One of President Donald Trump’s big domestic goals is to bring manufacturing jobs back to the U.S. Trump has also said he plans to be the greatest job producer “God has ever created.”
But the deck is stacked against him. The U.S. corporate model that has offered workers secure full-time jobs is fast disappearing—and with it, a way of life that defined the social compact between American companies and workers for decades, including access to retirement benefits and pension plans. Those are some of the takeaways of a recent study from policy think tank Third Way, and University of Michigan researcher and management professor Jerry Davis.
Davis has been talking about the vanishing U.S. corporation for some time—as IPOs dwindle to lows not seen since the financial crisis. But his new report expands the scope of public company research with a firm-by-firm examination of both NASDAQ and the New York Stock Exchange since 2000, to see exactly which industries are disappearing the fastest.
The results are eye-opening. Between 2000 and 2015, the NASDAQ and NYSE lost 5,834 publicly traded companies, Davis says. Today, there are about 4,381 companies on both exchanges, a net decrease of 2,536 businesses. While both exchanges add companies each year as others drop off, “On balance, a lot more left than joined,” Davis says.
The biggest sectors for disappearing corporations include telecommunications, computer programming and data processing, pharmaceuticals, banking, and electronic components. (Computer programming and pharmaceuticals also accounted for the most new initial public offerings, according to Davis.)
Reasons for dropping off public exchanges are varied and include bankruptcies, mergers and acquisitions, or simply going private again. That coincides with the phenomenon in Silicon Valley, where so-called unicorns—tech companies valued at $1 billion or more—stay private longer, or may have no plans to ever go public. Companies in that category include Airbnb, Snapchat, and Uber, that are so flush with investor cash that they don’t really need more from public markets, or the regulatory hassle of listing on an exchange.
But as more companies liberate themselves from the onerous public markets, the vanishing public corporation has wider implications for the American economy, Davis says. One reason to mourn their loss: jobs at large corporations in the U.S. traditionally implied a lifelong career path, and were padded with benefits including health insurance and retirement plans.
Second, public companies can more easily be regulated through securities laws or federal amendments like Dodd-Frank, which attempted to rein in abuses in the banking world after the financial crisis.
Notably, the old-guard blue-chip companies aren’t the jobs creators they used to be. General Motors, for example, has 215,000 employees today, about a quarter of its workforce in the 1980s. Similarly, AT&T had just 47,000 employees before its 2005 acquisition by SBC Communications, compared to 822,000 prior to its split in 1982.
However, those companies still provide more jobs than the Valley’s most vaunted tech giants. The combined global workforces of Box, Facebook, Google, LinkedIn, and others are smaller than the publicly traded Blockbuster Video was in 2005, the report claims.
In tech especially, “Markets don’t reward firms for growing large in employment,” Davis says.
What does that mean for employees? As corporations continue to vanish, the future of work for many is likely to be more ad hoc employment and contract positions without benefits, says Jim Kessler, vice president of policy for Third Way. As a result, programs that help workers create secure retirements—a perk of spending a career at a large public company—might have to be baked into temporary jobs with the help of federal policies.
The likelihood of that happening under a Trump Administration? Not as high as the study authors might like.
“This is a solvable public policy question, but one that does not lend itself to a populist solution,” Kessler says.
Update: An earlier version of this story misstated AT&T’s employee count after its acquisition by SBC Communications. The story now reflects that count prior to AT&T’s sale.