What is better? A job with decent pay and benefits or a demand for more pay that results in no jobs?
The unions representing the workers at Hostess in the United States; makers of Twinkies and Ding Dongs, chose the latter. The company was teetering on bankruptcy as the workers went out on strike. That being the final straw for the financially struggling business, they closed, and about 18,500 workers are now not working.
Are those people better off?
Hostess has been struggling for years against, some experts say, smaller, nimble companies that are not burdened as Hostess is with, as the company reports, huge pension obligations and high union wages.
The public doesn't make its choices in the snack aisle based on whether they think the company producing the item pays well. They make their choice based on price and the desirability of the product.
Many retailers had already dropped Hostess items from their lineup as the company, with workers on strike, could not supply enough product. Hostess reports that even if people came back to work, they could not get all of that business back.
AFL-CIO President Richard Trumpka tried to blame Mitt Romney and his company. “What’s happening with Hostess Brands is a microcosm of what’s wrong with America, as Bain-style Wall Street vultures make themselves rich by making America poor,” Trumka said in a public statement. “Crony capitalism and consistently poor management drove Hostess into the ground, but its workers are paying the price.”
The "Bain style" is to restructure a company and right-size everything, including payroll, to save the company and as many jobs as possible. The "union style" in this case, was to drive the company out of existence. In this case, everybody loses, including those who invested over the past decade as Hostess struggled to survive.
Will public unions in Ontario take the same scorched earth approach? Are the teachers willing to go down fighting? Education will always stay in business, but eventually, it is the unions that will have to go, or as with Hostess, thousands of people will be standing baffled and unemployed on the streets wondering why their slogans, placards and greed didn't save them once again.
A number of people, having read this blog or the Toronto Sun column version of it, followed by a reading of this editorial in the Toronto Star, wrote to me saying that I should apologize or update. I will do the latter.
The Star editorial reads, "What happens when vulture capitalism ruins a great company? The vultures blame the workers. The vultures blame the union. And vapid media outlets report the lie as “news.”
You can read the rest by clicking the link above.
Management at Hostess may have been incompetent. They may have been greedy. That has nothing to do with my argument.
What if the union members are 100% "right" in their arguments? They went out on strike and the company folded. There is a legal attempt to get Hostess to make agreements with the unions and stay in business. We'll see how that works out, but if 18,500 people end up unemployed, how does being "right" help them? Will the grocer supply food for their families for free because they were "right?"
Some people have written to me to ask whether I would take a 30% cut in pay. Not happily, that is for sure. Perhaps not even willingly, but I would only walk out if and when I had a new job lined up that would pay me more than what I would be left with after the cut. My family seems to want to insist on eating under a roof.
I think the workers allowed themselves to be ill-used by the union. They gambled and they lost. Unions have always threatened employers with damage to the business that employed them. They lived by that sword, now in this case, they may die by it, and for the families of those workers, that is sad.