New Private Equity Risk Index reveals industry threats to American jobs, housing, health care, and pensions
The Risk Index serves as a comprehensive policy tool to evaluate the private equity industry’s real impacts across all 50 states.
April 9, 2024
Today, the Private Equity Stakeholder Project (PESP), a nonprofit watchdog of the private equity industry and Wall Street, launches the Private Equity State Risk Index, a groundbreaking tool aimed at assessing the impacts of private equity (PE) on different states.
The Private Equity State Risk Index provides stakeholders with insights into the relative risks that states face from private equity buyouts across four crucial areas—Workers and Jobs, Health care, Housing, and Pensions. The Index also includes information on state policy solutions that protect people and communities from the private equity industry and its negative impacts.
According to 16 unique indicators in the PE Risk Index, the 10 states facing the greatest risk from private equity, starting with most risk, are:
As the private equity industry continues to grow exponentially, now surpassing $13 trillion in assets, it becomes imperative for the public, policymakers, and regulators to understand and address its implications. Private equity firms wield significant influence, controlling companies that employ over 11 million workers nationwide, and owning millions of homes, among other key sectors such as health care infrastructure.
“Let’s call out private equity’s abuse for what it is: legal looting,” said United States Senator Elizabeth Warren (D-Mass.). “The Private Equity Stakeholder Project’s new state risk index is a razor-sharp tool in the fight to hold private equity accountable. Together, we’re taking on this trillion-dollar, behemoth industry that’s hurting working people and sucking money out of the rest of the economy.”
Private equity investments pose significant risks across various sectors, including the following.
In private equity-controlled companies:
- reduced staffing levels
- lower wages
- benefit cuts
- job losses
- economic instability
In the health care industry:
- deteriorating patient care
- higher medical costs
- closure of critical health care facilities
In the housing market:
- increased rental costs
- housing market disruption
- unsafe living conditions
“Private equity firms have taken over the hospitality industry in Southern California and Arizona, and are poised to buy even more hotels throughout the country with capital from public pension funds,” said UNITE HERE Local 11 Co-President Susan Minato. “10,000 UNITE HERE Local 11 members have been striking hotels for nine months, and 81 percent of the hotels that have failed to settle a labor agreement are owned or operated by private equity firms. Investors and policymakers must act to address risks posed by the private equity industry.”
The new index additionally incorporates data on 12 state-level policy measures aimed at safeguarding workers, taxpayers, patients, renters, and consumers from the hazards associated with private equity. Each state profile features a checklist indicating the specific policy solutions implemented by policymakers in that state.
“The Private Equity State Risk Index shows all of us the private equity threats in our own backyard and gives state leaders the tools to protect the people they serve,” said Chris Noble, policy director at PESP. “By providing transparent data on the risks associated with private equity investments, we empower communities, working families, and policymakers to advocate for change and protect their states from the threats posed by unchecked private equity firms. This is an important step toward mitigating the risk and tangible harms wrought by private equity across the county.”
The Private Equity State Risk Index is now accessible to the public through its dedicated website, offering a user-friendly interface for exploring state-specific risk scores and indicators. Through this initiative, PESP aims to engage policymakers, regulators, and stakeholders in every state to ensure private equity companies are held accountable for their impacts on people and the planet.
For more information and to explore the Private Equity State Risk Index, visit PrivateEquityRisk.org.
