America’s wealthy union bosses have decided to make an example of greedy corporate beneficiaries. Does that mean they are yet again standing up to fat cat capitalists? NO! Instead, they are sacrificing the overpaid, unionized workers with rich benefits to send a message to America: Unions Politics first, commonsense and jobs last! The well paid bosses of the Bakery, Confectionery, Tobacco Workers And Grain Millers International Union (BCTGM) have decided it is better for 18,500 people to lose their jobs than to cut wages and benefits back to a sustainable level. They have sacrificed 18,500 jobs rather than ensure that truck routes and deliveries that can be done with one truck and one driver are instead done with 2-3 trucks and 4-5 people! This has caused Hostess to liquidate its operations and ensure that jobs will be moved off shore or will instead be transferred to completely non-unionized workers in another company. Why? It is likely that this is part of a carefully choreographed plan to create a labor crisis to allow national control of such companies to protect union jobs and benefits. This sort of scenario was predicted in Ayn Rand’s Atlas Shrugged when the government issued order “10-289” instructing all companies to “freeze” their jobs, wages, locations and prices under penalty of imprisonment. It is likely that the Obama administration is planning for just such a scenario.
The Unions were refusing an 8% pay cut and substantial cuts in their pension benefits. The company had a huge legacy cost for previous union workers and according to the Wall Street Journal: “The snack giant endured $52 million in workers’ comp claims in 2011, according to its bankruptcy filing this January. Hostess’s 372 collective-bargaining agreements required the company to maintain 80 different health and benefit plans, 40 pension plans and mandated a $31 million increase in wages and health care and other benefits for 2012.” (Editorial, “The Twinkie, A Suicide,” The Wall Street Journal, 11/16/12)” The Unions also had rules that prevented drivers from unloading trucks and prevented Wonder bread from being shipped on the same truck as Twinkies and other cakes. Separate people had to be hired to load at the pickup and unload at the destination. The Teamsters were willing to trade some of this away but the Bakers refused. This was while the Union bosses for the BTFGM were collectively making $3 million in compensation in 2011 with top leaders routinely making about $200,000. The workers themselves were averaging about $85,000 in pay and of course had rich benefit packages no one could afford without bankrupting the company. Now head of the AFL-CIO (the mother ship of the BTFGM) Richard Trumka is playing typical class warfare politics blaming “Bain style” venture capitalism instead of pointing to its own fat cat union bosses, bloated Union benefit packages and make-work Union contracts that are at the core of the problem.
The Obama administration likes to hail FDR as a hero and has referred to New Deal Policies glowingly. Examples include the Wagner act which created the NRA (National Recovery Administration) and other similar bureaucracies. They were all designed to freeze aspects of the economy in place for “The national health” just like the fictional “directive 10-289” in Atlas Shrugged. The laws set national minimum wages, production quotas, established maximum working hours and helped to create large business cartels by suspending anti-trust laws. However, as with all central economic planning, it failed miserably and unemployment rates never dipped below about 15%. In a famous case, FDR was rebuked by the Supreme court for his “live poultry code” when the owners of the Schechter Poultry Corporation were imprisoned on 60 counts of violating the poultry codes. As Obama did over the Citizens United case, FDR publicly rebuked the Supreme Court and then set off to pack it to support his collectivist policies. This is clearly the path that Obama will take us down and it is one of the reasons that the Union bosses are so willing to sacrifice 18,500 jobs. They know that their Union-picked President eventually will have to pass draconian and economically non-sensical laws to prop up jobs that are over-paid and often just busy-work positions. They can help create the crisis and conditions for this by sacrificing their Union brethren on the altar of progressivism as they just did. Obama has no compunction whatsoever about bypassing Congress and doing what he wishes through executive order. He feels he has a mandate and could care less about law suits and the Supreme Court.
In the end, even if this is not a set up for an Obama power grab, it does demonstrate that unions can kill the corporate host they rely on for jobs. When they demand unreasonable benefits, excess number of unnecessary workers, and pay out of alignment with the market they are responsible for killing the corporations that actually produce their jobs. Just as a parasite kills its host or in this case, it’s Hostess. Jobs are not what produce economic prosperity; it is economic prosperity that creates jobs. When Unions and workers recognize that unreasonable demands on a corporation will destroy the prosperity that creates jobs, we will recover economically as a country. Sadly, the track we are on is to do just the opposite and we will see more union-backed political power plays to create more coercive and anti-growth policies that will further damage our economy. At the same time it will create more power in the hands of those who least deserve it: government and the political class.