Economic Reality Losing Out to Craven Politics

By Joe Guzzardi
May 29, 2014

What follows is the tale of a major American industrial city’s economic reality clashing with Washington D.C.’s bureaucratic idealism. In August 2013, the H.J. Heinz Co., an iconic Pittsburgh symbol, announced that it would lay off 600 employees including 350 local workers. The cuts came shortly after Warren Buffett’s Berkshire Hathaway and the Brazilian investment firm 3G Capital bought Heinz in a $23.3 billion deal, the biggest in the food industry’s history.

Unsurprisingly, the initial layoffs were followed three months later with a deeper, more ominous round of job slashing. In a November statement, Heinz announced that it would close factories in South Carolina, Idaho and Canada and eliminate 1,350 more jobs. 3G Capital is notorious for firing employees from the companies it takes over. Burger-King, a 2010 3G Capital acquisition, lost half of its 600 headquarters’ employees immediately after new ownership assumed control. 

Time was, working at Heinz was a lifetime gig. But not in today’s corporate world where the outgoing executives collect golden parachutes but the rank and file employees get a few bucks and empty promises. William Johnson, departing CEO will receive $56 million in addition to his $157 million in stock options and deferred compensation. As for those laid off, Heinz spokesman Michael Mullen dispassionately said: “We regret the impact this has on Heinz employees and their families.” Severance packages and outplacement counsel will be offered, not quite as comforting as the nine-figure settlement Johnson received. 

The fear throughout Pittsburgh is that for appearances sake Heinz will keep a formal address within the city limits but have no employees. Mass corporate layoffs like Heinz and Hewlett-Packard which recently increased its estimated 2014 cuts from 34,000 to between 45,000 and 60,000 became so numerous that the Bureau of Labor Statistic maintained a website to report on them. Officially, the site was shut down because of government sequestration. But unofficially it was likely discontinued because so much job loss while President Obama pushed his comprehensive immigration reform bill predicted to add millions of workers to a weak labor market would prove embarrassing. 

Speaking of President Obama, his repeated claim that liberalized immigration would make the America economy stronger and more prosperous is indefensible.

At its core, Congress’ immigration bill would immediately give employment authorization to 12 million illegal immigrants and import nearly 30 million high and low-skilled workers during the first decade. The Economic Policy Institute estimates that six million Americans are missing from the workforce. In other words, because their employment prospects are so scant six million have abandoned the job search. The EPI calculation includes male and females both under age 25 and over age 55.

Crucially important: the U.S already has an exceedingly generous immigration policy. The Department of Homeland Security issues an annual review of legal immigrants who enter. In 2012, 833,000 green cards were given to working age immigrants. About 8 million illegal immigrants hold non-agriculture jobs in factories and service industries, ones that unemployed Americans would eagerly do.

During the year since the Senate passed its Gang of Eight bill, the results of partisan polling designed to show support for amnesty have been widely published. But if pollsters took opinions in Pittsburgh and Palo Alto, Heinz and Hewlett-Packard’s headquarter cities, and asked if the U.S. need more overseas workers, the answer would be a resounding no. 

###

Joe Guzzardi is a Californians for Population Stabilization Senior Writing Fellow whose columns have been syndicated since 1987. Contact him at [email protected]