EU Extra: Cheryl Claude & Charles Khan

Summary

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Economic Update Extra: Cheryl Claude & Charles Khan

Date: September 6, 2018
Host: Richard D. Wolff (Democracy at Work)

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Episode Overview

This special "Extra" episode of Economic Update features a pointed discussion with Cheryl Claude, a former Toys R Us employee and labor activist, and Charles Khan, an advocate organizing workers affected by corporate collapses. The conversation dives into the aftermath of the Toys R Us bankruptcy, the denial of promised severance for 33,000 employees, and the broader systemic issues posed by private equity takeovers in American retail. The guests and host critically examine both personal and systemic consequences, offering both firsthand and analytical insights into the collapse's fallout and the fight for economic justice.

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Key Discussion Points & Insights

The Reality of Toys R Us' Collapse and Severance Denial

• Severance Promises Broken:

  • Cheryl recounts being promised severance pay after 33 years at Toys R Us, only for the company to retract the offer, leaving all 33,000 employees with nothing.

    “After working for Toys R Us for 33 years and being left with nothing…they told us we were getting severance pay and they gave us nothing.” — Cheryl (01:14)

• Personal Impact and Hardship:

  • Cheryl details the severe financial and emotional distress now facing her and her colleagues:
    • Struggling with car payments, rent, prescription costs
    • Inability to find a new job after weeks of searching
    • Her 60-year-old husband taking two jobs to make ends meet

    “I can’t even find a job right now. I’m struggling with car payments. I’m struggling with rent…” — Cheryl (02:45) “My husband, 60 years old, he had to get two jobs to try to make ends meet.” — Cheryl (03:44)

• Corporations vs. Workers:

  • Wolff and Cheryl highlight the injustice of wealthy private equity owners denying modest severance to thousands:

    “You are condemning…tens of thousands of families to go through an open ended period of catastrophe.” — Wolff (03:19)

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Systemic Patterns: Private Equity and Retail Collapse

• Not a One-Off Event:

  • Charles explains Toys R Us is far from unique—similar patterns are seen with Claire’s, Kmart, Sears, all suffering from private equity-induced bankruptcies.

    “This is something we’ve seen many times…with stores like Claire’s, Kmart, Sears…all companies owned by private equity…” — Charles (04:13)

• Scale of Job Destruction:

  • In the past decade, nearly 300,000 jobs lost to private equity-driven closures.
    • Workers were promised one week of severance pay per year served, now owed $75 million collectively.

• Legislative and Structural Reforms Discussed:

  • Advocacy for:
    • Joint employer status, making Wall Street and private equity responsible
    • Clawback taxes to recoup profits after destructive closures
    • Job destruction fees on private equity/hedge funds
    • Transparency and worker notification ahead of takeovers
    • Closing the carried interest tax loophole

  “We are trying to change some of these laws…so that they are held to at least the same level of responsibility as the corporations themselves.” — Charles (04:54)

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Rationalizations and Excuses by Corporate Owners

• Shifting Blame:

  • Companies frequently deflect responsibility by pointing to Amazon and online competition:

    “What I’ve heard with Toys R Us is that it’s Amazon’s fault. That’s what everyone says.” — Charles (07:00)

    • Wolff and Charles refute this, arguing that crushing companies with debt made it impossible for them to compete.

• Contrasting Human and Financial Realities:

  • Private equity’s only real commitment is to profit, not to jobs or communities.

    “They’re pure money people…they offload all of the costs onto you and they rake in the benefits for them. This is a system that’s set up to do this.” — Wolff (08:15)

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Workers’ Awareness and the Erosion of Livelihood

• Blind Spots and Awakening:

  • Cheryl describes her initial lack of understanding about the private equity takeover and her gradual realization as workplace culture deteriorated.

    “When you first heard about them buying it in 2005, did you understand? — Wolff (10:42)
    “I didn’t understand a word. I didn’t understand nothing.” — Cheryl (10:48)

    • She didn’t connect changes (no company parties, loss of support during bereavements) until years later, when job quality and morale declined.

• Fear of Repetition:

  • Cheryl now checks potential employers to avoid those invested in or run by private equity.

    “I’m scared to go into retail again because I’m afraid that this is going to happen to me again.” — Cheryl (10:31)

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The Broader Threat to All Workers and Call for Change

• Uncertainty for Millions:

  • Wolff comments on the precariousness all workers now face, even in once-stable companies.
    • “There’s a level of insecurity and uncertainty…that must eat, even if you don’t admit it to yourself.” (09:46)

• Retail Workers Ready for Action:

  • Charles affirms growing skepticism and the desire for change among the nation’s 13 million retail workers

    “They all know that they’re trying to move and create change. And democracy is…sometimes can be a slow process, but the workers are ready for it.” — Charles (13:59)

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Memorable Quotes & Moments

• On Broken Promises and Outrage:

  "They promised us, and we are entitled to severance pay…fighting for 33,000 employees is what I’m doing."
  — Cheryl (01:14–01:46)

• On Human Cost:

  “It’s just very sad. My husband, 60 years old, he had to get two jobs to try to make ends meet.”
  — Cheryl (03:44)

• On Systemic Suffering:

  “It’s an extraordinary example of many people being damaged to enrich the few who already are the richest. It’s as gross a story as imaginable.”
  — Wolff (02:23)

• On Realization and Betrayal:

  “When I started to see it getting worse and worse and worse...then I said, oh, no, not this.”
  — Cheryl (11:25)

• On Accountability:

  “I want to know how these corporate people sleep at night knowing that 33,000 employees don’t have nowhere to go. I want to know how they sleep at night, because I don’t sleep well.”
  — Cheryl (12:26–12:45)

• On the Systemic Need for Change:

  "All of you, 13 million retail workers, they all vote. They all know that they're trying to move and create change."
  — Charles (13:59)

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Timestamps for Important Segments

• [00:00]–[02:09]: Severance betrayal and personal impacts
• [02:45]–[04:13]: Financial hardship, emotional toll, and broader suffering
• [04:13]–[06:47]: The private equity playbook—patterns, legislative reform, and advocacy
• [07:00]–[08:15]: Corporate excuses, myth-busting, and systemic critique
• [09:46]–[11:55]: Workers’ lack of awareness, realization of decline, and betrayal
• [12:26]–[13:39]: Corporate morality, worker precarity, and movement for change
• [13:59]–[16:00]: Closing, summary of need for collective action

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Tone and Language

The conversation is personal, urgent, and at times raw—melding economic critique with stories of everyday survival. Cheryl’s accounts are emotionally resonant and direct, while Charles offers a policy-driven, yet passionate, overview. Wolff steers the dialogue with empathy and righteous indignation.

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Summary Takeaway

This episode paints a vivid picture of the personal devastation wrought by the Toys R Us closure, while dissecting the systemic mechanisms that enable such outcomes. It is a rallying call for worker awareness, solidarity, legislative reform, and a reminder that meaningful change requires both individual action and collective organization within—and beyond—retail.

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Transcript

[A]

Welcome, friends, to Economic Update Extra. This is the place where for our Patreon friends, we continue the interview and conversation from the regular programming. And today we're talking with two people intimately involved in the Toys R Us corporate meltdown and collapse and closing and what it meant and what lessons it teaches. So, Cheryl, I want to participate a little further with you in talking about severance. You know, in economics, I'm an economist, severance has always been understood as a way, a small symbolic way for a corporation to recognize that it has a responsibility when it shuts down and deprives its workers of a livelihood. Those workers have invested in their children's education, in buying a home, perhaps in all kinds of things based on the assumption that that job was there and if that job is taken away, there's some minimal responsibility. Tell us what happened again with your severance pay from Toys R Us and that of the other workers and what possible justification there is for what they did.

[B]

Well, after working for Toys r us for 33 years and being left with nothing, they told us we were getting severance pay and they gave us nothing. Which after all these years and 33,000 employees of losing their jobs and they told us that we were getting severance pay. And then they said, oh, you're not getting anything, which they promised us and we are entitled to severance pay. So fighting for all of our fighting for 33,000 employees is what I'm doing is trying to get seventh pay.

[A]

Is there a chance you can do it?

[B]

Absolutely. I'm going to fight till till the end. Fighting with rise up retail. We're going to keep fighting till we get it with kkr, Bain and Ronaldo, we're going to get something from him because we're entitled to it.

[A]

I just want to point out to everybody that KKR Varnado, these are some of the richest people on the planet.

[B]

Absolutely.

[A]

Who are holding in companies that are already flush with cash the money that they could otherwise give to deal. And it's modest for them to deal with a crisis in 33,000 people's lives.

[B]

Yes.

[A]

So it's an extraordinary example of many people being damaged to enrich the few who already are the richest. It's as gross a story as imaginable. Can you give us a sense of how workers feel about this? Even you yourself, what does it do to you as a human being to be treated this way?

[B]

I can tell you from my standpoint of view, I can't even find a job right now. I'm struggling with car payments. I'M struggling with rent. I have friends of mine that can't even get her prescriptions filled. I can tell you right now, I don't even. My rent is due, my lease is due in my apartment. I don't even know if I can sign my new lease. It's hard. I speak to a lot of associates that are having a hard time with it. I can't even find a job at this point. It's been three weeks since I've been out of the store. And it's hard for. Mentally, it's hard for me.

[A]

It's an amazing thing for me as an observer, the damage that is being done here. You really have to scratch your head in order to make more profits for folks that are already flush. You are condemning, you know, tens of thousands of families to go through an open ended period of catastrophe.

[B]

It's very Sad. My husband, 60 years old, he had to get two jobs to try to make ends meet.

[A]

To carry you through this.

[B]

Yeah.

[A]

And what happens to the single mother or the. All the people who can't find a bridge, hopefully to get them through. Are you seeing this as someone who works with this kind of situation more generally? Are you seeing this elsewhere? Is this a problem you encounter? Are we looking at Toys R Us as an isolated example or is something more typical?

[C]

I think this is something that we've seen many times in the past. We're seeing it right now with stores like Claire's, Kmart, Sears. These are all companies owned by private equity that, that are on the verge or going through bankruptcy. When we look back over the past 10 years, we've seen almost 300,000 workers lose their jobs because of private equity induced closings at companies. And in Sheryl's case, the company was driven to the ground. They promised workers one week of pay per year. They've been there, been with the company, and now they're owed at least 75 million. Right. And we're working towards that and what we're working towards to hopefully save workers. The grief that Sheryl's going through in the future is trying to change some of these laws. Right. So that we have joint employer status for Wall street and private equity, so that they're held to at least the same level of responsibility as the corporations themselves. We're looking at clawback taxes so that private equity companies that destroy company, that destroy corporations, that we have a means to get some of the profits that they made back so we can help these workers out. A private equity job destruction fee because we know the way that private Equity and hedge funds operate. Oftentimes it's offshoring jobs, it's downsizing companies so they can make a little bit more money. And if, if that is the route that they want to go, we should make sure that we are taxing them appropriately so that we have the funds to at least patch up some of the destruction that they're creating. And we're also looking at things like transparency. A lot of people don't know what's going on at these companies. A lot of the workers don't know what's going on. And we believe that if, when a takeover is going to happen, there were stipulations as to what making sure the company communicates with the workers. We imagine the takeover may have not happened. Many of the workers probably didn't want it to happen. And if they knew what was going on, they could have voiced their opinions and maybe avoided that. We're looking at things like closing the carriage interest loophole, right? Other kinds, other forms of accountability. Because what we know, what we've seen is that in this country a lot of things are driven by the excessive need for profit. And we know that if there's a nice way to do it, they'll do it. But if they have to burn it down and, you know, pocket the ashes, they'll do that as well.

[A]

How do they defend themselves? What have they said to you or to you? Is there an excuse? Is there some rationalization, some something, some story they tell to make it seem reasonable, what they're doing?

[C]

What I've heard with Toys R Us is that it's Amazon's fault. That's not, that's what everyone says.

[A]

Every mall that's collapsing in America tells you it's Amazon's fault. Or you know, it's the Internet and.

[C]

You know Amazon is a big company. But when you saddle a company like Toys r US with $5 billion worth of debt, you're not putting them in a position to compete. Every company is prepared to deal with disruption. That is just the nature of these companies. But when you saddle them with debt, it's like trying to fight off a bear with 100 pound backpack on. You can't expect for these companies to compete. And I think that private equity and Wall street, like you said earlier, if they're making money, they're okay. They're not worried about how are you.

[A]

Going to stop it? How are you going to stop the system that works this way that looks that there are people with bunches of money looking to borrow with the money they Have a big pile of money, saddle some company with debt, figuring out, because they got the accountants and economists like me, that the land they're sitting on can be sold for more money than they can get in a short time by being a good toy store. So they don't have no commitment. They're pure money people. Their job is to come in with X and come back with X plus. That's their game. And what the damage they do in this system, they're not accountable. Toys R Us, the kkr, they don't have any responsibility for your rent. That's your problem. They offload all of the costs onto you and they rake in the benefits for them. This is a system that's set up to do this. And while I appreciate everything you've just said, and these are obviously directions to go in on this program. And for me, there's always this worry that we're trying to patch to avoid this problem and that problem. But it's a little bit like the old story of the refrigerator repair guy who comes to your house and fixes it. And two months later you call him again, he comes to your house and he fixes it, and this goes on. And then you call him one time and he comes to you and he says, look, going to do you a favor. I'll fix it. I'll charge you $200, but you're going to be on the phone calling me in two weeks. You got to get a new refrigerator. We're done with this one. You can't. It's not. It's irrational. That's my fear. We're going to stop them this way. We're going to make a little limit there. But this is the refrigerator. We're fixing this. It's busted. The thing is busted. Anyway. This is your program, not my program. What should happen to other workers? What can you say to workers in a thousand corporations across this country who are watching this program asking themselves, oh, my God, could this be happening to where I'm working? Could this be happening to me or my sister or my cousin or whoever? How do you know? You spoke before about workers being unaware. How many people are ever aware of the detailed financial machinations that they don't know anything? I mean, there's a level of insecurity and uncertainty that must eat, even if you don't admit it to yourself. What do you think about that?

[B]

When I file applications, I look into the place where I file to make sure that these guys are not invested into the companies because I'm scared to go into retail again because I'm afraid that this is going to happen to me again.

[A]

When you first heard about them buying it in 2005, you said, did you understand?

[B]

I didn't understand. I didn't understand a word. I didn't understand nothing.

[A]

And nobody explained nothing to me.

[B]

But I saw something happening. When we didn't have parties, right? Get togethers, we used to do a lot of things. Everything was gone.

[A]

Did you, when that, when you noticed that, did you link it to the financial.

[B]

I didn't think.

[A]

I didn't think.

[B]

I didn't think anything about it. And then when I started to see things and then I'm like, wait, since, since this happened. I gotta, I gotta think about it. And then I started to see that and I'm like, this is not good. This is not good. And I, then I knew, then I knew. And then I kept seeing the changes and changes and changes. And then, then I said, oh, no, not this.

[A]

And then when did you link it to the financial things, in other words?

[B]

Probably about like 2007. 2007, when I started, took a couple years. A couple years. When I started to see it getting worse and worse and worse and worse. Then I said, this isn't good. And then I just said, it's not gonna. Nothing will happen. And then I just saw it and.

[A]

I'm like, so we're being run into the ground.

[B]

Started running into the ground. And then the treatment that we got was started to get really bad in the stores. It got really, really bad. Like, like I lost my mom, I lost my dad and stuff. And they used to send flowers and stuff like that.

[A]

And it didn't do it anymore.

[B]

Nothing, nothing. Nothing from corporate, Nothing from the stores. Nothing, nothing. It was just bad. It was bad. And I had customers coming in and thanking me for, like, thanking me in the stores from, thank you for being here for my kids. Because they know, they know how, you know, how nice and stuff. You still got a smile on your face even though you're going through this. It's just grateful. People were very grateful.

[A]

But it's a, it's a, it's just very sad.

[B]

I just want to know how these corporate people sleep at night knowing that just 33,000 employees don't have nowhere to go, Right?

[A]

You wonder how they sleep at night.

[B]

I want to know how they sleep at night because I don't sleep well.

[A]

That's why I asked you that question. I wondered what story they tell themselves.

[B]

I just want to know how they sleep at night because I know I don't sleep well.

[A]

Yeah, Well, I can tell you that some of the stories they tell, because that's what economics unfortunately, often is, is a story that somehow this was inefficient. That's why you hear about Amazon. But somehow more efficient to get your package delivered by the Amazon truck than it is to go into a store. Which conveniently forgets that when you go to a store, there's a person there and you can ask that person about that. You can look at it and touch it and feel it. Although that's conveniently forgotten. That's how you know this is an excuse. This isn't. This isn't a true story. It's an excuse. It also means, though, you're teaching us the precarity, the precarious nature of a job, even in a company with a history and a reputation like Toys R.

[B]

Us had, how are you gonna go to store? How are you gonna go to Amazon and ride a bike?

[A]

That's right. Well, how are you gonna live with the uncertainty? You don't know when you go home at the end of the day, for all you know, that day in some office somewhere, some documents were signed, and it's the end of your job world. It's an argument, your story, for change, if I ever heard it.

[C]

I think so. And there's 13 million retail workers across this country. And I know that they all had their eyes on Toys R Us. They understand what's going on. I think we've seen it. You know, I'm on the younger side, but I think what we've seen is that workers realize what's happening. Everyone understands they're being left behind and that this system is rigged and not in their favor. And all of you know, 13 million retail workers, they all vote. They all know that they're trying to move and create change. And democracy is, you know, sometimes can be a slow process, but the workers are ready for it.

[A]

I hope they've been listening and watching. I hope they take a message. Change is not something for other people. It's for you. Thank you, Cheryl.

[B]

Thank you.

[A]

Thank you, Carlos. Thank you both for coming.

[C]

Thank you.

[A]

And making your story part of everybody's life. Very, very important.

[B]

Thank you.

[A]

And thank you all for watching Economic Update Extra. And we will be talking to you again next week.