Sticking others with the bill

In the mall near me the Macy’s store closed. Corporate Sears, one of the other big stores in the mall is on shaky ground. The wall otherwise looks healthy with only a few empty stores. The other big stores are JC Penney (in dubious health) and Kohl’s.

I wrote back in April that between October 2016 and April 2017 89,000 retail workers had been laid off. The reason given at the time is competition from online stores. Other reasons given include Millennials who might be more penny-pinching than their elders, likely because wages have stagnated. Or Facebook and social networks mean public spaces aren’t necessary.

Hunter, writing for Daily Kos considers another reason, as noted by David Dayen of the New Republic. Private equity companies can kill off a chain by “purchasing it, loading it with debt, and sticking others with the bill.” In a bit more detail, they buy, borrow massively, use corporate reserves to pay themselves, then declare bankruptcy. Workers, who actually supply value to the company, see nothing. If the workers aren’t laid off immediately they lose their jobs anyway when the whole thing collapses. Congress could stop such cannibalism, if they had the spine to mess with top political donors.