If you're a Canadian of a certain age, the name Sears has special meaning. Just like legacy retailers such as Eaton's and The Bay, Sears was, for many of us, a company that bordered on a cultural institution growing up.
In my youth, my siblings and I eagerly awaited the annual arrival of the Sears Christmas catalogue. For days afterward, any one of us could be found stretched out on the living room floor, cutting out which items we wanted Santa to bring us. I used Sears catalogues as shin pads for outdoor hockey. As teenagers, we often met behind the downtown Sears to light up.
Back then, imagining a day when a place such as Sears ceased to exist was impossible. But this past weekend, the last remaining outlets shuttered for good. If that were the end of the story, it would merely be a melancholy moment for some of us. But it's not.
There are thousands of Sears retirees who have been royally ripped off by a company they gave their life to, many for modest wages, in exchange for a post-working-days security package that included a solid pension, life insurance, and health and dental benefits. That is how many persevered for years in jobs that could often be tedious and unfulfilling: imagining the rewards they would reap one day in retirement.
Thanks to the relentless reporting of The Globe and Mail's Marina Strauss, a clearer picture of what exactly has happened here has emerged. And it is enraging.
The store's death spiral began in earnest after 2005, when it came under the control of a New York-based hedge fund run by former Goldman Sachs wunderkind Edward Lampert. In that year and those that followed, billions were paid out to shareholders, while spending was slashed and little was invested in capital improvements. It effectively became an agonizing and protracted liquidation. Sears became junk. But while shareholders were getting rich, the workers were getting cheated.
The new owner allowed the pension plan to become underfunded, and failed to ensure there was sufficient money to cover the health and medical allowances promised to retirees. When it was announced last year the retailer was filing for creditors' court protection, 18,000 retirees learned that they were not only losing their benefits but their pension would be worth about 80 cents on the dollar on delivery.
This has forced many of these former workers, some now into their seventies and beyond, to seek work in order to pay the bills. The plan they based their retirement on has collapsed. Bills they thought were going to be covered, now aren't.
If you're one of those former employees lucky enough to live in Ontario, there is some relief. There is a fund they can draw on that covers the first $1,000 a month in pension lost. (That amount is set to go up to $1,500.) That helps somewhat. But doesn't come close to making up what these people have lost.
Also, it's fair to ask why taxpayers in Ontario should have to cover for the inexcusable behaviour of a U.S. hedge fund that ran a Canadian institution into the ground, while enriching investors and gutting workers. By any measure, this is despicable corporate behaviour. And you have to wonder how those who were on the Sears board, and approved this plan, can sleep at night knowing that so many former employees of the company are having trouble doing just that because they now have major money concerns.
There are so many questions. Why, in the final disposition of assets and the payout to creditors, are employees ranked so low? Far below banks that declare billion-dollar profits. How can corporations be allowed to underfund pension plans, be allowed to fritter away resources set aside for retirement health benefits, while paying out massive profits to shareholders?
How can our governments sit back and allow corporations to treat their employees like total rubes? The business world could see what was happening to Sears, analysts could see the ruthless and deliberate winddown of the company, and yet no one thought to ask: what does this mean for retirees and their benefits?
It's truly sickening. And it should serve as a cautionary tale for workers who might be in a similar situation. Don't be afraid to ask questions.
If something smells wrong, it likely is.