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What's Wrong With Trumka's Op-Ed

    In a recent op-ed in The Wall Street Journal, AFL-CIO President Richard L. Trumka mischaracterizes private equity’s record in creating jobs, strengthening companies and benefiting workers.


    Read the truth about private equity investment

    Private Equity and economic recovery

    1) Private equity investment plays a critical role in leading the country out of recession. Following the past five periods of negative economic growth in the U.S. (1974, 1975, 1980, 1982 and 1991), real private equity investment increased by an average of 94 percent during the initial year of recovery – substantially stronger than either overall business investment or private investment in manufacturing.

    2) Real private equity investment grew in all five years of initial recovery, while total real business investment continued to decline in two of those five years and real investment in manufacturing continued to fall in four of those five years.

    3) The number of private equity acquisitions grew by an average of 55.1 percent in each of the five years following an annual decline in GDP. The increased number of private equity acquisitions suggests that private equity retains access to capital during economic downturns and initial recoveries and that more companies actively seek private equity funding during tough times.

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    Sources

    1-3) Shapiro, Robert, “The Role of the Private Equity Sector Promoting Economic Recovery,” The Private Equity Council, March 2009