This provision of the Inflation Reduction Act will discourage corporations from siphoning resources from worker wages and productive investments for share repurchases that inflate CEO pay.
Not long ago, I was a saleswoman and manager at Art Van Furniture, a furniture retailer that was an institution in metro Detroit for over half a century.
It was more than a job. My coworkers were my family, and we were all proud to work for our company. Thanks to our hard work, Art Van had grown from a family-owned business with one location to the top performing furniture retailer in our state.
But all that changed in 2017, when the private equity firm Thomas H. Lee Partners bought the company out. Soon, the company I knew and loved began to vanish right in front of my eyes. Where we saw a strong company we were proud to work for, they saw something they could strip for parts.
By 2020, my job had become one of the over half a million retail jobs that have been destroyed by private equity big shots.
See Shirley’s story here:
Here’s what happened.
Almost immediately after it bought the company, TH Lee used Art Van’s golden name to borrow massive amounts of money and saddle the company with debt. TH Lee also sold off Art Van’s real estate, then forced Art Van to pay rent on the same property it once owned.
My colleagues and I noticed bills weren’t being paid and shipments started getting delayed. Restocking merchandise used to take three to four weeks, but it suddenly started taking three to four months.
Then Art Van stopped doing business with our usual vendors. Instead, cheaper products once sold at outlet locations went into our main stores. Sure enough, customers started noticing that quality was falling even though the prices were rising.
We were the best trained retail staff in the industry and we did our best to make it work. But TH Lee cut back on staffing and replaced Art Van’s top-notch leadership with Ron Biore, who was rated one of the worst CEOs in America just two years before being hired.
Everything TH Lee did was setting up Art Van for failure. In just three years, they drove the top furniture retailer in Michigan into bankruptcy.
TH Lee’s initial severance offer was to give us $400 under the condition that we would not speak poorly of them to the media — they even said we should be grateful, because they didn’t actually have to give us anything.
They then cut off our health insurance before the company even officially closed. Coworkers of mine had to cancel surgeries, and several of us couldn’t get our prescriptions filled.
I wish I could say that Art Van was an exception, but private equity’s track record in retail has been absolutely horrible. Thousands of retail workers across the country have been through what we faced, according to a study by United for Respect, an organization I now work with, and Americans for Financial Reform, a Wall Street watchdog.
Through all this, TH Lee didn’t pay any price. That has to change.
In Michigan, there’s a bill to mandate severance payments when companies are driven to bankruptcy, so that workers have some financial stability after losing their jobs. We also need Congress to pass the Stop Wall Street Looting Act, a bill that would make private equity executives personally liable for the decisions they make and limit their use of debt to acquire companies.
My colleagues and I went through hell. Greedy executives should never have the power to drive thriving companies into bankruptcy just so they can make a profit. I can’t fix what happened to Art Van, but I can use my voice to make sure these abusive business practices do not victimize others.
Elected leaders must take action to prevent future private equity abuses.
This piece originally appeared on OtherWords.