Blame the Unions

So an iconic snack food company goes out of business and blames the employees who helped make it profitable for over 80 years. Naturally, the right-wing pundits join in — when a company goes under, it’s always the fault of those greedy workers who refused to agree that their wages should be cut to save the company owners and managers from their own mistakes.

Get this one, from Mark Hemingway at The Weekly Standard: “Among many pro-labor types, this was dismissed as yet another negotiating ploy by management. It wasn’t.” Love that “Among many pro-labor types” part. So much subtextual contempt conveyed in those few words! “Pro-labor types” — as though people who support the right of employees to organize in order to represent their own economic self-interests are some weird little cult.

And this, from Philip Klein at The Washington (emphasis is mine):

Hostess — the owner of Twinkies, Ho Ho’s, Ding Dong’s, Drake’s coffee cakes and dozens of other iconic brands of prepackaged baked goods — is being forced to liquidate, because members of one of its labor unions refused to end their strike and come back to work. So now, most of the company’s 18,500 workers will be looking for a job as Hostess liquidates its assets.

Tengrain at Mock, Paper, Scissors injects some reality into this nonsense:

Hostess Brands Inc., makers of the ubiquitous Twinkies, Ding Dongs and Wonder Bread, is going out of business. The management claims it is because the associated workers’ unions would not accept a pay cut, and not enough scabs crossed the picket lines to keep production going[.]


What’s interesting in the article is that it barely mentions any other factors that might be involved, like price increases of ingredients or that the demand for these “treats” has dropped in what is a highly competitive market segment.

Which is cold comfort to all those people who are losing their jobs. We are sure Rayburn will be feted as a principled Job Creator and move onto another gig.

Gawker notes that: Out of 18,500 individuals employed by Hostess, only 5,000 belong to the bakers’ union. The strikes began on Nov. 9, when the company imposed a contract that would cut workers’ wages by 8 percent. The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) said the contract would also cut benefits by 27 to 32 percent.

And Doug Mataconis (emphasis is mine):

Hostess has had financial difficulties for years now, much of it related to its labor costs and its inability to compete effectively in a food and snack market that has changed significantly over the decades. The company, originally known as Interstate Bakeries Corporation, was founded in 1930 first filed for Chapter 11 Bankruptcy protection in 2004 and spent five years under bankruptcy protection before emerging in 2009 under a new name, Hostess Brands, Inc. Within two years, though, the company was back in financial trouble and once again filed for bankruptcy protection at the beginning of this year. It’s difficult for a company to successfully emerge from Chapter 11 successfully to begin with, it becomes nearly impossible when that company is forced to re-enter Chapter 11 only a few years later. That’s a sign of an unsustainable business model and/or cost structure. So on some level, it’s not at all surprising to see this happen.

But as always, the right’s instinct is to go for the authoritarian world view. If there’s a big national deficit that needs to be cut, cut the domestic social and economic relief programs that benefit the most vulnerable, least powerful members of society rather than raise taxes on wealthy Americans by one penny. If a company is failing — or if it isn’t failing at all but simply wants to increase its profits — blame the workers at the bottom of the pay scale who object to having their wages and benefits cut, and/or their working conditions made less safe. Don’t ever hold top management and/or the company’s owners responsible for bad business decisions, or expect them to cut their own salaries or forego their bonuses or — horrors! — lose their own jobs when they make disastrous business decisions.

There’s this idea in the corporate world and among free market cheerleaders that private companies and corporations have an inalienable right to make money regardless of how they treat their employees. But that is not true. No company has an innate right to a profit and/or to be in business at all if it cannot do so without busting unions and exploiting workers.


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Kathy Kattenburg

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  • The workers are to blame? If the press were to step back a minute, they would ask themselves what would it take for thousands of workers in this economy to essentially quit their jobs without any replacement work in sight? You’ve got to be an awfully desperate worker to do what the Confectioners Union is doing. The real question, then, is what drove these workers to such desperation? From what they say, it is an endless stream of managers who know nothing about the business, and it is the extent of the pay cuts and pension cuts they are being asked to swallow. If they agreed to these cuts, what they would have is not too different from having no job at all.

    I would add as a contributing factor the amount of debt the company has in relation to its assets. It is de facto bankrupt and has been loaded up with debt through a succession of leveraged buyouts. The workers of this company have been through LBO hell and have borne the brunt of the management failures, the equity extraction games, the collapse of market share, the increases in raw material costs (especially sugar), and the declining public taste for their products. Management has not suffered in the least during these changes, and I wouldn’t be surprised if there is one or more instances of investors taking dividends out of the company even though no profit has been achieved for years.

    Bear in mind that the LBO people involved in Consolidated have been supporters of the Democratic Party, and are not your typical Mitt Romney types. The net effect of their actions on the workers, however, is still the same as if Bain Capital took over.

  • Another major contributor to nearly all financial ills in this country is the unrealistic cost of rent, both residential and commercial.

    These unrealistic rates continue to be possible as a result of bailouts. Workers can’t afford the rent on the wages they earn, and neither can businesses.

    • I looked into housing costs in Geneva recently, just out of idle curiosity, and I discovered a curious thing. In Geneva, an apartment the size of my (tiny) house sells for about USD $900,000, but it rents for about $1300. While these numbers are both quite high to my way of thinking, they are not in line with each other according to my local arithmetic. A million-dollar property rents for waaay more than $1300 here in Austin.

  • Just once in these discussions of unions, I’d like to see it develop into something more than “unions good – management are evil, stupid pricks” vs. “management are wealth creators – the proles are ungrateful, overpaid slobs”. Playing things this way means that the debate never gets any further.

    For me the relevant questions centre around whether a labour organization model developed primarily for manufacturing works well in an information / service economy, should it be changed to provide a good basis for collective organization, if so how, etc. This fills column inches and gives people space to vent, but this largely amounts to projecting a past that frankly most don’t completely understand onto a future we have even less understanding of.

    Part of this, I fear, is that the numbers being what they are and the demographics of Internet-mediated commentary being what they are, most of the folks who are opining about it have little direct experience with it. Just out of curiosity, what’s the experience of the folks commenting on it so far in terms of working in unionized vs. non-unionized environment? I’ve worked for ten unionized and coming up on 12 non- in jobs that are broadly similar (information generation, dissemination, etc.).

    As a related issue, what do folks want unions (or other forms of labour organization for that matter) to do? What do they look like?

    • Dave, you think this is a discussion of unions? It seems to me that a business failed, and its failure was reported in the press as resulting from unreasonable unions. That does not appear to be the case. Pointing out the inaccuracies in the reporting seems to me a step towards fruitful discussion, not an ending of it unless we’re assuming that we must bash unions as an entry to discussion. It would be sort of like saying, “Muslims want to impose sharia law in the US. If you object to that statement, you’re stopping discussion from ever getting beyond ‘Muslims are good, misunderstood people.’ Playing things this way means the debate never gets any further.”

      • No I don’t think this is a discussion of unions – for me this is an example of what passes for a discussion of unions in the modern American context. It’s one side appearing to feel rhetorically obligated to say unions are good, because the other side said they were bad. If someone else writes a prime mover piece saying unions are good, one can bet that there’d be pieces in response saying how they are bad. The frustrating thing for me is that they never seem to get much beyond that.

        I find it frustrating because it seems to me that more intelligent forms of labour organization potentially represent a way out of some of the traps that we’ve gotten ourselves into. In the same way that one can’t say that the failure of this company is simply attributable to unions, I don’t think that one can is solely attributable to management. It’s frankly attributable to both parties (and likely a number of other things quite apart from labour relations). It seems to me that if all the effort is spent shifting the blame to one side or the other, that what is really missed is an opportunity to think about how things could be restructured to be more effective.

        It’s long seemed to me that some of the reason why union membership is in freefall has to be due to it (traditional labour organization – “unions”) somehow not being well suited for the current environment. That’s certainly not all of the reason, but the trend is so pronounced that I think it’s got to be some of it. For me the question then becomes, what does labour organization that’s better suited for the current environment look like? I have enough experience working in the knowledge economy to know that what works for labour organization in businesses that produce widgets doesn’t look like that great a fit and that really does seem to be the explicit and implicit model that I see trotted out when folks talk about unions being good or bad.

        • Here‘s a good discussion about the state of unions. Yes, Canadian unions but it applies to the U.S. as well.

          And more here.

          Unions are coping with growing pressure from employers and governments to accept wage freezes and reduced benefits, while they are also being asked to become active partners in boosting company productivity and improving work processes.

          Labour leaders are confronting growing hostility about their role from both governments and broad swaths of the non-unionized public. In this difficult and complex climate, we talked to leaders in labour, business and education about their take on the challenges and new roles facing unions this Labour Day. More at the link

        • Ah, the centrist position: the correct response to biased news reports is not to point out the inaccuracies, but to intone seriously that it’s both sides’ fault. I’ve never seen that that really promotes good analysis.

          • Good to know that this is all about analytical quality for you as opposed to scoring rhetorical points from the folks in the cheap seats.

  • Hi Dave. I’m from a union family (seven generations of coal miners) and I’ve worked in both union and non-union jobs. I’ve also helped form and chaired a locally-organised NGO which had a lot of union roots in its methods and organisation – a tenant’s association advocating for residents’ rights to local government and landlords.

    As to what unions should do, that’s relatively simple in the macro: move the Overton Window, both locally and further afield, in favor of their membership and of workers in general. What a union organised to succeed in the information age might look like is an interesting discussion worthy of a full post. For me: it has to have officials who are delegates not representatives; where possible work from a consensus of the membership who are informed on the issues and involved at an Athenian level via computer etc; and have the ability to easily and quickly have full votes of its membership when needed. Officials have to be accountable and transparent, nor can they aggrandize too much power or personal wealth in or from the organization. The members have to be motivated, educated on the issues and involved at every turn. That doesn’t entirely look like many of the big existing unions I am familiar with, in the US or the UK, but it does look like some other groups advocating for rights of the working class.

    • These are good examples of what things should look like, but in my view they don’t reach deeply enough into where we should be going. Formal labour relations seems to me to be mired in an excessively oppositional mode. There’s no doubt in my mind that a strong leavening of opposition is inherent in the role (representing the collective voice of workers), but it seems to me that there’s an awful lot else that should be done to really represent the interests of workers that would look (and be) a lot less oppositional. There’s more to it than the Benjamins, but in my observation of labour representatives this has seemed to be their overwhelming focus, the notion being that if they get as high a wage settlement for their workers as possible, much else will settle out naturally.

      A couple of the key challenges that I’ve seen would be that unions appear to have gotten too large and represent groups that are too heterogeneous, making it pretty much impossible to represent the interests of all members fairly and the resolute focus on job tenure as the “trump” dimension (e.g., more senior workers bumping junior workers in times of restructuring, layoffs, etc.). Anyway, just a few early morning, not yet fully caffeinated, thoughts.

  • Others say that unions are not large enough.

    “We shouldn’t kid ourselves,” says CAW president Ken Lewenza. “The multinational companies we deal with can move capital from one jurisdiction to another with no impediment.”

    Unions have talked about trying to catch up and become more powerful global entities.

    Union leaders and members are more anxious as they watch their historic power and privileges being eroded by governments and corporations that sense this is the time to attack.

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