It’s remarkable how quick people are to blame workers and their unions whenever a company goes bankrupt or goes out of business. On Friday, I heard Rush Limbaugh on the radio blaming the Bakery Workers for the closing of the Hostess bakeries. His insight apparently didn’t require a look at the company’s history of buyouts and downsizing, the CEO and managers’ pay, the competition, the wage cuts the employees had already taken, or even the company’s products, which have contributed more to diabetes and heart disease than nutrition for decades.
The New Yorker‘s James Surowiecki does a better job of considering the many factors that contributed to such a brutal loss of jobs in “Who Killed The Twinkie?” Surowiecki focuses on the inability of Hostess Brands’ s management to adapt to a changing market rather than the supposed greed of the workers who were trying to hang onto pension benefits they had bargained for decades ago.
The Sacramento Bee‘s Bruce Maiman points out that Hostess’ revolving-door management failed to invest in new machinery and improved logistics, even while saving millions of dollars by undercutting the labor market by slashing wages and pension benefits. The executives did manage to take care of their own compensation, however, giving themselves double– and triple-digit compensation increases, according to Maiman. I hate to see anyone lose a job they want—and mediation might yet keep the ovens full and the delivery trucks running at Hostess—but if they survive by savaging wages and benefits, won’t they just put downward pressure on the workers at Sara Lee, Oroweat and other bakers?
I was a guest on a radio show in Michigan yesterday morning, speaking about right-to-work laws and their depressing effect on union membership, wages, and pension and health benefit coverage. A caller said I was wrong to think that unions are all good: “Look what they did to the textile industry and Hostess Brands! They killed them.”
As the show ended, I was trying to convince him that the U.S. textile industry was overwhelmingly non-union and that it wasn’t just—or even primarily—union companies that closed or moved overseas, it was the whole industry. Non-union employees just got paid less before the factories shut down. In 1980, only 15 percent of textile workers were unionized, or 117,000 out of 786,000. Today, only 118,000 textile mill workers remain, meaning that at least four out of every five textile jobs lost since 1980 were non-union.
It’s easy to blame unions for the loss of the American manufacturing base. It’s also wrong.