SEIU Survey

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This is a survey of voter opinions on private equity, sponsored by the SEIU.

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SEIU Survey

  1. 1. SEIU Private Equity Project Presented by: Benenson Strategy Group August 31, 2007
  2. 2. Methodology <ul><li>The Benenson Strategy Group conducted 800 telephone interviews nationwide between June 28 and July 1, 2007. </li></ul><ul><li>All respondents were registered voters and likely to vote in the 2008 presidential election. </li></ul><ul><li>The total data set has a margin of error of ± 3.46% at the 95% confidence level, and it is larger among subgroups. </li></ul><ul><li>Note: Where class designations appear in the following analysis, please note that these are self-identified class distinctions based on a question asking respondents to choose which described their economic position: poor, lower-middle class, middle-class, upper-middle class, or affluent. </li></ul>
  3. 3. Key Findings: Economic Outlook and Income Inequality <ul><ul><li>Voters’ overwhelming negativity toward the direction of the country has spilled over to affect views of the economy. </li></ul></ul><ul><ul><ul><li>71% say the country is on wrong track </li></ul></ul></ul><ul><ul><ul><li>61% rate the national economy negatively </li></ul></ul></ul><ul><ul><li>This negativity extends across most income levels, with only the top earners rating the economy positively. </li></ul></ul><ul><ul><li>At the root of these economic concerns is a sense that our economy is out of balance, with more than 6 in 10 saying the gap between the wealthy and other Americans is wider than ever before. </li></ul></ul><ul><ul><ul><li>77% see this income inequality as a problem in our country, </li></ul></ul></ul><ul><ul><ul><li>Voters see income inequality as having political and moral, as well as economic, implications for the country. </li></ul></ul></ul>
  4. 4. Key Findings: Private Equity <ul><ul><li>While there is little evidence of broad hostility toward Wall Street in general, the private equity industry’s activities play into voters’ sense of economic imbalance. </li></ul></ul><ul><ul><ul><li>After a neutral introduction to private equity, more than 6-in-10 voters say buyout deals are “bad for the economy.” </li></ul></ul></ul><ul><ul><li>Even after hearing the industry’s positive arguments, voters overwhelmingly believe buyout firms have a “responsibility to make sure workers benefit from the wealth being created,” and believe they only benefit the few. </li></ul></ul>
  5. 5. Key Findings: Private Equity <ul><ul><li>Voters’ doubts about the buyout industry center on its effects on workers and its preferential tax treatment. </li></ul></ul><ul><ul><ul><li>They are very concerned that firms are laying off workers, wages are stagnant while executives make enormous profits </li></ul></ul></ul><ul><ul><ul><li>They are also concerned about the unfairness of the tax structure that gives private equity an advantage over other companies </li></ul></ul></ul><ul><ul><li>Voters clearly see a government role in correcting the imbalances created by private equity buyouts. </li></ul></ul><ul><ul><ul><li>To ensure that buyouts happen in a way that helps and not hurts the economy: </li></ul></ul></ul><ul><ul><ul><ul><li>55% trust government, while 16% trust the private equity industry. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>54% trust labor unions, while 18% trust the private equity industry. </li></ul></ul></ul></ul>
  6. 6. Key Findings: Private Equity <ul><ul><li>With so much skepticism toward the buyout industry, there is strong and broad support for reforms that restore balance to buyout deals and the economy at large: </li></ul></ul><ul><ul><ul><li>Honor commitments to retirement and health care benefits made by previous owners </li></ul></ul></ul><ul><ul><ul><li>Provide health insurance to employees </li></ul></ul></ul><ul><ul><ul><li>Tax income at same rate as other corporate income </li></ul></ul></ul><ul><ul><ul><li>Tax profits going to PE managers at same rate as ordinary income </li></ul></ul></ul><ul><ul><ul><li>Increase disclosure requirements on private equity firms </li></ul></ul></ul><ul><ul><ul><li>Offers community and employee representatives a seat at the table when buyout deals are negotiated </li></ul></ul></ul><ul><ul><li>Overall, voters’ appetite for government action can be seen from the fact that of ten reforms tested, 9 received support from 70% of voters or more. </li></ul></ul>
  7. 7. The National Economy
  8. 8. Americans are Overwhelmingly Pessimistic About the Direction of the Country and Economy Only Republicans give positive marks to the economy Q6: In general, would you say things in this country are going in the right direction, or have they gotten off on the wrong track? Q8: How would you rate the state of our country’s economy today? Would you say that it is excellent, good, fair or poor? Direction of Country State of Economy <ul><li>Dem: 87% </li></ul><ul><li>Rep: 43% </li></ul><ul><li>Ind: 77% </li></ul><ul><li>Dem: 79% </li></ul><ul><li>Rep: 37% </li></ul><ul><li>Ind: 60% </li></ul><ul><li>Dem: 8% </li></ul><ul><li>Rep: 42% </li></ul><ul><li>Ind: 15% </li></ul><ul><li>Dem: 19% </li></ul><ul><li>Rep: 62% </li></ul><ul><li>Ind: 38% </li></ul>Gallup July 8: 36% Aug 16: 33% Gallup July 8: 63% Aug 16: 66%
  9. 9. Most Americans See the Economy Struggling Only highest earners rate the economy as strong State of the Economy Q8: How would you rate the state of our country’s economy today? Would you say that it is excellent, good, fair or poor?
  10. 10. Income Inequality
  11. 11. Income Inequality: The Gap is Growing, and It’s a Problem The gap between wealthy people and other Americans is growing wider than ever before There have always been people at the top, middle, and bottom/things are no different now than they have been in the past Gap Between Wealthy People and Other Americans Is: Q11: Which do you agree with more? Q12: In your opinion, would you say that the gap between the wealthy and other Americans is a problem in our country? Serious Problem: 32%
  12. 12. Voters Very Concerned About Growing Imbalance Between CEOs, Wealthiest and Average Workers Concern About Income Inequality Specifics Q15-21: How much does this concern you? 7pt scale.
  13. 13. While Voters See Shared Responsibility for Fixing Income Gap, Government Should Lead the Way Responsibility for Dealing With Income Gap Q23: Who do you think should have the most responsibility for dealing with the growing gap between wealthy Americans and other Americans?
  14. 14. Private Equity
  15. 15. Initial Awareness of Private Equity is Low Favorability to Private Equity Q28, 29, 30, 33: Do you have a very favorable view of it/them, somewhat favorable, somewhat unfavorable, or very unfavorable view? (Corporate Takeover Specialists and Buyout Industry were split sampled)
  16. 16. Introduction to Private Equity Generates Very Negative First Impression <ul><li>Private equity buyout firms are reshaping the American economy. These buyout firms have bought up some of America’s best-known companies, such as Chrysler and Burger King. </li></ul><ul><li>After buying public companies and taking them private, firms make changes to the companies, then re-sell them. </li></ul><ul><li>Sometimes companies are turned around after a buyout; sometimes workers are laid off or see their benefits cut. </li></ul><ul><li>When these companies are re-sold a few years later, they generally yield large profits for the private equity firm. </li></ul>Q36: Given this, would you say that private equity buyouts are good or bad for our nation’s economy? Private Equity’s Effect on Economy
  17. 17. Voters Feel PE Has Responsibility to Workers: Don’t Leave Behind While CEOs Make Billions <ul><li>PE Positive : </li></ul><ul><li>Private equity firms are creating value for the economy by taking over struggling companies and making them more competitive. </li></ul><ul><li>Because many of their investors are pension funds, private equity firms have returned $430 billion in profits over the last 15 years to working Americans, strengthening our economy and making millions of seniors more economically secure. </li></ul><ul><li>Response : </li></ul><ul><li>Private equity buyout firms have a responsibility to make sure workers benefit from the wealth being created. </li></ul><ul><li>A handful of private equity executives are personally making billions of dollars in buyout deals but workers are being left behind . </li></ul><ul><li>If private equity firms valued and rewarded the work of the employees at the companies they bought, they would raise salaries and improve health and retirement benefits. </li></ul>27% 65% Q38: Which of these statements comes closer to your view? Middle Class: 71%
  18. 18. Voters Reject Buyout Firms’ Arguments on Benefits to Worker Pensions PE Positive/Pensions : Because many of the investors in private equity funds are pension plans, profits go to help working Americans . In the past 15 years, private equity firms have returned $430 billion to pension plans. <ul><li>Response/No Significant Benefit : </li></ul><ul><li>Only 20% of Americans have pensions with the number declining every year. </li></ul><ul><li>The returns private equity brings to pension funds don’t provide a significant benefit to our economy . </li></ul><ul><li>At the same time, millions of workers are struggling to get by, with many seeing their livelihoods put at risk by buyouts. </li></ul>Q37: Which of these statements comes closer to your view?
  19. 19. Voters Concerned: Effects on Workers, Use of Tax Loopholes, Executive Profiteering Concern About Effects of Buyout Q41-51: How concerned are you about this effect of a private equity buyout?
  20. 20. Conflicts of Interests, Fees, Lack of Disclosure All Generate High Levels of Concern Concern About Effects of Buyout Q41-51: How concerned are you about this effect of a private equity buyout?
  21. 21. Voters Trust Government, Unions to Keep Buyouts from Harming the Economy Trust More to Ensure Buyouts Are Done in a Way that Helps not Hurts Economy Q54,55: Who do you trust more to ensure that private equity buyouts are done in a way that helps and not hurts the economy? (split-sampled) <ul><li>Dem: 61% </li></ul><ul><li>Rep: 43% </li></ul><ul><li>Ind: 56% </li></ul>Government <ul><li>Dem: 65% </li></ul><ul><li>Rep: 51% </li></ul><ul><li>Ind: 51% </li></ul>Government Labor Unions
  22. 22. Very Strong Appetite for Reforms to Restore Balance, Protect Workers, Increase Disclosure Total Support Q65-74: Do you strongly support this proposal, somewhat support it, somewhat oppose it, or strongly oppose this proposal?
  23. 23. Proposals for Reform, Cont’d: Voters Show Very Strong Support for Wide Range of Reforms Total Support Q65-74: Do you strongly support this proposal, somewhat support it, somewhat oppose it, or strongly oppose this proposal?

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