Workers Made to Pay for Bank Failures

Lauren Gamble

Portland, Maine

It has been a month since the Silicon Valley Bank (SVB) collapse and government-sponsored bailout, and now the working class feels its effects. A wave of layoffs and job losses is devastating Silicon Valley. 10,000 employees were laid off in March from Meta, Facebook’s parent company, on top of 11,000 jobs cut in November 2022. More layoffs are likely to come. Meta’s CEO, Mark Zuckerburg, claims the layoffs are “restructuring” for  “efficiency,” but Meta is actually making its workers pay for ad revenue lost due to management’s policies. Tech jobs were seen as secure due to the skill of the workers and the high demand for tech workers before the SVB collapse. The collapse reminds us that under capitalism, no job is secure.

The Meta layoffs are just the tip of the iceberg in the tech industry; 609 tech companies laid off 174,000 employees this year as of April 24th. Job cuts are happening now in transportation, security, construction, and many more industries. As more and more layoffs spill into other industries, another recession could be imminent. The Federal Reserve bank tried to counter high inflation by raising interest rates, attempting to “cool off the economy” by forcing job losses and wage cuts, in effect provoking a recession. An estimated 3.3 million people lost their jobs this year due to trying to “fix” this crisis. Though the Federal Reserve attempted to prevent the slide into a recession by throwing money at corporations and big banks in the form of bailouts, the damage is already done.

 The SVB bank collapse was not the only factor pushing the economy toward a recession. Inflation remains high, the result of record-high corporate profits. The prices of goods, services, and other general living costs in a capitalist society have been increasing while the already inadequate wages of the working class fall further behind. As a result, most working-class people cannot afford much more than essentials. Even the basics, like housing, food, and gas, are becoming more difficult to afford. Further, because people have less money to spend, workers in hospitality and retail will see more job losses soon. This will continue whether or not the capitalist government and media call it an official recession. 

Workers see the Federal Reserve and Biden’s administration quickly push through financial support for failing banks, yet even the meager student loan cancellation promised by Biden has yet to go into effect over half a year later. This confirms that the federal government does not care about working-class people but that saving failing capitalist institutions like the SVB bank is the highest priority for the corporate political parties. Many workers see both the Republican and Democratic parties failing them. Corporate parties will only protect corporate interests, which are opposed to the interests of working people.

This isn’t the first time we’ve seen an economic crisis like this in recent memory. After the 2008 financial crisis, Occupy Wall Street was a movement against big banks and corporate bailouts that began as a protest on Wall Street. Working-class people and youth took to the streets to demand an end to harmful policies that led to the recession in the first place. 

For example, Occupy protesters called for reinstating Glass-Steagall, a policy created in response to the Great Depression in an attempt to stop commercial banks from engaging in high-risk investments. Essentially, Glass-Steagall created a separation between commercial banks and investment banks. However, two provisions of the act were repealed in 1999 making it less effective.

Though the provisions preventing commercial banks from engaging in risky investments remain, the repeals have led to mega-mergers, giving banks more power to lobby against restrictions and making them “too big to fail” as we heard in the aftermath of the 2008 recession. 

It’s important to look at why Occupy Wall Street failed to understand how we can effectively fight against the turmoil and exploitation caused by Wall Street and the global financial sector. Occupy was notable in that it raised the idea of alternatives to capitalism, increasing interest in socialist ideas in the U.S. in the decade that followed. But the Occupy movement had no solid idea of what the economic alternative to capitalism should be. This meant that its demands didn’t seriously break from capitalism. Instead, it focused on “banking reform” and other minor changes to the capitalist system.

Comparing the aftermath of the 2008 bailouts to now, we see that capitalists have lobbied against even the minimal regulations to prevent this kind of banking collapse, and deregulation continues. The capitalist class will fight against any reform under capitalism until it can be blocked, changed, or repealed. Occupy was very loosely organized and lacked the leadership and structures required to build a sustained movement that could win reforms and fight to keep them from being eroded. 

The difference between the recent bank failures and the aftermath of the 2008 recession is the COVID-19 pandemic and the government’s response. There’s a rise in awareness that the government has the money—hoards of it—but it takes a crisis and widespread protests to get even temporary improvement in social benefits. Unemployment benefits increased for a moment during the worst of COVID due to the pressures of mass job losses, mass protests like the Black Lives Matter movement, and workplace protests for health and safety measures to deal with COVID. The capitalist class wanted its profit-taking to grind on even during a pandemic, and they feared more social unrest. 

But in most recessions—and without a strong workers’ movement—we don’t see any increase in social benefits offered, only cuts. We don’t see crisis relief checks or any improvement in needed social benefits that would help workers, including those unemployed. Following the initial public health and economic impacts of COVID, we saw a rush to return to “normal.” This included undoing those limited policies that helped frontline workers and unemployed people; concessions aimed to prop up the capitalist system by minimizing social unrest. Workers clearly experienced the government’s prioritization of profit above the needs of people and essential workers. 

Now, unionization efforts are resurging. Rank-and-file union members demand better contracts, pay, and work conditions from the union bureaucrats who have ignored and obstructed the democratic decision-making of the membership. This pro-union shift is very encouraging. We can use this upsurge to rebuild the power of organized labor. 

We can use the power of unions to fight back against layoffs. In addition, we must build a mass movement with the passion of the original Occupy protests and the Black Lives Matter protests that can break from corporate politics and fight for socialist solutions to economic crises. If we work together to build a mass workers’ party that does not compromise on issues affecting workers, we can collectively fight against capitalist greed and break the cycle of economic boom and bust where workers always lose.