The job hits just keep on coming in the northern suburbs from Capital One’s acquisition last year of credit card issuer Discover Financial Services.
Capital One said earlier this week it’s laying off 243 more workers at the former Riverwoods headquarters of Discover. Including those new reductions, over the past 15 months Capital One has cut nearly 1,300 jobs in Illinois, more than a fifth of Discover’s workforce here before the buyout, according to Crain’s Chicago Business.
While the good-paying white-collar jobs in the ‘burbs are getting slashed, the substantial workforce Capital One inherited from Discover in the city of Chicago largely has been spared. Most prominent has been the call center Discover opened with fanfare in Chatham on the city’s South Side in part of an abandoned Target store.
Capital One insisted when it announced the Discover deal in February 2024 that it would preserve the Chatham operation, which had been opened just two years before. The project represented one of corporate Chicago’s most significant investments in Chicago’s South Side in decades. Discover’s then-CEO Roger Hochschild framed the move at the time as “sparking repair (for systemic racism) in our own hometown through infrastructure investment, jobs and philanthropic support.”
Discover prioritized hiring from the neighborhood and surrounding environs to fill the 1,000 jobs it was creating. The majority of those call-center workers continue to be South Siders, a Capital One spokeswoman tells us.
So it’s ironic that Mayor Brandon Johnson’s continued call to impose a monthly $33 per-job tax on private-sector employers in Chicago with headcounts of 500 or more would penalize Capital One’s continued commitment to the South Side — to the tune of nearly $400,000 more per year. That would be Capital One’s price for putting so many people to work in a part of town where jobs are scarce.
Unlike Discover, Capital One isn’t locally based, which is partly why it feels free to cut so many north suburban jobs. In the world of corporate mergers and acquisitions, an out-of-town buyer looks to cut costs in order to help cover the share-price premium necessary to clinch the deal and those reductions typically come mainly at the expense of the seller. Capital One’s McLean, Virginia, headquarters is a long way from Chicago’s South Side.
What mayor in his right mind would want to send such a negative signal to an acquirer of a local company that went far out of its way to create economic opportunity in a part of the city where the cost of doing business is so high that retail giants like Walmart, Target and Walgreens have shuttered multiple stores? Walmart, in fact, closed its Chatham store very near the Capital One call center earlier this year.
And what locally based corporation would consider following in Discover’s footsteps and making a similar investment out of a sense of duty to neglected city neighborhoods for the privilege of incurring a tax on each job created?
The Chatham call center is the credit card company’s most visible presence in Chicago, but it’s not the only one. All told, Capital One employs more than 2,300 in the city, including at its satellite office at 77 W. Wacker Drive.
Speaking in the context of the head tax, the Capital One spokeswoman says in an email, “It is premature to comment on specific plans, but significant policy changes would naturally factor into how we evaluate future planning and investment in the region.”
Johnson will propose the last budget of his term in a couple months, and he will confront a daunting budget deficit just as he’s done in each of the past three years. We don’t know yet whether he will take another run at obtaining City Council approval of the corporate head tax, but aldermen who were part of the council majority that rejected the jobs levy last year suspect he will, if only to wield as a political weapon in his reelection campaign. (Johnson has yet to announce his intentions.)
In continuing to publicly grouse about the council’s action, Johnson has repeatedly castigated Chicago’s business community for refusing to put “skin in the game” to help solve the city’s structural budget shortfalls. The Chatham call center sure looks like skin in the game to us.
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