NEW: Perdue’s Corrupt “Profiteering,” Money Grabs, Job Displacement Exposed, Regarded As “Absent Boss”

December 15, 2020

Over his nine month tenure, Perdue earned $1.7 million while 7,600 plus Pillowtex employees would soon be laid off

Perdue made upwards of $50 million over his tenure of displacing jobs through Dollar General while profits shrunk, then was hit with a series of lawsuits from shareholders

ATLANTA — New reporting by Mother Jones detailed Senator David Perdue’s pattern of displacing workers across the country before abruptly leaving his executive roles only to be sued for his possible “profiteering.” Perdue’s experience outsourcing jobs banked him an executive position at Pillowtex, where his failed leadership as a “seemingly absent boss” earned him $1.7 million before more than 7,600 employees lost their jobs when the company shuttered.

During Perdue’s tenure at Dollar General, he received pay bumps, stock options, and contract extensions, then “lined his own pockets as part of a leveraged buyout deal” and “shortchang[ed] shareholders.” Multiple class-action lawsuits brought by managers claimed Perdue misclassified labor and violated the law, and Dollar General and others’ predatory business model has preyed on low-income and rural communities and has been repeatedly documented for aggressive union-busting, depressing wages, pricing out local small businesses, and even violence.

“Once again, Perdue has shown to only be out for himself, willing to cut American jobs so he can get a big paycheck,” said Braxton Brewington, spokesman for the Democratic Party of Georgia. “Perdue’s failed leadership didn’t begin with his corrupt stock trades in Washington – he’s spent his business career getting rich while hardworking employees who depended on him got laid off.”

Mother Jones: We Can’t Talk About Corruption in the Georgia Runoffs Without Talking About David Perdue and Dollar General

  • “Back in 2002, after two years of bankruptcy proceedings, a North Carolina pillow manufacturer hired a Reebok executive named David Perdue to right the ship. For Pillowtex, Perdue’s experience with outsourcing jobs was part of the appeal. (“I spent most of my career doing that,” he admitted later in a deposition.) He was a cost-cutter.  … And, with few options, at the end of 2002 Perdue indeed helped develop a four-year plan, according to a Charlotte Observer investigation, to fix the firm. It’s key recommendation: “wiping out most of Pillowtex’s U.S. jobs.””
  • “But in the end, Perdue’s plan to aggressively market pillows and textiles while moving jobs overseas failed. Executives blamed the overall death of industry that loomed on the horizon; in 2005, the United States would finish phasing out its quota on textile imports, allowing freer trade and less protection for local manufacturers. But that wasn’t the only impediment. There was also Perdue himself.”
  • “After starting at the company in June, he was a seemingly absent boss. An industry magazine joked about giving him directions to Pillowtex headquarters as a Christmas gift. By the end of 2002, only a half-year into his tenure, Perdue was even claiming he had been lied to, asked to take on a doomed firm with too much debt. Things unraveled pretty quickly, and during his final months, he took everything he could get: $700,000 to pay back taxes, $100,000 for relocation, $500,000 to stay on to potentially negotiate one final deal (that did not happen) to save Pillowtex. Over his nine month tenure, he earned a salary of $1.7 million dollars. A lawsuit later bluntly called his exit a “money grab.””
  • “At the same time, Perdue began looking for another job—“I had the prospects of being unemployed with no severance protection at that point in time,” he explained. Meanwhile, 7,600-plus Pillowtex employees would soon be laid off as the company cratered to a second death. It led to the single largest day of job loss in the history of North Carolina to that point.”
  • “Perdue landed on his feet though. In December 2002, he interviewed to become the new CEO of Dollar General, taking over as chief executive the following year. Over the next four years there, Perdue would again make millions. And when he left, he would again be sued for possible profiteering on the way out.”
  • “As a senator, Perdue has been investigated for the ways in which he has seemed to enrich both himself and his donors with, let’s call them, incredibly convenient and prescient stock trades, though he has repeatedly denied the charge of insider trading.”
  • “Yet, in that mix, you do not hear much talk about Pillowtex or Perdue’s time heading Dollar General—even though the Republican senator’s business record has been reported on before. It was rehashed at length in 2014 during his initial run, under one of the more anodyne headlines you’ll see: “Perdue’s business record mixed.” These days, Perdue mostly brags about being a “job creator” and an “outsider” businessman, seemingly inclined to ignore the details.”
  • “While we know Loeffler oversaw a “mini-Enron,” as my colleague David Corn reports, what do we call Perdue’s record then? It doesn’t seem “mixed.” Pillowtex is certainly the more sordid of the tales from that era, an easy case of big business bottoming out with executives getting paid and workers getting laid off. Perdue might not have been liable (the lawsuit against him went nowhere), but that doesn’t make it any less true he was fine, and many workers were not.”
  • “Dollar General is perhaps the more revealing story though. Unlike at Pillowtex, where he claimed he was just a poor innocent who was misled, Perdue knew what he was getting into with the chain of convenience stores. By 2002, Dollar General had grown from a Kentucky father-and-son-operated shop to 5,891 national locations on a gimmick: What if everything cost, only, a dollar? To sell stuff on the cheap, the stores kept wages low. The credo from the early days was for wages to be 5 percent of gross sales, according to ProPublica. Perdue’s job when he took over in April 2003 was to expand while keeping costs—and wages—down. That could allow for cheap goods, and in doing so, as a former analyst explained to me of the model, “they’re pricing out general stores.””
  • “As we’ve reported before, Dollar General’s mass expansion was part of a trend: Cheap stores, with shit jobs, flooded communities over the past few decades. In the early 2000s, you saw see this expansion en masse. Announcements regularly rolled in, year after year, extolling store opening after store opening. Financial reports and investigations over the years elucidated the stores’ strategy: They wanted to serve low-income and low-population areas. By 2006, Dollar General operated 8,190 stores nationwide.”
  • “But, uniquely, Dollar General also began to operate larger shops—more akin to grocery stores. By 2007, the company had 56 locations with offerings more like tiny Walmarts. This was part of Perdue’s plan, too. And it is why Dollar Generals have become the last resource for many consumers in poor and rural locations. This was job creation through job displacement. Perdue created more Dollar General workers, sure, but by pricing out other businesses and other, potentially better employers. This proved true everywhere from New York City to Sioux City, Iowa, to small-town Kansas, where local stores have struggled to compete with Dollar General.”
  • “Is this—more jobs at a national chain, less at mom and pops—really the American Dream “success story” of capitalism Perdue wants to brag about? He proudly notes Dollar General could never happen in a socialist country. And yet the chain is consistently listed as having the most employees on public benefits like food stamps.”
  • “Over all this time, of course, Perdue was still getting his—making upwards of $50 million dollars in total over his tenure, as the Intercept reported. In 2006 alone, Perdue got a $100,000 pay bump, stock options, and a contract extension to keep up the work; he earned over $3 million in salary (including equity) just that year.”
  • “But the good times didn’t last, and even on his exit from Dollar General there was controversy. And lots of cash. (As I said, a pattern.) In March 2007, Perdue informed stockholders the company would be sold off to buyout private equity firm Kohlberg Kravis Roberts & Company, or KKR, for an eventual $7.3 billion. An analyst told the New York Times the deal was likely made because under Perdue the thrift store was “operating below its potential.” Despite Perdue’s big pay days in 2006, Dollar General actually had a bad year. Profits shrunk. The chain had to cut stores after aggressively expanding, announcing early in the year that it would close 400 locations.”
  • “Shareholders were upset about the sale. They alleged Perdue had knowledge the stores did in fact have more potential—but still sold the company below value because he didn’t see that the 2006 downward trend was a blip. As Courthouse News reported just last month, as soon as the deal was announced, Dollar General and Perdue were hit with a series of lawsuits from these shareholders.”
  • “But Perdue, yet again, came out just fine. When he left Dollar General in July 2007, he was paid, according to tax records obtained by the Atlanta Journal-Constitution, $42 million. Meanwhile, the AJC reported in 2014 that settling the lawsuits was costing the firm $42 million so they could deal with those “alleging Perdue lined his own pockets as part of a leveraged buyout deal, shortchanging shareholders.” In sum, Perdue’s bad company stewardship led to a bad sale and seemingly everyone but him and the other bosses got less money than they deserved, the stockholders say.”
  • “Midway through his tenure at Dollar General, there were multiple class-action lawsuits brought by managers for overtime pay under the Fair Labor Standards Act; they claimed the company had been misclassifying their labor. One suit was settled for $8.3 million, and others have continued past Perdue’s time at the company.”
  • “And below the manager level, these long-term cheap dollar store gigs for local workers—as documented by NBC News and the New Yorker—have proved terrible. There has been aggressive union-busting, the depression of wages, the purposeful pricing out of local stores that could offer alternative employment. Worse yet, violence has become de rigueur at dollar stores—as ProPublica’s Alec MacGillis has argued, this should not be viewed as inevitable: “Robberies and killings that have taken place at dollar store chains would not have necessarily happened elsewhere.” And as we reported earlier this year, store workers weren’t even provided PPE during the pandemic.”
  • “Are these really the “thousands of quality jobs” Perdue wants to tell constituents he created? Perdue maintains the same basic line about Dollar General as Pillowtex: He was trying to help the American worker. … And yet. In the end it was and continues to be just the same—worker helped or not, Perdue has a bit more cash.”


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