Self-Serving Union Bosses Bankrupted Hostess — And Hurt the Middle Class in Doing So


One need only to consider the impending Hostess bankruptcy to realize that union bosses are pummeling the very middle class they claim to serve.

By enshrining inefficiency within contracts, union bosses artificially suppress the production value per labor hour. This leads directly to bankruptcy on a company level and a lower standard of living on a national level.

How much inefficiency did union contracts impose on Hostess in the name of “job protection?” Contractual clauses required separate Hostess delivery trucks for snacks and delivery of bread, regardless of destination. Furthermore, drivers were not permitted to load their own trucks. These preposterous requirements needlessly drove up labor costs, contributing to large losses. Further, unfunded pension liabilities rose to $2 billion last year, nearly equaling Hostess’ $2.45 billion in revenue for the year!

While individual employees and sensible union members would likely be open to renegotiating egregious employment conditions leading to such a disastrous bottom line, union bosses viewed the 18,000 Hostess employees — the rank and file union members — as expendable pawns in their efforts to maintain power and lavish lifestyle. The refusal of the union bosses to negotiate betrayed the trust of these thousands of blue collar union members.

This travesty repeats itself nationwide constantly, albeit in less obvious fashion. How so? At first glance, it might appear that contractually guaranteed subpar productivity should be tolerated due to the extra jobs “saved or created” by job redundancy or production inefficiency. However, belief that inefficiency creates a higher national standard or living or that this contractually imposed mismanagement actually improves the health of the employment situation is tantamount to an adult fairytale.

Let me explain.

 If productivity were allowed to increase by eliminating this redundancy, some of the labor – i.e. employees — would now be free to enhance other sectors of the economy. Once engaged in a sector truly in need of this labor, supply in this other sector would be stimulated. The end result would be increased “product” with the same number of employees. As supply grows, employment further grows as well. As the national “economic pie” expands, individual “slices” of this pie grow in size as well.

On the other hand, union boss efforts to promote business inefficiencies stymie the “creative destruction” of capitalism; this stunts economic growth and harms all income classes. Unfortunately, too often the media and even many economists focus only on the initially visible effects of “job protection measures.” It is easy to see the job “protected,” no matter how duplicitous the position. What is more difficult to directly measure are the jobs and production which fail to materialize due to the strong armed union boss tactics. The lack of focus on this opportunity cost allows propaganda from union bosses to irrationally influence public perception.

The vast majority of people, including this author, believe the rights of private sector employees to unionize should be protected. If workers believe it to be in their best interest to collectively bargain, then the right to contract in this manner should be respected. However, union bosses have attempted to monopolize power in their own hands and to bully employees into unionizing. How many are aware of union boss efforts to actually restrict the ability of companies to pay some employees for performance above the standard collective bargaining contractual rates? For what reason, other than protection of power in the hands of those in top union leadership positions, would a union attempt to stifle the aspirations of a dedicated employee to provide a better life for her family? Yet, the SEIU opposes the ability of some union members to earn more than the collective bargaining rate.

Right to Work states historically eclipse the jobs and income growth rates of states which have not advanced in this important realm of employee rights. Yet, union bosses resist efforts to allow employees to choose by secret ballot whether to unionize and attempt to mandate union membership at union shops. These tyrannical positions hardly qualify as democratic or as protective of individual liberty.

Fortunately for middle class workers nationwide, efforts to transfer yet more power to inept union bosses have met with utter failure at Walmart. Without unionization, employees of Walmart on a whole have experienced improved access to health care and higher wages compared to many unionized grocery stores. It’s no accident that the employee turn-over at Walmart lies far below that of the average retail establishment.

The right of private sector workers to unionize can be protected without allowing union bosses to succeed in monopolizing power at the expense of the middle class and economic growth. The harm already inflicted by union bosses  on middle class workers throughout this country can by stemmed by countering propaganda with facts. Our nation deserves better.