The demise of Hostess bakery has at least two segments of the American public unhappy: those who will miss the product and those who blame the unionized workers and consider them the cause of this eighty year old company’s ending to be their fault. Just maybe the explanations are a little more complicated and a little more nuanced.
Union bashing has taken on a new meaning since the recession, particularly public sector ones. But union membership is at an all-time low, probably down forty percent from its heydays. Public sector unions may comprise the largest segment of members today. They are really catching it, but overlooked is that many states and municipalities that signed agreements never kept their end of the bargain by paying into the pension funds as promised. I think it fair to ask why unions came to be, and the answer isn’t complicated. Employers created working conditions that were intolerable. Unions not only sought better pay, but they also sought collective bargaining to improve safety, reduce the number of hours, and to protect workers against what we call unfair labor practices. In time the unions acquired power and with it came abuses that we are all too familiar with. In other words, the power and abuses shifted from the employer to the union. That pendulum has in recent years has swung back again. Today on reactionary radio you hear the talk meisters say that workers should be grateful just to have a job, that they should shut up and take whatever comes their way from their employer, that life is tough, and that everyone has to bear the burden. One of these charlatans once made the mistake of disclosing that he is a member of the Screen Actors Guild (have any readers bought a full price Broadway play ticket over the years?), yet here he was blaming the unions for Hostess going under. While these worker bashers tout sacrifice, you can bet that the likes of Rush Limbaugh haven’t given up anything ($40 million/year for His Porkulous) while trashing the working stiffs.
Back to Hostess. A few years ago Hostess went through Chapter 11 reorganization. The unions agreed to pay and benefit cuts in order for the company to survive. Then Hostess was purchased by some private equity investors and new management put in place---none with food service experience but instead, financial engineers. And what was one of the first things the new team did? They doubled their pay and took seven figure incomes. I remember that in officer training we were taught that an officer never eats until the last enlisted man has eaten, and he never sleeps until the last enlisted man has a place to sleep. That is leadership 101. But the Hostess management team went the other direction. While their company was failing they demanded that the workers take cuts while they took more out for themselves. And from what I have read, the management did nothing to try and offset the changes in American eating habits, which was shifting to healthier food products. The big boys made no effort to enter the export market in a meaningful way, something they could have done considering that the product has preservatives that would not have impeded shipping, and they made no effort to produce goods that the public wanted. No, it was too easy to clean the company out at the top and tell the bakers, drivers, and other workers to eat the crumbs that they were only too lucky to get. They overlooked the simple fact that owners and workers have a symbiotic relationship, and setting the example at the top, talking and working with your people, taking care of those that do the daily routines, can produce amazing results. Delta is an example. There are many other unsung American companies that understand good management and good leadership, that they are all in it together, and that happy workers are productive workers.
The income disparity between the C - level managers and employees has grown from roughly 40:1 in the early 1980s to 300:1 today. If anyone thinks that this is healthy, that it is making America better, so be it. I couldn’t disagree more. We grew the largest middle class in history during and after WW II. This substantially contributed to the economy and benefited everyone. Middle class people could afford to send their kids to college, to buy homes, to own two cars, and contribute to the economic growth of our great country. Upward mobility jobs with rewarding careers were the American way of life if you were willing to work for it. With less disposable income today for the middle, there is less money being spent, and our consumer economy is hurting badly. It will get worse if better heads don’t prevail and figure out that we are all in this together, that we don’t ever want to become a nation of haves and have nots, that companies like Hostess could have survived, that Hostess is just a microcosm of a very bad trend.