Key Takeaways
- • A new report from the Private Equity Stakeholder Project documents systematic labor violations across private equity-owned portfolio companies, including mass layoffs, anti-union activities, child labor, and forced labor practices that pose material financial and reputational risks to investors.
- • All eleven of the largest private equity firms evaluated in a recent scorecard received grades of "C" or lower, with seven earning failing grades, indicating widespread governance failures in labor management across the industry's $14.7 trillion asset base.
- • Blackstone-owned Packers Sanitation (PSSI) exemplifies the financial fallout of poor labor practices: after a 2022 child labor scandal involving over 100 children as young as 13, the company lost major contracts with Cargill, Tyson Foods, and JBS, ultimately transferring to lenders three years post-acquisition despite a $1.5 million DOL settlement in February 2023.
- • Private equity's labor practices have demonstrable economic consequences: research shows the industry eliminated more than 1.3 million jobs between 2008 and 2018, including approximately 600,000 retail positions, while reducing worker wages and threatening employment stability across portfolio companies.
- • Institutional investors including CalPERS and CalSTRS are actively scrutinizing private equity labor practices, with the New York State Comptroller formally flagging reputational and financial risks—signaling increased ESG-linked capital allocation pressure on general partners.
Summary
A comprehensive report from the Private Equity Stakeholder Project has documented systemic labor violations across private equity-controlled companies, presenting material financial and operational risks to institutional investors. The investigation evaluated labor practices—including mass layoffs, child labor, forced labor, and anti-union activities—at major private equity firms managing the rapidly expanding $14.7 trillion industry. A newly released scorecard graded all eleven of the largest firms at "C" or lower, with seven receiving failing marks, indicating widespread governance deficiencies in labor management.
The Blackstone-owned Packers Sanitation case provides concrete evidence of how labor failures translate into financial losses. In late 2022, federal regulators accused PSSI of "oppressive child labor" after discovering over 100 children—some as young as 13—employed in 13 facilities across eight states, working with caustic chemicals and dangerous meat processing equipment that caused chemical burns and injuries. Following a $1.5 million settlement with the U.S. Department of Labor in February 2023 and extensive media coverage including a critical 60 Minutes segment, PSSI hemorrhaged business. Major clients including Cargill, Tyson Foods, and JBS terminated or reduced contracts in spring 2023. Within three years of Blackstone's 2018 acquisition, the company transferred control to lenders, demonstrating how reputational damage from labor violations cascades into operational collapse and investor loss.
Beyond individual cases, private equity's labor model has documented macroeconomic consequences. Research indicates the industry eliminated more than 1.3 million jobs between 2008 and 2018, including approximately 600,000 retail positions. Evidence shows private equity acquisitions systematically reduce worker wages and threaten employment stability. Current issues persist: as of September 2025, labor disputes remain active at facilities under current private equity ownership, with federal labor agency rulings continuing to surface violations.
Institutional investors are responding with heightened scrutiny. CalPERS, CalSTRS, and the New York State Comptroller have formally flagged labor practices as threats to financial returns and institutional reputation. This regulatory and investor pressure is reshaping capital allocation decisions and creating existential challenges for firms unwilling to reform labor governance across their portfolios.
The Blackstone-owned Packers Sanitation case provides concrete evidence of how labor failures translate into financial losses. In late 2022, federal regulators accused PSSI of "oppressive child labor" after discovering over 100 children—some as young as 13—employed in 13 facilities across eight states, working with caustic chemicals and dangerous meat processing equipment that caused chemical burns and injuries. Following a $1.5 million settlement with the U.S. Department of Labor in February 2023 and extensive media coverage including a critical 60 Minutes segment, PSSI hemorrhaged business. Major clients including Cargill, Tyson Foods, and JBS terminated or reduced contracts in spring 2023. Within three years of Blackstone's 2018 acquisition, the company transferred control to lenders, demonstrating how reputational damage from labor violations cascades into operational collapse and investor loss.
Beyond individual cases, private equity's labor model has documented macroeconomic consequences. Research indicates the industry eliminated more than 1.3 million jobs between 2008 and 2018, including approximately 600,000 retail positions. Evidence shows private equity acquisitions systematically reduce worker wages and threaten employment stability. Current issues persist: as of September 2025, labor disputes remain active at facilities under current private equity ownership, with federal labor agency rulings continuing to surface violations.
Institutional investors are responding with heightened scrutiny. CalPERS, CalSTRS, and the New York State Comptroller have formally flagged labor practices as threats to financial returns and institutional reputation. This regulatory and investor pressure is reshaping capital allocation decisions and creating existential challenges for firms unwilling to reform labor governance across their portfolios.
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