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News/Politics, The Liberal Complaint

Who is Responsible for the Fall of Hostess?

“Someday very soon, life’s little Twinkie gauge is gonna go… empty.”  Tallahassee would be in panic mode right now.  For those who may not know, Tallahassee is the character from the film Zombieland who is on a mission to find the world’s last Twinkie.  On Friday, Hostess filed a petition to liquefy the company.  Could the last Twinkie already be sitting on the shelf?
Fortunately, for people like Tallahassee who love Hostess products, many of these brands will be purchased and sold by competitors.  The Twinkie is not gone forever.  What are gone are 18,500 jobs.  There is a lot of finger pointing going on between the unions and the company.  As usual, the truth is that both parties are at fault.
The largest union at Hostess, the Teamsters, was able to negotiate an agreement with Hostess.  They even encouraged the BCTWGMU, or the baker’s union, to end their strike.  However, the baker’s union was unwilling to accept further cuts.  The resulting liquidation of Hostess means that these employees are not going to be out of work.  While it’s always hard to accept pay cuts, the union should have realized that there would be no way for Hostess to continue financially without making cuts.  They should have come to an agreement that kept the company from shutting down.
Lately I see a lot of criticism of unions on the internet.  Many people say that the union workers should just be happy that they have a job in this economy and accept the pay and benefit cuts.  No, they shouldn’t.  Do people really believe that these workers should be happy about an eight percent cut in pay and a cut in benefits of over 30 percent?  This is where I think people have been spoiled by the environment that unions have created over the last 100 years.  We are all reaping the benefits created by those who stood together against corporations.  We enjoy a five-day workweek because of unions.  Many of us have health care because of unions.  We all have safer work environments because of unions.  Finally, we have enjoyed a much more equal income distribution because of unions.  Recently, as people have begun to shift away from unions, income inequality has begun to grow.
This problem is evident in the under-reported facts about Hostess executives.  The company initially filed bankruptcy in 2004.  At that time, the unions made concessions as a part of their negotiations.  The company emerged from bankruptcy in 2009.  Only two years later, Hostess was again on the verge of chapter 11 bankruptcy.  By the end of 2011, the company had suspended payments for union pensions.  In January of this year, they again filed for bankruptcy.
As the company worked through this bankruptcy, they again asked the workers to make concessions for the benefit of the company.  What made this time so different were the actions of the executives.  In 2011, executives had received raises of up to 80% compared to their previous salaries.  The court filings during the most recent bankruptcy included a proposed compensation package for CEO Brian Driscoll that tripled his compensation with a base salary of $1.5 million and incentives of $1.95 million.  Remember that this all happened during a time when these executives made the decision to stop making union pension contributions.  These raises were obviously part of a golden parachute program for Hostess executives.
This is indicative of the problem we have today.  Executives are giving themselves massive raises while running their companies into the ground.  They are getting rich off the backs of the average worker.  Then when the company begins to struggle, they blame the problems on the strike that resulted from their own greed.  Never mind the decreased demand, hundreds of millions of dollars in debt, and extraordinarily poor management of the company.  It must be the workers’ fault.  They should just be happy to accept their lower wages and fewer benefits.
It is obvious that the problems at Hostess came from the top down.  Could the baker’s union have made concessions to get their members back to work?  Yes.  The question really is how many times should these workers be forced into lower wages and reduced benefits so that executives could give themselves raises and pile debt on the company?  For our country to prosper, we must build a strong middle class.  This can’t be done by allowing executives to make terrible decisions and pay themselves more and more, while reducing the pay and benefits of the average worker.  Any company run like Hostess should go out of business.  I feel for the workers who will be forced to struggle, but I support their decision not to give in to corporate greed.  When you read headlines about Hostess closing due to the “crippling” union demands, realize that they should really read that Hostess is closing due to dreadful management.  The public has to stop blaming workers and unions for these problems, and start holding the executives accountable for their own failures.


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