Twinkies selling for hundreds of dollars on eBay. Union membership dropping steadily over the last decade.
Sound unrelated? They shouldn’t. The fate of the popular sponge cake was in the hands of the unionized men and women who work for Hostess Brands.
Or perhaps I should say “worked” -- past tense. Because a union-backed strike has killed what the Great Depression couldn’t. Hostess announced recently that they are suspending operations and will be laying off more than 18,000 employees. (Both sides had subsequently agreed to a mediation, but a judge ordered the bankruptcy to proceed.)
No, the union in question -- the Bakery, Confectionery, Tobacco Workers and Grain Millers International -- doesn’t deserve all the blame. Hostess has struggled financially for years, losing $341 million last year alone. But it didn’t have to end this way.
The company was, in fact, making cuts to stay competitive amid a tough economy and changing eating habits. These cuts, however, angered the unions who represented Hostess workers: the Bakery union and the Teamsters. Their protests led to the strike that has now dealt the company its final blow.
Union leaders are blaming poor management for the company’s demise. But that explanation doesn’t hold up. The Teamsters actually examined the books and reluctantly agreed to accept the cuts. But the Bakery union held out, in a myopic and self-defeating demand for more. Now, instead of having less, they have nothing.
But this is how unions often operate in the 21st century economy. They function like an albatross around a company’s neck -- making it less flexible, less able to react wisely to the demands of a changing marketplace. An inherent suspicion of management leads them to refuse to accept good-faith offers that would benefit everyone, management and labor alike. As a result, unionized companies make less, invest less, and create fewer jobs than non-union companies. The “us versus them” attitude winds up taking the whole team down.
As Heritage labor expert James Sherk points out, this is a major reason why union membership keeps falling. Unions keep losing members as existing unionized firms shrink, and they can’t recruit enough new members to take their place. This year, union membership hit another record low: 11.2 percent. In the private sector, just 6.6 percent of workers belong to a union.