SCOTT SIMON, HOST:
Toys R Us, Payless ShoeSource, Claire's - all out of business, all liquidated. Is private equity dismantling the retail sector and taking jobs away from people of color? Coalition of progressive groups have just released a new study to that effect. Maggie Corser is a senior research analyst with one of those groups, the Center for Popular Democracy. She helped write the report and joins us now from Detroit. Thanks so much for being with us.
MAGGIE CORSER: Thank you for having me.
SIMON: Let's begin with the top line of the report. We certainly know retail is suffering. We see stores all over America closing. Midtown Manhattan is having problems with retail space. We assume it's online shopping and delivery. But how many job losses do you fix specifically to the role of private equity?
CORSER: Well, we found that over the last decade, 1.3 million people lost their jobs at retailers that had been acquired by Wall Street private equity firms and hedge funds. During that same 10-year period, the retail sector had actually added an additional 1 million jobs. So what we find is that in key areas, Wall Street firms are destabilizing retailers. Toys R Us is a good example. Toys R Us was highly profitable when it filed for bankruptcy. Their private equity owners had loaded the company with debt and did not really invest in necessary technology upgrades to support e-commerce and to make it viable.
SIMON: Well, let's peel back a phrase like Toys R Us was highly profitable when it filed for bankruptcy. That wouldn't seem to fit in the same sentence. But how do you explain that?
CORSER: It wouldn't. So what we outlined in our report is that when private equity takes over a company, the first thing they do is extract wealth for investors. They have the retailers take on that kind of unsustainable debt. And they often sell off the retailer's real estate assets. Then they start cutting the workforce and often stop investing in the company. Workers tell us again and again, when private equity comes in, that's when our hours are cut. That's when our pay gets cut. And that's when they stop upgrading stores.
SIMON: And you believe this affects people of color disproportionately?
CORSER: Yes. Our analysis shows that these job losses were really concentrated among women and people of color. That's because most are in sectors like clothing and big-box retail, where women and people of color are disproportionately represented in the workforce. We found that these job losses are especially devastating because these groups are already struggling. So 1 in 4 retail workers live below or near the poverty level.
SIMON: There have been studies to the effect that the U.S. does just have too much retail space - a few years ago, 7 square feet of retail space per person in the U.S. compared to about 2 feet in France, Japan, closer to one in the U.K. Isn't it true that to just set that balance aright, Wall Street maybe is the vehicle to do it?
CORSER: Well, we are making less an assertion about the retail sector, more broadly looking at how are these Wall Street actors enriching themselves, and what's at stake for those workers and their families? And so the point we want to make is that Wall Street really needs to do better, and it needs to have more sufficient regulations to ensure that they're going to do right by our economy.
SIMON: But doesn't Wall Street throw money at people who call themselves disrupters? We're going to disrupt that old model. We're going to create something new.
CORSER: Well, I think that what we need to look at is where are private equity firms making investments, and what impact is that having both on the firms that they're acquiring and the sectors that they're operating in? Private equity firms and hedge funds are expanding into what we find is an alarming number of parts of our economy. Somebody can go to work at a private equity-acquired company, drive on a road that is managed by a private equity fund, call an ambulance that is operated by a hedge fund, drink a glass of water that is run by a public utility that's been taken over by Wall Street. That's an alarming number of areas in which Wall Street is really having an impact on people in their lives.
SIMON: Maggie Corser of the Center for Popular Democracy, thanks so much for being with us.
CORSER: Thank you for having me.
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