Closed toy firm workers fight on
By Negin Owliaei
It was once the biggest toy company in the world. But Toys ‘R’ Us turned off the lights in its remaining stores for the last time this summer, becoming the most recent casualty of Wall Street greed.
As Toys ‘R’ Us first began its descent into bankruptcy and liquidation, it was seen as another point on the “retail apocalypse” continuum, with many in the media blaming e-commerce and changing shopping habits for store bankruptcies around the country. But the narrative is shifting to place the blame on the private equity firms that purchased the company with a leveraged buyout in 2005, only to saddle it with billions of dollars in debt.
That shift is due in no small part to the biggest victims of the buyout – the more than 30,000 Toys ‘R’ Us employees now out of a job. Those workers are fighting hard for a fair severance – and consequences for the Wall Street firms that turned a profit while leaving them in financial insecurity.
The private equity companies KKR and Bain Capital and real-estate firm Vornado were able to squeeze $470 million in fees out of the debt-ridden toy store after acquiring it in 2005. Top execs even won approval to hand out millions in bonuses last year while in the midst of bankruptcy proceedings, arguing to the court that the chain “rewards team members at all levels of the company.”
Tell that to the workers, many of whom spent decades at the toy store, who received far less. Store employees were shocked to learn they wouldn’t receive severance upon losing their jobs, and the hefty exec bonuses were salt in the wound. In the weeks preceding the chain’s closing, employees mobilized to demand fair severance pay and decry the corporate greed that left them unemployed.
Tens of thousands of people signed petitions calling on Toys ‘R’ Us owners to pay workers out of the sizable private equity profits. Workers gathered in Bain Capital’s New York City lobby, creating a mock graveyard to mourn the toy store “killed by Wall Street greed.” They protested at the private equity firms that owned the company, outside the home of former CEO David Brandon, and within their local stores.
The store’s former employees are also doing their best to deal a blow where it would hurt most – the profits of the private equity firms that took Toys ‘R’ Us down. Workers and labor advocates have been encouraging public pension boards across the country to divest their funds from private equity firms that played a role in the toy store’s demise.
The California pension board heard from Nadia Romo, a store manager in Ventura who worked at the company alongside her fiance and step-son. The combined loss of income meant the family had to try to downsize their home in order to cover her newborn daughter’s medical insurance.
Romo was joined by other Toys ‘R’ Us employees, including Sandra Lopez, a manager who worked her way up from a part-time position over the course of 22 years. Lopez told the board that she’d missed countless family events while working at the store as a single mother.
“Our work in retail has value for the families we help at the stores, and our families at home. We can’t let Wall Street and we can’t let Bain and KKR take it all away,” Lopez said.
Negin Owliaei is a researcher with the Institute for Policy Studies and a co-editor of Inequality.org,