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Hostess Bankruptcy: What Role Did Policy Play?

ahayes Wrote: Nov 19, 2012 11:45 AM
>Having to pay union workers roughly $100 per hour I call bullfeces. PROVE that a union worker at hostess in an unskilled and non-hazardous position earned that amount. Hostess didn't fail because if unions, it was its own fecal mismanagement. The company was doing poorly since the 2000s and while the union workers agreed to take pay cuts to keep the company afloat the CEOs each gave themselves raises, one CEO raised his own pay three times while the company was failing. Even if the labour costs are high a smart company would have invested in better automation to make up for it, the management was too busy figuring out how to fatten their own wallets to figure out how to keep the company's wallet from becoming anorexic.

The demise of Hostess and Twinkies is not a national emergency, but it is certainly sad when a major business goes under and thousands of people lose their jobs.

If federal and state policymakers want to play a useful role here, they should study why Hostess couldn’t make a go of it. Were there tax or regulatory factors that stood in the way of the company earning a decent rate of return?

Unions were an important factor that pushed up the firm’s costs and reduced its operational efficiency. The policy reform here is obvious for people who appreciate market economics: repeal America’s coercive union laws. If policymakers don’t...