Pro-labor push gains traction in bankruptcies
Workers can lose everything when their employer files for bankruptcy. At least for now.
A pro-labor movement sparked by the employees of Toys R Us Inc., and taken up by Sears Holdings Corp., has reached Congress.
Rep. Tim Ryan, D-Ohio, said he plans to reintroduce 2017 legislation that would define worker claims in bankruptcy as administrative expenses, meaning they’d be paid in full, like the investment bankers, consultants, lawyers and liquidators who earn millions of dollars dismantling dying companies.
It comes after 19 Democrats, including Ryan and presidential candidates Sen. Bernie Sanders of Vermont and Rep. Tulsi Gabbard of Hawaii, teamed up in July to demand answers from Toys Us’s owners after its bankruptcy left workers in the lurch.
Rep. Alexandria OcasioCortez, D-N.Y., released a video featuring struggling former Toys Us workers on the first Black Friday since their layoffs. And Sen. Elizabeth Warren, another 2020 candidate, publicly challenged former Sears ChairmanEddie Lampert’s “commitment to the company’s employees” in a January letter.
Ryan said the stories of workers whose finances were devastated during the 35-day government shutdown, which ended Jan. 25, highlighted the need for such measures.
“It laid bare that workers who are perceived to have pretty solid jobs could not miss one paycheck,” Ryan said. “They were at the food pantries.”
The bill would prioritize pension claims for fired workers when their compa- nies go under. It joins legislation to hike taxes on the wealthiest Americans, provide wage and leave guarantees and restrict corporate share buybacks.
Though the bill is a longshot to become law because it would have to pass the Republican Senate, it could lead to legislation on the state level that would com- plicate the bankruptcy process.
Labor’s drive to be recognized as a full partner in the U.S. economy, boosted by a low jobless rate, was given a jolt by the Toys R Us workers. They pressured KKR & Co. and Bain Capital, the retailer’s private equity owners, to create a $20 million hardship fund in November for workers such as clerks, cashiers and warehouse staff hurt by the retailer’s liquidation.
After Sears filed for bankruptcy in October, it was Lampert’s vow to save about 40,000 jobs that helped him win a bid last month to keep the retailer in business.
The $20 million may not seem like an overwhelming figure, but it was unprecedented. Suddenly workers are asserting themselves.
Teachers in Arizona, California, Oklahoma and West Virginia have won pay raises after walking off the job. Teachers in other states, including Colorado, Kentucky and North Carolina, have also demonstrated for higher wages and better working conditions.
Air traffic controllers calling in sick on the East Coast led to a halt in flights to New York City’s La Guardia Airport, while union leaders warned of added risk to airline customers. That put pressure on President Donald Trump to end the government shutdown.
Twenty states, including California, Illinois, New Jersey and NewYork, raised their minimum wages for 2019, according to the Economic Policy Institute. The hikes range from just a few cents, to adjust for inflation, to $2 an hour in New York City.
But as American workers suddenly enjoy more visibility than they had just a few months ago, U.S. bankruptcy law lumps employees with other creditors whose claims are lower priority.
In the beleaguered retail industry, that’s left tens of thousands without recourse.
“Our country’s bankruptcy laws are broken,” said Lily Wang, deputy director of United For Respect, a workers’ rights group. “Employees are fighting for their lives in a system that’s rigged against working families.”