Several hundred full- and part-time Forever 21 employees are in the early stages of organizing for worker protections, according to the New York-based labor rights group, United for Respect. The mobilization follows the successful efforts of workers at Toys R Us and Sears following their companies’ liquidation or downsizing.
“We’re seeing how Toys R Us was a game changer,” Lily Wang, deputy campaigns director for United for Respect told The Washington Post. “It was a real moment, and now we’re seeing it unfold with companies that go bankrupt. Workers realize they don’t have to normalize [this] problem.”
Organizing efforts by traditional retail employees is a boon for the labor movement, which President Trump has sought to weaken in recent years. Despite those efforts, approval of labor unions hovers near its highest level in 50 years, according to Gallup. Labor has also emerged as a key campaign issue among Democratic presidential candidates like Sen. Elizabeth Warren (D-Mass.), South Bend, Ind., Mayor Pete Buttigieg and Sen. Bernie Sanders (I-Vt.), who called for Forever 21 workers to be fairly compensated.
Hundreds of workers have reached out to the labor group since the weekend, Wang said. “People are upset and anxious about their future, their employment and their store.”
Current employees did not want to go on record with their experiences because of fears of retribution from the company; Wang said several employees cited past instances where Forever 21 swiftly closed stores with little warning or explanation, which prompted their concerns over how the company would treat employees amid bankruptcy.
Forever 21 did not respond to requests for comment, but Executive Vice President Linda Chang said in a statement announcing the bankruptcy filing, “This was an important and necessary step to secure the future of our Company, which will enable us to reorganize our business and reposition Forever 21.”
Now, United for Respect is looking to maintain momentum from this summer’s victory with Toys R Us.
When the toy company announced last year it would shutter its 800 U.S. stores and lay off 33,000 employees, workers fought and won a $20 million severance fund from the investment firms that bought the toy company a decade earlier. Although the sum was less than a third of what labor advocates say the company owed to its employees, it signaled a new level of possibility for worker rights and compensation in the face of layoffs and reorganizations.
Wang credited the maturation and history of other grass-roots labor movements, like the fight for a $15 minimum wage, with propelling United for Respect’s current efforts.
“We have learned over and over again from the past week, workers are at the bottom in terms of priority for any claims or wages,” Wang said. “Workers deserve to know their pay and benefits are protected before executives can get their bonuses.”
The threat of being laid off with little to no severance isn’t the only financial pressure workers face, said Hyunseob Kim, an assistant finance professor who specializes in labor economics at the Johnson Graduate School of Management at Cornell University.
The impact on a worker’s income can last as long as seven years when taking into account lost earning potential, the unpaid time and resources spent looking for a new job, and the periods full-time workers may spend earning less if only part-time work is available, he said. Skills specific to a particular store or industry don’t always translate across industries, further reducing a worker’s earning potential.
In July, nearly three months before Forever 21 filed for bankruptcy protection, Forbes estimated the retailer’s annual sales were sagging by 20 to 25 percent (the family-owned company does not release public financial figures) and was already shrinking its retail footprint by opening smaller stores, or leasing fewer levels in shopping centers.
Forever 21 joins budget retailers like Charlotte Russe, Payless ShoeSource and Gymboree that filed for bankruptcy (and in most cases, shuttered all locations) this year. Kim said traditional brick-and-mortar companies face the twin threats of more nimble e-commerce and rising rents, especially in major metro areas where they’re squeezed on both the revenue and the rental expense side. Forever 21 also embarked on an aggressive expansion outside the United States and, according to Forbes, had a habit of signing 10-year leases on massive retail spaces in the United States.
But perhaps the company’s biggest blind spot wasn’t real estate or international expansion, but the changing tastes of its core customers: teens and young adults.
“If you take everything that’s happening in retail, we unfortunately know there will be more retail bankruptcies on the horizon,” Wang, the labor organizer said. “There’s a real opportunity for Forever 21 employees to realize the power they have and make sure they have a voice in this organization.”
In the months ahead, Forever 21 is expected to release more details about the future of dozens of U.S. stores. According to court documents filed in the bankruptcy motion, the company’s decisions will have an impact on roughly 6,400 full-time employees in the United States and more than 26,000 part-time workers.