Morning Bell: Can Hostess Save the Twinkies from the Union?
Amy Payne /
Taking down the Twinkie. Clogging Wal-Mart parking lots on Black Friday. Messing with a major airport on the day before Thanksgiving.
If unions are trying to be more popular with the American people, they’re doing it wrong.
Americans have gone crazy over the possible loss of Twinkies, Ho Ho’s, Ding Dongs, and Hostess CupCakes after the company said it was shutting down because its bakers’ union opted to walk off the job for a strike. People are already asking exorbitant prices on eBay for boxes of the packaged treats.
Hostess and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) have agreed to enter mediation with a bankruptcy judge, who said there are “serious questions as to the logic behind the decision to strike.” More than 18,000 jobs are at stake.
A Washington Post blogger says that “The AFL-CIO plans to try to turn this into a ‘teachable moment’ and a ‘national discussion.’” Union membership has been declining in the private sector, and the groups are desperate to reverse that trend. But shutting down one of America’s beloved brands certainly isn’t going to win lots of friends.
Obviously, poor management helped get Hostess to this point, and contested payouts for managers are causing controversy. Megan McArdle explains that paying incentives to managers to stay on during a rough bankruptcy transition isn’t unusual—it’s hard to convince people to stay and steer a sinking ship. Unfortunately, sometimes that means senior leaders could try to take advantage of this situation to get more money for themselves on the way down.
But McArdle reports that the current management “opened the books to the unions, paid senior management virtually nothing, and tried to cut deals that would save the company and salvage something of the grossly underfunded multi-employer pension plans of which they were a part.” The new managers did everything unions typically ask for in such situations.
It was enough to satisfy the Teamsters, who also represent employees involved in distributing the products. They came to a deal with the company to continue work.
Yet the bakers walked out. Their union didn’t file any objections to the bankruptcy plan when the judge proposed it in August. Instead, the union’s leaders called for a strike. The strike was authorized with a voice vote—a public vote in the union halls—and the union leadership refused the Teamsters’ request for a secret ballot vote on returning to work.
Why would the union do this? James Sherk, Heritage’s senior policy analyst in labor economics, says:
Either the union leadership was (a) utterly incompetent, or (b) was willing to sacrifice its members’ jobs at Hostess in order to send a message to other firms that it would play hardball and they should not ask for concessions. Either way, it was not looking out for its members at Hostess.
Hostess is just the latest in the upward trend of labor strikes. After falling for decades, the number of strikes in the U.S. is climbing. In 2009, there were five major work stoppages (involving 1,000 or more employees). In 2011, there were 19.
Even when workers don’t walk off the job, unions are looking to cause chaos. A union-backed group is planning to stage protests at Wal-Mart stores on Black Friday. And unionized workers with the Service Employees International Union (SEIU) are planning a protest at Los Angeles International Airport tomorrow—one of the busiest travel days of the year.
The aviation company in that case says the majority of its workers voted last year to leave the union. “Our employees are now earning more per hour than under SEIU and are happy to be free of them,” said Joe Conlon, Aviation Safeguards’ regional vice president.
Many Hostess employees probably wish they had the same opportunity to vote. However, they never got that choice. Once they’re in, unions remain certified indefinitely; they do not have to stand for re-election. Instead, new workers must accept the union’s representation as a condition of employment. Just 7 percent of private-sector union members voted to belong to their union.
The only way to get rid of a union is by filing for decertification—an extremely difficult legal process. Had Hostess workers gotten to vote, they might have opted for a more reasonable representative who would actually look out for them. This is why union representation should be voluntary—or, at the very least, unions should have to regularly stand for re-election.
Unfortunately, the Obama Administration is moving in the opposite direction. His National Labor Relations Board (NLRB) recently changed the rules so that unions can cherry-pick who gets to vote in union elections. This will allow unions to disenfranchise those workers who don’t want to take the risk of strikes bankrupting their company, too.
When the President returned to Washington after the election, one of his first meetings was with union leaders. After spending heavily in the election, the unions are keen to use the political process to boost their ranks. Their membership may be dropping, but union power in Washington is growing.
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