoming more deplorable. They're becoming more and
more liberal. Even on the question of immigration. This is
the one that really shocked me because I didn't expect it.
We went and checked the data several times, we thought
it was wrong. Back couple of decades ago, the question
(10:02):
was should illegal aliens, illegal immigrants be permitted to become
citizens if they've been here three years, paid their taxes,
have no felonies. In other words, they're part of our
working economy. You would think people would be outraged against that. Well,
those who agreed with that statement jumped again from thirty
something percent to over sixty percent. Two thirds of the
(10:25):
white working class today believes that we should basically have
a path to legalization for the millions of immigrants that
are here illegally, unlawfully undocumented. It's a shame that Schumer
and Pillary. Clinton didn't look at that data because I
think they would have found that the working class is
not all that different from the managerial class when it
(10:47):
comes to social issues. What they're really concerned about is
job instability. And in this country, if you don't have
a skill that is easily marketable where you can start
a podcast, write a book, or if you don't have
one of those skills and you're subject to mass layoffs,
you're in trouble. You feel economically insecure. You know, this
(11:10):
is the other part of the story. Those workers were
told by both parties that, look, you may be having
it rough because of globalization, technology, blah blah blah blah,
but your kids are going to do better because they're
going to be a bit better educated, they're going to
get jobs in the high tech sector. Well, last year,
two hundred and sixty two thousand workers in the booming
(11:34):
high tech sector went through mass layoffs, and another seventy
five thousand so far this year. There is no place
that provides stable employment anymore. And that is a problem
for American democracy, and it's going to be a problem
for both parties right now. The Republicans, I think are
benefiting from this but they're going to have to deliver.
It's going to be very difficult to deliver because to
(11:56):
stop mass layoffs you have to stop certain practices that
are going on right now, primarily driven by Wall Street,
and that's going to be difficult. As you well know.
Speaker 1 (12:20):
You don't really make an argument, which I think is
a really important argument to look at that automation, whether
it's artificial intelligence or robotic or whatever, is not really
the driving force here, that in fact, it's corporate behavior
that is the driving force. Can you walk through that
(12:41):
just for a second, what your analysis is on why
it's not a function of modernization and automation that is
driving this.
Speaker 2 (12:50):
That particular chapter came about because the publishers said to me, Hey,
I'm reading your book. The first thing I'm thinking about
is AI. I said, wow, okay, let's look at that.
It's always been the case that we've all been fascinated
by new technology. One of the biggest moves towards automation
took place actually doing World War Two, and of course
(13:13):
what followed World War Two is one of the largest
booms ever in American history that your parents experienced all
the way from World War Two, you know, through really
up until the end of the nineteen sixties early nineteen seventies.
So automation has always been something that we've been worried about.
But you know, there's been a lot of studies done
about how long it takes for automation to actually have
(13:36):
a major impact. Of course, look, we don't have elevator
operators anymore. We don't have operators anymore for the most part,
but the change is usually gradual. Challenger and Company does
a report every month about playoffs, and I checked the
report for January and they actually have it out a
little section on has layoffs from AI. This is quite remarkable.
(13:58):
So there were eighty seventh thousand layoffs in January. The
number of layoffs attributed to AI was three hundred and
eighty seven. It's just not a fast process. And meanwhile,
though layoffs that are driven by leverage, buyouts, private equity
deals and stock buybacks, they happen really rapidly. To finance
(14:23):
a stock buyback, and just make sure all your listeners
know what a stock buyback is. The company uses its
own earnings, goes into the stock market, buys back its
own shares, which boosts the price of the stock before
nineteen eighty two, this was considered stock manipulation. You're not
supposed to go manipulate your own shares because they thought
(14:44):
that contributed to the Great Crash. In nineteen twenty nine,
there was a limit to the percent of profits that
you could use for stock buybacks. It was two percent,
and then they lifted the ban in nineteen eighty two.
Today it's nearly seventy percent of all corporate offits go
to stock buybacks. Seventy percent, So that's a lot of money.
(15:05):
And to get that cash, one of the first things
you do is layoff workers, and if you can find
a way to do it, you do it. The second
big thing is when a company buys another company or
a private equity deal takes place. Usually most of the
deal is borrowed money, and that borrowed money is then
placed on the purchase company, like they did on bed
(15:27):
Bath and the Yond I think went through one of
these not that long ago, but anyway, and Twitter, you
put the debt on the company, and then the debt
service becomes the cost of the company to pay for
that debt service. Layoffs begin. When Elon Musk bought Twitter,
the debt service payments went from fifty million dollars a
(15:50):
year to two billion. He laid off half the workers.
He had to because I had to service that debt.
Both these things could be moderated with I think thoughtful policy.
Speaker 1 (16:02):
You spent a fair amount of time talking about Mingo
County in West Virginia. Well, wasn't that a function of
regulation rather than stock buy back? Isn't the collapse of
the coal industry largely driven by the government.
Speaker 2 (16:14):
The collapse of the coal industry is a complicated story.
I used the Mingo County example. That's a very good
point you're making there. I used that story because the
vote for Bill Clinton was sixty nine point seven percent.
The vote for Joe Biden was thirteen point nine percent.
So there was an enormous collapse in a county that
was so democratic. Where the Coal Wars took place in
the early twentieth century, it was basically a war zone
(16:37):
and then an occupied territory. It was only when Roosevelt
came basically to support the United mine Workers that the
siege was lifted, and they were ever thankful that they
voted Democrat forever. What led to the collapse of coal
mining jobs across Appalachia I don't know that we can
pin down our regulation. You certainly can't pen it on
(16:57):
stock buybacks. Either. Has a lot to do with the
shift from eastern coal to western coal. Actually it has
to do with lack of regulation table the mountaintop removal
that allowed huge pieces of equipment to come in. And
there's a case where you have certain kind of I
don't know if you call that automation, but a different
kind of production process lost a lot of jobs. Where
(17:17):
Wall Street does come in, however, has to do with
the feeding on the carcasses. The Wall Street vulture capitalists
come in. They try to buy up the collapsing companies
and then eliminate things like retirement benefits for co workers,
which is a terrible thing to do just to have
rich wall Street. I'm using that example to show that
(17:40):
it can't be racism, sexism, etc. It just couldn't be
that caused the collapse of the Democratic Party of Mingo County.
It can't be that those people are deplorables. The other
part of the story is what the Democrats historically would
do in that kind of situation is come in with
job programs. It would have been possible to go all
over or Apple Achia sit down with people and say
(18:02):
what do you need. Well, we need our schools we built,
we need better roads, we need the rivers cleaned up,
we need internet, we need a lot of infrastructure. Mingo
County lost the most cold jobs of any county. This
county has twenty five thousand people, lost three thousand coal
jobs in nineteen ninety six and twenty twenty. That's the
most of any county in the entire country. So the
(18:23):
Democrats historically would come in and create jobs. Even Jimmy
Carter did that. And you know, we could have an
argument about whether that's the right way to go, but
the wrong way to go was to do nothing. Because
what happened was free enterprise did come in in the
form of drug stores that became pill mills prescribing opioids,
(18:45):
and two drug stores ended up going into a great
free market competition. They figured out a system to put
out one prescription per minute. One of those drug stores
ranked twenty second in the country in the county of
twenty five thousand people in opioid prescriptions. And you're counting
all the big drug stores in New York, Washington, Boston,
Los Angeles. I think about if you lived in that county.
(19:08):
You see cars lined up to buy drugs. You have
very few new jobs being created. The drug stores are
not hiring a lot of people. You've lost three thousand
of the best paying jobs in all of West Virginia.
I mean, despair would be the feeling I would have.
And then that despair turns to anger, and the Democrats
got the anger, and you saw West Virginia flip dramatically.
Speaker 1 (19:44):
What would you do? What are your solutions?
Speaker 2 (19:47):
I would take the stock buybacks back to two percent.
I think we had a very prosperous country that way.
That's number one. And also there's all sorts of tax advantagers.
We're giving Wall Street the wealthiest of the rich. They
don't need them. The second thing I would do is
I would limit the amount of borrowed money you can
do for a leverage buyout. But that's small potatoes in
a way. The big one I would do as you know,
(20:09):
and God, you've seen this better than almost anybody anybody
I've ever met. The government puts out a lot of contracts.
I think it's roughly seven hundred billion a year in
government contracts that go to corporations. How about one little
provision that says, if you're going to take taxpayer money,
(20:30):
you can't lay off taxpayers during the life of this contract.
That provision right there would bring mass layoffs way down.
And I can give you an apocryphal example. You remember
Carrier air Conditioner where Trump intervened and kept the plant
from moving to Mexico. And it was twenty sixteen seventeen.
(20:52):
They asked the CEO of United Technology, which owns Carrier
air Conditioning, why did you go along with this deal.
Here's what he said. He said, I was born at night,
but not last night. We get ten percent of our
money from the federal government. He did not want to
be in the crosshairs of the administration and the administration
(21:15):
because they do a tremendous amount of defense work and
they didn't want that work to go to somebody else. Well,
I think this could be very fair. You don't have
to take that government contract. We're not saying that all
corporations can't do mass layoffs. That would be very difficult
to do. The unintended consequences might be enormous. But you
could tell somebody, look, you're getting seven hundred and fifty
(21:36):
million dollars this year. No layoffs, no mass layoffs. You
can do voluntary mass layoffs. In other words, if you
want to do a layoff, you can provide enough money
so the person voluntarily leaves. You can do that, but
you can't just get rid of them. That then raises
the question do corporations have the flexibility to live that way?
(21:58):
The example I have in the book about Semens, I
think shows that it does. When I went to this book,
I did not think that corporation could prevent themselves from
doing mass layoffs. I really didn't. I thought that it
would lead me more towards the social wage. How do
you help people that are laid off? That's sort of
the traditional kind of do good way of dealing with
(22:18):
the problem. Then I ran into Semens Semens Energy, which
is controlled by Semens in General. Semens in General has
four hundred thousand employees German based company around the world.
Semens Energy has ninety thousand of them, and they decided
a few years ago to get out of the I
think they were making compressors for fracking, and they decided
they didn't want to do that anymore. So they're going
(22:39):
to lay off seven thousand people. Seventeen hundred in the
United States, three thousand in Germany. Well in the United States.
Almost all of them turn out to be union plants.
Two of them were steel workers, one of them in olean,
New York, right above that southern tier of New York,
right above Pennsylvania, very rural, used to be very industrial
with Corning and all these other companies there. Now it's
(23:01):
difficult five hundred steel workers with very good paying jobs
out the doors. And in Germany something else happened there.
They have co determination, something that we sort of pushed
for very strongly. After World War Two. Americans wanted workers
to be on the boards of directors of German corporations
because they felt that the workers would be less prone
(23:23):
to be go fascist again, where the corporation leaders were
very prone to do that. So they thought this was
a nice stabilizing thing. So half the seats of what
they call a supervisory board board of directors are workers.
The tiebreaker is the CEO chosen by the supervisors. That
workers have a lot of power. They did a lot
of investigating of the problem, and they're coming up with
(23:46):
all kinds of different solutions. Finally, this is what seemans
agrees to. No compulsory layoffs, only voluntary layoffs. And the
second thing they agreed to, and this was the stunner
to me. This shows about corporate flexibility. Six facilities in
small towns were going to be shut down. Six they
(24:07):
agreed to put a different product than all the six
plants to keep them open, so it wouldn't cause the
kind of community economic harm that's Semens. And this is Germany,
an export driven economy, where you'd think they would be
loath to do something like this. They did it. They're prospering.
And in the United States seventeen hundred workers lost their
(24:28):
jobs by forced layoffs. Semens in Germany, no force layoffs.
If they can do it the here, they can do
it here, and we should have held their feet to
the fire and we didn't. This is the interesting thing.
Semens in fact, has a very large government contract they
provide I think something like three quarters of a million dollars.
I think that might be a two year contract. They
(24:51):
would have agreed to no compulsory layoffs, Are you kidding?
They would have immediately agreed to that. If that's what
they had to do to sign that contract. They would
have agreed. They didn't Germany, they could do it there
would have be an easy argument to make. These big
companies are really flexible. They have very complex systems that
they can rearrange. For example, in Pennsylvania their layoffs going
(25:11):
on at the UPS. UPS has the ability to move
its delivery around fifteen ways to Sunday. They could avoid
compulsory layoffs. They want to do layoffs, fine, bid up
the price until worker voluntarily goes. And workers are in
all different pages of life. You know somebody in your
retirement might take that package and go readily. It could
(25:32):
be done. I think we're at the stage in America
we have to do something about mass layoffs before it
really tears us apart.
Speaker 1 (25:38):
Do you make a very compelling case? And your book
has both a tremendous amount of information and I think
poses some very important, challenging questions for the next administration.
I think it's a very important book in that sense.
And Lesa, I want to thank you for joining me.
Your new book, Wall Street's Warren Workers is available now
(25:59):
on Amazon in bookstores everywhere. I think it's going to
be a book people going to talk about a lot,
and it raises a whole new set of questions that
affect tens of millions of Americans. I want to encourage
our listeners who'd like to learn more to visit your
website at the Laborinstitute dot org. And I really appreciate
you joining me.
Speaker 2 (26:19):
Thank you so much for having me and for your
kind words.
Speaker 1 (26:26):
Thank you to my guest, Lesleopold. You can get a
link to buy his new book Wall Street's War and
Workers on our show page at Newtsworld dot com. Newsworld
is produced by Gingrish three sixty and iHeartMedia. Our executive
producer is Guernsey Sloan. Our researcher is Rachel Peterson. The
artwork for the show was created by Steve Penley. Special
(26:49):
thanks to the team at Gingrish three sixty. If you've
been enjoying Newtsworld, I hope you'll go to Apple Podcasts
and both rate us with five stars and give us
a review so others can learn what it's all about.
Right now, listeners of Newtsworld, consign up for my three
free weekly columns at gingrishwe sixty dot com slash newsletter.
(27:10):
I'm Newt Gingrich. This is Neutsworld.
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