The main US private equity lobby group, the American Investment Council (AIC), released a report in 2019 touting private equity’s contributions to the US economy by employing millions of workers.[1]

Since private equity firms buy out companies with existing workers, though, they often do not create new jobs.  Indeed, as economists have documented, when private equity firms take over a company, the total number of workers usually goes down.[2]

In addition, our analysis of some of the largest private equity-owned companies found that the largest number of workers employed by private equity-owned companies are concentrated in low-wage industries such as food service, retail, healthcare, security, and call centers.[3]

Food Service and Hospitality

There are over 1.8 million workers at food service and hospitality companies owned by private equity firms.

 Roark Capital’s portfolio companies alone account for almost half of those jobs:

The majority of the jobs at these Roark-owned companies pay low wages with minimal benefits.

The wages at these companies are so low that many of these companies’ workers must turn to public assistance in order to afford health care, food, and other basic necessities. A report last year from the US Government Accounting Office (GAO) found that some of Roark Capital’s chains (such as Sonic, Dunkin’ Donuts, and Arby’s) were among the companies with the most workers relying on food stamps.

A recent Newsweek article highlighted, Roark-owned Inspire Brands, with 600,000 workers at its (mostly franchised) brands, recently bragged about helping to kill the federal Raise the Wage Act, which would have raised the minimum wage to $15 per hour.

Other large private equity-owned food service and hospitality companies are:

Retail

The second largest industry based on the number of workers at private equity-owned employers is retail with over 1.1 million jobs.

Since 2010, private equity firms and hedge funds have made substantial controlling investments in over 80 major retail companies. One of the factors that has made retail companies attractive to private equity is that retail chains often own some or all of their store property, which can be used to secure the debt that private equity companies take on during buyout deals.[5]

The five largest private equity owned employers in retail are:

The majority of the jobs at these retail companies pay low wages with minimal benefits.

Security

There are about 1 million workers at security companies owned by private-equity firms globally.

In March 2021, private equity firm Warburg Pincus purchased the security company G4S, which has over 533,000 employees worldwide.[7] Warburg Pincus already owned the security firm Allied Universal, which has over 300,000 employees globally.[8] The two companies have about 260,000 total employees in the U.S. [9]  Garda World, owned by BC Partners, has over 100,000 workers.[10] SOS Security, owned by Apollo Global Management, has about 24,000 employees.  

Health Care

There are almost 800,000 workers at private equity-owned companies in the US health care industry.

Private equity firms’ investments in the health care sector have expanded rapidly. In 2018, private equity firms made 855 deals, investing $100 billion in health care, 20 times more than in 2000.[12]

Five largest private equity-owned health care companies.

Many of the jobs at these companies pay low wages with minimal benefits.

Call Centers/ Business Process Outsourcing

Business Process Outsourcing (BPO) companies are third-party vendors that are contracted to provide a service, such as payroll, accounting, telemarketing, or customer support.

There are over 500,000 workers at private equity-owned companies in the BPO industry.

The five largest private equity-owned BPO companies.

Three of these companies are call centers, and they pay their workers low wages.

[1]https://thisisprivateequity.com/wp-content/uploads/2019/10/EY-AIC-PE-economic-contribution-report-10-16-2019.pdf

[2]https://bfi.uchicago.edu/wp-content/uploads/BFI_WP_2019122.pdf

[3] https://www.dol.gov/agencies/whd/data/charts/low-wage-high-violation-industries

[4] All wage information is from Indeed.com, accessed May 19, 2021.

[5] Sale-Leaseback Deals Continue to Be Popular With Retailers

[6] All wage information is from Indeed.com, accessed May 19, 2021.

[7]https://www.g4s.com/who-we-are/our-people/our-employees

[8]https://jobs.aus.com/

[9]https://www.g4s.com/en-us/employee-wellbeing, https://jobs.aus.com/

[10]https://gardaworldgroups.com/

[11] All wage information is from Indeed.com, accessed May 19, 2021.

[12] https://www.arnoldventures.org/stories/part-1-in-pursuit-of-profit-private-equity-expanded-into-health-care-the-results-raise-concerns-about-cost-and-quality/

[13] All wage information is from Indeed.com, accessed May 19, 2021.

[14] All wage information is from Indeed.com, accessed May 19, 2021.