By JARED WHITLEY
Despite Mat Ishbia’s repeated claims that his company, United Wholesale Mortgage, has never laid anyone off; the facts – and common sense – belie his statement, as UWM’s employee count is down 30 percent over the past two years.
“While my competitors are cutting investments and laying off thousands and thousands of people, we continue to invest in technology, take care of our people, and have never laid off a single team member in our 37-year history,” Ishbia said at a recent webcast townhall.
But, according to the company’s annual report filings with the Securities and Exchange Commission, UWM slashed its workforce by nearly a third – from a height of 8,600 in January 2021 down to 6,000 now.
With interest rates rising and the housing boom cooling, there’s nothing unusual about UWM reducing its workforce. Most companies that staffed-up while the housing market was on fire are now contracting, In fact, mortgage lenders cut 10,000 jobs in 2022.
Considering the cooling market and the lack of job prospects, it seems strange workers in the housing market would leave a secure job.
But in the case of UWM, an overage of 100 employees a month – one every 2 working hours of every working day – left the company over the past two years.
So when is a layoff not a layoff?
Apparently when it’s a firing – or a mass quitting.
“UWM IS A S— SHOW: Please leave asap, most of my friends got Fired last Friday,” reads a recent post on Reddit. “Please leave that hell whole/slave ship, they are going to lay off another 200 people my friend said by the end of this month” [all sic].
There are so many complaints about work standards at UWM there’s an entire subreddit dedicated to the subject.
So how does Isbhia, who once publicly declared he would “sleep on the couch before I lay anyone off,” reconcile his rhetoric with the reality of thousands of lost jobs?
A company spokesperson attributed the reductions to “natural attrition” due to the company’s $62.5 million net loss in Q4 2022.
Firing or constructive dismissal, creating a work environment so untenable that workers quit, can have financial benefits for a company. Generally, companies do not pay severance for these types of separations and its possible that workers would not be allowed to collect unemployment benefits.
What makes Ishbia’s position different, industry officials and business ethicists say, is the gap between his public claims vs. the economic reality.
Clashing headlines like that are an unsustainable management practice, according to Abe Bakhsheshy, business professor at the University of Utah and director of its Daniels Fund Ethics Initiative.
“The success of any organization for achieving a healthy bottom line is due to collaboration, teamwork and sacrifice of the entire workforce employed by such firm. No one can make it alone. As such, the leaders and founders of an enterprise should share the wealth with those who have contributed to the bottom line. Financial losses should be painful to all, including the top-level executives.”
Ishbia, through his family’s company, collects about $150 million a quarter from UWM’s dividend, enough to make him a new NBA franchise owner. But also enough to potentially put UWM in financial peril as it sold off more than $55 billion worth of loans it was servicing to net $426 million – more than a third of which will go directly to cover Ishbia’s anticipated Q4 nut.
Pushing the boundaries isn’t anything new for Ishbia and UWM who, in 2022, paid $2.75 million to settle unpaid overtime claims from current and former account executives. Ishbia has also faced backlash over his attempts to force small brokerage firms to stop doing business with other lenders if they work with UWM, resulting in lawsuits.
These reputational challenges may be hard to fix once the housing market rebounds, says Bakhsheshy.
“The younger generations have immediate and ongoing access to the most recent updates about companies’ immoral business practices than any other generation through social platforms and media. Negative publicity will end up bringing the most successful companies to their knees. Times have changed and any ethical practices are shared with everyone rapidly these days… The invisible hand of the marketplace will eventually correct such inequalities and misdeeds by destroying a company’s reputation.”
But for the thousands of UWM employees who have already been laid off – errr – fired or quit, Ishbia’s reputation is already cemented.
Jared Whitley has written about politics and public policy for publications including Real Clear Politics, National Review, and the Washington Times. The views expressed here are his own.