Unions challenge private equity
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SCOTT JAGOW: Private investors are sticking their hands in almost about every industry. Just this week, we told you Chrysler will be the first big carmaker sold to private equity. Private investment deals have grown 600 percent in the last five years. Five million Americans now work for companies owned by private equity. Well today, Congress hears from a big labor group that’s worried about this trend. John Dimsdale reports from Washington
JOHN DIMSDALE: The traditional rap against private investment firms is that they buy a company and sell its parts to maximize returns. At a press conference yesterday, Chrysler CEO Thomas LaSorda was asked if that was Cerberus Capital’s plan.
TOM LASORDA: Absolutely not gonna happen. We heard that from the CEO of Cerberus.
But even before the Chrysler deal, the Service Employees International Union began a campaign to persuade venture capitalists to honor union rights and protect health care benefits. The SEIU’s Stephen Lerner is hoping private investors will do so voluntarily.
STEPHEN LERNER: We’re saying they’re getting incredibly wealthy and they have a responsibility to help create opportunity for more workers to help grow the middle class in this country.
Without a commitment from new private owners to share their profits with workers, the service employees union will petition Congress to open private companies to more public scrutiny.
In Washington, I’m John Dimsdale for Marketplace.
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