Monday, December 21, 2020

Big business got bigger in US during pandemic

America’s biggest companies are flourishing during the pandemic and putting thousands of people out of work | Washington Post - Douglas MacMillan, Peter Whoriskey & Jonathan O'Connell:

December 16, 2020 - "As the coronavirus pandemic devastated small businesses and plunged millions of Americans into poverty this summer and fall, executives at some of the country’s largest corporations sounded surprisingly upbeat.... With few exceptions, big businesses are having a very different year from most of the country. Between April and September, one of the most tumultuous economic stretches in modern history, 45 of the 50 most valuable publicly traded U.S. companies turned a profit, a Washington Post analysis found.

"Despite their success, at least 27 of the 50 largest firms held layoffs this year, collectively cutting more than 100,000 workers, The Post found.... On one side, corporate leaders are touting their success and casting themselves as leaders on the road to economic recovery. On the other, many of their firms have put Americans out of work and used their profits to increase the wealth of shareholders.

"When the coronavirus struck, big companies promised to help battle the crisis. Dozens of prominent chief executives, who last year signed a public pledge to focus less on shareholders and more on the well-being of their employees and broader communities, appeared eager to make good on that promise. Many suspended payments to investors and vowed not to hold layoffs.

"Then, 21 big firms that were profitable during the pandemic laid off workers anyway. Berkshire Hathaway raked in profits of $56 billion during the first six months of the pandemic while one of its subsidiary companies laid off more than 13,000 workers. Salesforce, Cisco Systems and PayPal cut staff even after their chief executives vowed not to do so.... Walmart, whose CEO spent the past year championing the idea that businesses 'should not just serve shareholders,' nonetheless distributed more than $10 billion to its investors during the pandemic while laying off 1,200 corporate office employees....

"The Post contacted all 27 large firms that held layoffs this year. Many said the cuts were not related to the pandemic, but instead a necessary part of broader 'restructuring' plans, where companies shift spending from declining lines of business to growing ones.... Several emphasized that they hired more people this year than they let go.... Others pointed to the work they have done to help ease the pain in their communities, such as expanding health and family benefits to employees and distributing personal protective equipment to front-line workers. Cisco gave $53 million in cash and PPE to vulnerable populations and PayPal pledged $530 million in investments in minority-owned small businesses....

"The majority of the largest American corporations have prospered in the coronavirus economy. Millions of consumers spent more time and money online during government-mandated lockdowns, watching Netflix, viewing ads on Google and Facebook pages, filling Amazon shopping carts and turning the video game business into a bonanza for Nvidia, Microsoft and others. (Amazon founder and chief executive Jeff Bezos owns The Washington Post.)... 

"Shoppers began splurging on cleaning supplies, hobbies, home cooking and home improvements, driving record growth at big-box stores including Home Depot and Walmart. Even in the hardest-hit sectors, such as restaurants, travel and hospitality, the biggest companies were largely insulated from the worst of the virus’s reckoning. While independent restaurants struggled to survive, McDonald’s ramped up its takeout and drive-through operations, rolling out new apps and technology catering to on-the-go orders.... In many industries, the giants devoured market share ceded by small businesses, who lacked the resources to keep stores open during unpredictable swings in customer demand,

"While the 50 largest companies averaged 2 percent revenue growth over the first nine months of 2020, small business revenue shrank 12 percent over the same period, according to data collected by software provider Womply from thousands of small firms."

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