Those toiling in mergers and acquisitions knew what was in store for Discover employees following the credit card firm’s purchase by Capital One: They weren’t going to be in the new company’s wallet.
Since May 2024, when Mclean, Virginia-based Capital One wound up buying Riverwoods-based Discover for $35 billion, the combined firm has been shedding redundant workers at Discover’s four-building corporate campus at Lake-Cook Road, just west of the Tri-State Tollway.
Before uniting two of the largest credit card companies in the U.S., an estimated 4,000 folks worked at the Riverwoods headquarters. Capital One officials said last week that 1,139 employees will be laid off at Discover Financial Services.
That amount follows about 600 people let go last year. Those in mergers and acquisitions will tell you that layoffs normally don’t affect the buyer, in this case banking giant Capital One. The last day working for those being laid off in the latest round is set for May 4; others will be phased out by October.
“As part of our continued journey to integrate Discover with Capital One, we announced the difficult decision to eliminate some Discover associate roles across the organization,” Capital One said in a statement.
If there are bright spots, nearly half of those laid off don’t reside in Lake County or Illinois. According to the company, at the Riverwoods site, some 532 work at the campus and 69 live in Illinois and work remotely. Another 538 white-collar employees work remotely outside the state. Those being laid off will receive severance packages.
Full disclosure: I have a Discover card stuck in my wallet.
I remember the exciting day this new charge card came my way. It was at a kiosk set up outside the entrance to the mega-Sears store at Hawthorn Center in Vernon Hills.
I was lured by the siren call of “buy now, pay later.” After all, back then Sears had nearly everything anyone would need. That was in the summer of 1986.
Back then, this young and financially struggling scribe took advantage of the introductory offer from then Hoffman Estates-based Sears for this new credit card and signed up for it. My Discover card has been well-used since then.
Sears, as a corporate entity, of course, is long gone. At Hawthorn Center, the Sears store, which once anchored the east side of the sprawling shopping center at Routes 21 and 60, has been repurposed into a mix of upscale housing and storefronts.
But the company’s credit card spinoff remains. At least for the time being.
Capital One says it intends to continue to offer the Discover credit card alongside its own card. Yet, as in any endeavor, things can change.
Certainly, it is only a matter of time before company bean counters determine the 1.1 million-square-foot Riverwoods headquarters, dating to 1988, and on about 25 acres, is no longer needed, nor in the best interest of a Fortune 500 company with facilities spread across the nation.
Capital One wouldn’t be the first corporation to shed brick-and-mortar sites as remote work and artificial intelligence cut into office labor.
While the Discover layoffs hit close to home, they also follow last month’s announcement that Deerfield-based Walgreens, now part of New York City private equity firm Sycamore Partners, is furloughing 469 positions. Those latest layoffs should be another warning sign to Illinois elected officials and local economic development specialists.
Illinois surely struggles with competitiveness among economic rivals across the U.S. and the Midwest. Since 2019, the Land of Lincoln has had the nation’s fifth-slowest growing economy, according to one study.
To help fund another record-high state budget of $56 billion, Gov. JB Pritzker has proposed about $589 million in new taxes. Those proposals include a usage-based fee on social media platforms, an extension of the cap on net operating loss deductions and $120 million in new casino taxes on table games.
Not exactly incentives to entice new businesses to make Illinois their corporate home.
The casino tax would immediately impact The Temporary casino and the coming American Place expansion in Waukegan’s entertainment zone at Fountain Square. Under Pritzker’s budget proposal, the marginal tax rate range for table games would soar from 15% to 50%. The current range is 15% to 20%.
The impact will be another burden on gaming interests, which Illinois has cultivated over the years with expansion in suburban Chicagoland. State officials lean heavily on games of chance and other “sin” taxes to balance the state’s generous spending habits.
Over recent years, Illinois has seen a flock of corporations flee to more tax-friendly locations, which means shrinking tax collections and fewer employees to contribute to the income- tax pool. If officials want to see continued reports of layoffs at Illinois firms, all they need to do is continue their current policies.
Charles Selle is a former News-Sun reporter, political editor and editor. sellenews@gmail.com. X @sellenews.
