-11 votes

Is Corporation's Demise Due To Its Striking Union... or To Greed?

Hostess's latest woes took hold when thousands of employees in its bakers union went on strike Nov. 9 in protest of a court-imposed labor contract that cut wages, commissions, and health care benefits and changed the structure of pension plans in a way that could reduce payouts to retirees.

The company's burdensome debt traces back to Hostess's first trip through bankruptcy in 2004. Missteps by a private-equity firm, hedge funds and managers since burdened the company, despite its more than $2 billion in annual sales.

As a powerful company, Hostess evidently did not believe that it should voluntarily share some of its profits with its rank-and-file workers or pay them more than it absolutely had to. Hostess felt, as many businesses do these days, that they were entitled to make as much money as they could possibly make and that the financial well-being of their employees was not something that they should be concerned with. In short, while viewing "shareholders" and "customers" as the only two corporate constituencies that matter, Hostess neglected the idea that great companies should also serve a third constituency: their own "employees".

Hostess evidently didn't understand that one company's employees are another company's customers. Instead of spreading the country's wealth to more citizens and expand the purchasing power of the country as a whole, and in so doing, helping the overall economy, Hostess's decision only expands our faltering economy.

Specifically, Hostess's move helps to usher in an age in which the middle class is shrinking while our country's overall poverty expands. This lack of spending power in the middle class crimps overall economic growth, while corporate profits as a percent of the economy are at an all-time high and wages as a percent of the economy are at an all-time low.

In a letter posted on a new site set up to communicate with employees and suppliers through the liquidation process, CEO Gregory F. Rayburn instead pinned the blame on its striking union.

Edit: In a surprise move Monday in Federal Bankruptcy Court, the presiding Judge did not approve the liquidation that Hostess wanted and instead postponed consideration and ordered the company and the union to go to mediation. The presiding Judge will be the mediator.

Judge Robert Drain asked Hostess and the Bakery Confectionary and Tobacco Workers Union to join him Tuesday for a mediation session where he will try to broker a new contract. If Tuesday's session fails, then the company will be able to return to court Wednesday to try to move ahead with its plans to close down.

"Many people, myself included, have serious questions as to the logic behind this strike," said Judge Drain. "Not to have gone through that step leaves a huge question mark in this case."

One thing that bothers the unions is that while the company maintains it can not afford to continue funding the pensions of its workers, it is asking the court’s permission to pay its executives $1.75 million in bonuses. Hostess is following the practice of failed Wall Street Banks that when they were on the verge of collapse in 2007 due to bad management and business practices, they still paid obscene bonuses to the executives that bankrupted them.

The workers will bear the brunt of this situation however it turns out. If the long-shot mediation works and a new contract is negotiated, workers will pay for those bonuses through wage and benefit concessions. If a new buyer comes forward, it is a certainty that concessions from workers will be part of the deal.

http://www.examiner.com/article/bankruptcy-judge-sends-hoste...
http://blogs.wsj.com/corporate-intelligence/2012/11/16/the-e...
http://www.businessinsider.com/henry-ford-salary-increase-20...




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During the great depression,

During the great depression, Ford in common with other manufacturers, responded to the collapse in motor sales by reducing the scale of their operations and laying off workers. By 1932, the unemployment rate in Detroit had risen to 30%[17] with thousands of families facing real hardship. Although Ford did assist a small number of distressed families with loans and parcels of land to work, the majority of the thousands of unskilled workers who were laid off were left to cope on their own. However, Henry Ford angered many by making public statements that the unemployed should do more to find work for themselves.
This led to Detroit's Unemployed Council organizing the Ford Hunger March. On March 7, 1932 some 3,000 - 5,000 unemployed workers assembled in West Detroit to march on Ford's River Rouge plant to deliver a petition demanding more support. As the march moved up Miller Road and approached Gate 3 the protest turned ugly. The police fired tear gas into the crowd and fire trucks were used to soak the protesters with icy water. When the protesters responded by throwing rocks, the violence escalated rapidly and culminated in the police and plant security guards firing live rounds through the gates of the plant at the unarmed protesters. Four men were killed outright and a fifth died later in hospital. Up to 60 more were seriously injured.

http://en.wikipedia.org/wiki/History_of_Ford_Motor_Company#T...

What a great company this Henry Ford ran...when times were good...

Ford was adamantly against labor unions. He explained his views on unions in Chapter 18 of My Life and Work. He thought they were too heavily influenced by some leaders who, despite their ostensible good motives, would end up doing more harm than good for workers.
http://en.wikipedia.org/wiki/Henry_Ford#Labor_unions

Did Union leaders at Hostess do more harm than good for their now UNEMPLOYED workers? It would seem to me that the Union bargained them into a 100% wage cut when the Company was offering an 8% wage cut...you be the judge.

Was it due to greed? I'd say yes, indeed it was.

----------------------------------------------------------
"Ehhh, What's ups Doc?" B.Bunny "Scwewy Wabbit!"E. Fudd
People's Awareness Coalition: Deprogramming Sequence

This comment thread,

is effin' hilarious.

Its about liberty, not greed

Wow, the comments on this thread are all about pointing fingers, at either the unions or the company. From what I can gather, the real killer was that hostess was in unrecoverable financial trouble, had been for a few years. On top of that, it had two separate unions to work with (the bakers and the drivers) Neither union was willing to give more than the other, so negotiation was basically at a stale mate, so the company took the easy way out ... just close the doors and blame the unions for being uncooperative. Honestly, management sucked which is why the company was in the tank, and the unions were unwilling to negotiate in order to save their jobs because neither was willing to suck it up if the other didn't make equal concessions.

It was a big mess, and there probably isn't anyone on this forum who honestly knows enough of what really happened to pass judgement, and honestly it isnt our job to do so.

But the comments on this thread arent about Hostess, so much as each person is just reguritating the talking point crap fed by the opposing viewpoints on the subject of unions.

THIS FORUM ISN'T ABOUT PARTISANSHIP. its about liberty.

We support peoples right to freely associate with one another, and form unions if that is in their best interest. We also support a companies right to close its doors. We support a CEOs right to make decisions about his company, including deciding to give himself a bonus of whatever number he can afford to do. We support liberty here. We believe that people should have the liberty to run their own lives, and it is none of the governments business how hostess and their unionized employees work out their problems (or fail to do so).

Hostess isn't too big to fail. We support unions' right to strike in order to get their way. WE also support a companies right to close its doors and tell them they were all stupid for striking.

But, most importantly, if you believe in liberty, you don't see the failure of hostess as a "crisis" worthy of government intervention, or new laws, or anything else that will only make everyone else pay for the stupidity that caused the downfall of this company, and cost so many employees their jobs. (but didn't take away their liberty nor their ability to go look for a new one).

People looking for government driven solutions to economic problems need to read up on Austrian economics, and realize that the liberty movement is about less government intervention, not centrally planned recovery strategies that's what the other team is all about.

Just how much money is

Just how much money is someone on a cupcake assembly line supposed to make?

If they're good employees who work hard

and if the corporate employer is making plenty of profit, I would say they should make enough to live on with enough leftover to put into savings. Just how much should a CEO who sits in a nice private office, never works up a sweat and enjoys all the expensive perks supposed to make? Twice as much as the laborers? 3 times as much, 10 times, 100 times? In some cases they're making thousands of times as much -- and many of them prove to be dismal failures. IMO, if many CEO's had their pay cut to 1/10th of present levels, they'd still be overpaid, but at least the other employees who are hard working could enjoy a little pay increase from the CEO's pay cut. Of course, a major contributor to the problem is Fed Gov bailouts, corporate welfare, Federal Reserve dollar devaluation and heavy taxation and regulation at home. I think the general attitude toward unskilled labor is unfair, though. These companies can't operate without them any more than they can without a good CEO. Yes, they're not as valuable as more skilled employees, however, they sweat more and work just as hard and should be paid better than they are, in my opinion.

"It's the technological unemployment, stupid"

I can't believe that with all the great minds here and all the economics threads contemplating the underlying problems and suggesting solutions, no one has addressed the unemployment due to tech advancement yet. I even posted on this but got no bites. http://www.dailypaul.com/263882/with-the-advancing-technolog...

A commenter below posited that a row boat would work better, the more people that are rowing. While this may be true in isolation, what happens when sails are invented? At that point, all that's needed are enough employees to maneuver the sails? What should happen to the rest of the passengers? If the ratio dropped from 100:10, then why can't 90% of the people just go along for the ride? On that same line, why can't each group of 10 people work for 1/10th of the trip and then retire? Is this free market?

Should someone on the boat (this is an isolated thought exercize, right?) invent and build cold fusion powered propellers, then shouldn't everyone get to ride for no work?

Ah, but what about the owner of the ship? Should he get to profit more because his passengers now have no work to do? Sure but that leads to his ability (and propensity) to gouge passengers. What if, however, all the collective passengers of possible future trips built their own ship(s) with the free energy? Could they split the total capital cost across all the passenger-miles the ship was expected to travel in its lifetime and cut out the owner?

Bit of a stretch for an analogy but IMHO, we suffered from tech unemployment with the advent of the industrial revolution. Since we didn't recognize it, the double and triple fruits of our now greater labor were soaked up by the Federal Reserve system. Then they got greedy and bought the media and corporations (via the stock market scam) and everything else they could get hold of so they could falsely manipulate the market. Now we're in a system where we have nothing left to steal and their betting games are coming due so they're trying to get us to promise our future earnings to them too.

Instead of fixing this basic problem correctly, we've allowed a whole series of fluff jobs to be created. We have middle men and in places, 6 levels of middle men. We have people that earn a living doing things we could have done for ourselves the whole time... but with today's technology, we can even do better online ourselves for free. Yet we pay others. Case in point, travel agents and tax preparers, cashiers, entire advertising and realtor industries and so many more. Of the studies I've seen, the average result has been said that we now only need 5% to 15% of the workforce that we currently have. Why can't we eliminate those jobs ourselves and let everyone take a 90% break (or 80% as the numbers work out to) for the rest of the trip?

I say we don't have to do things the same old way. We can build our own ships (companies) that don't rely on their ownership (incorporation, loans, stocks) and split the costs among ourselves. To illustrate this better, the average retail price of a product in the US now consists of around 6% labor and 11% materials. That means prices could drop by 83% on average if the other expenses were eliminated somehow.

My take would be to expand on Ford's actions of increasing wages by increasing that 6% to around 30% (big whoo-hoo!) and let the in-house employees deal with those 'external' tasks that are weighing companies down. If done in a few industries at a time, taking the average salary up so high would only raise prices a little. More than likely, it would replace cheap quantity with quality decisions and that would filter higher wages across other industries again. When this extra wealth filters into the population, it can be tapped for no-interest debt to start the next company and so on. I could continue for days, but I'll seek comment on this much first.

I partially agree

Of course technological advancement eliminates some jobs. But imo, the primary cause of loss of jobs in our country are treaties like NAFTA (which are purported to be about free trade, but are actually the opposite), corporate welfare to companies that leave the USA, and heavy taxation and regulation at home. I also think the corporate pay scale is all screwed up...I think it's outrageous that some corp. employers pay low level employees minimum or close to minimum wage while paying out $millions to CEOs. They may be more valuable than "low level" employees, but how much more? Twice as much would be saying alot, but in some cases, they're being paid thousands of times more than hard working employees and that's just sick and twisted.

I hate getting caught up in national pride issues

At some point, those 3rd world countries may just catch up or surpass us. It's already happening in Africa. They don't have land based phone lines to maintain because they skipped that step. They jumped straight into cell phones. That's a huge drain on our economy that they don't have. What happens when they do the same for food, energy and media? Jobs have become a global commodity and as such, we can look at the world as a single workforce. Overall, that workforce is dwindling compared to what it would have been 40 years ago to provide the same goods.

There was a MAJOR increase in

There was a MAJOR increase in unemployment following the current crisis we are in. This cannot reasonably be attributed to some dramatic increase in technology all at one time. In fact, you say that this is an ongoing trend of unemployment since the industrial revolution, but no such trend of unemployment exists.

The decrease for the last century

was in the NEED for jobs, not the actual existence of them. When the need drops, we dumb humans create all kinds of ways to make a buck. Many of those ways are unnecessary or what I call fluff jobs. Middle management comes to mind first, but there are tons of them in every industry.

When the economy crashed, the fluff jobs went bye bye real quick.

The end game for this trend is that 5-15% of the '07 jobs will be in existence by the time technology fleshes out the automation and the unnecessary jobs. (That's according to numerous studies on the subject) My point in all this is that if that's the case, then those employees should somehow get paid multiples of current salaries (in purchasing power, not dollars) to compensate. I believe there's a free market way to do that but it involves making employment a worker's market, not a hirer's market.

No one has suggested that

No one has suggested that because it's totally bogus!!!!

There have been idiots expressing concern over "technological unemployment", or, in economics, the "Ricardo effect" since the dawn of the industrial evolution.

There were even instances of people smashing machinery and destroying knitting looms, LMAO!!!

Read this: http://mises.org/daily/5303

.... then read "human action" by Ludvig Von Mises... or Hazlitt's "Economics in one lesson".

.... Or at the very least google "broken window fallacy".

"I do not add 'within the limits of the law,' because law is often but the tyrant's will, and always so when it violates the right of an individual."

First of all, do you always over-react when you reply?

It is not bogus because it is happening. !!!!~! And just because it's suggested, doesn't mean someone is an idiot. I'll put my economics knowledge against yours any day.

That said, I'm familiar with the logical miscalculations of the broken window fallacy and Ricardo effect. They are correct in a perpetually-advancing society but they have their limits. Those limits are never accepted by their promoters, i.e. you.

At what point do people say they have enough BS new gadgets and services in their lives? When will people say their done working for nothing but more junk? Well, we're fast approaching that point. We do or will soon have a single electronic gadget (one mobile and one for home) that does everything we want now and can want in our foreseeable future. We have abundance without time constraints on what foods we choose to eat, what shelter we desire, what education and communication we choose and even many other things like transportation and energy. Granted, those last two will be advancing tremendously here shortly but in doing so, you should know that the trend will be away from planned obsolescence and toward local and longevity.

Keep in mind that I'm not saying there won't be any new gadgets or services. I'm saying that when the average Joe worker gets enough things accumulated and becomes self sufficient enough to live comfortably without continued purchases, he will simply stop trading his time for more stuff.

So, to your assessment, I would say that at all times in the past, you would have been correct. And for most things today, you may still be correct. But there's no arguing that we are steadily approaching the pinnacle of technology in some areas and that number only stands to grow at faster and faster rates. Once you fully automate an entire restaurant, how can you add more customer experience? How can you produce more fluff jobs in the travel industry when the entire industry can be replaced by a few web sites? When we get every feature we want in a cell phone / iPad / laptop / computer (and the only new things come in the form of free apps), what will employ more people in that industry?

The writing is on the wall as we've seen in the US in recent decades. Jobs used to be highly skilled and then they became low skilled via automation and computer controls. This allowed them to be outsourced to cheaper labor markets (while the profits quietly soared). What happens when they get so low skilled that the people are no longer needed? As a former automation engineer, I can show you an example of nearly every manufacturing job known today being done by non-supervised robotics somewhere in the world. I think it's pretty naive to simply dismiss this progress because your textbooks don't believe in it.

By the way, Mises is usually very good but still misses some points that he takes for granted. I couldn't stand Hazlitt. Too generic textbook to see a different world.

I'll go ahead and entertain

I'll go ahead and entertain the thought that your understanding of economics is, indeed, far superior to mine. I have a question:

Why did you ignore the laws of economics in your "technological unemployment" post? Do you reject the laws of economics?

"I do not add 'within the limits of the law,' because law is often but the tyrant's will, and always so when it violates the right of an individual."

Calm down. Ad hominiem

Calm down. Ad hominiem attacks don't increase your understanding one bit.

You posted this long-winded rant about "technological unemployment".

I'm simply informing you that the concept is fiction, followed up by a link for you to read, to increase you understanding of economics.

I'm trying to help!!!

I have no opinion or your understanding vs. mine, but when you posts things such as "economic self-sufficiency", "technological unemployment" and typing paragraphs suggesting that human satisfation is approaching it pinnacle, I instantly see ways that I can help increase your understanding... Thus I provide links to reading material that has been enormously helpful to my own understanding of economics.

I can lead you to the water, but I can't make you drink. By all means, dehydrate yourself, if that is your choice. You're a free person.

We all have much to learn, and are at different stages in that process.

"I do not add 'within the limits of the law,' because law is often but the tyrant's will, and always so when it violates the right of an individual."

Me calm down?

You're the one with all the exclamation points to force your point down my throat. I merely taunted you a bit about using them.

I thought I was being very methodical in my explanation of how your thinking is wrong and limited in vision. You simply dismissed it with the tact that you're trying to educate me. Sorry, but I've done more than my share of reading and researching. That was many years ago and I've moved on to actually creating new thoughts. I'm sorry if you assumed I'm some first year student that has lots to learn yet, but that's not the case.

Now, if you would care to continue this conversation, by all means make your argument that counters what I've said. It is a proposal that has stood the test of a couple years on many different sites and even a university professor trying to look scholarly in front of some of our senators at a state convention dinner. He went down in flames without a suitable rebuttal (although he was a Keynesian).

Re: your second comment about ignoring the laws of econ. I'm not ignoring anything. I'm trying to show that the playing field in which those laws were created and in which they apply is evolving. How that is happening, I have more than explained. I certainly wasn't implying that technology has reached its pinnacle but rather that in isolated areas of technology, and more specifically relevant to certain industries of jobs, this process has begun. I even gave a number of examples which you can feel free to explain how those fail.

I proposed the idea and you simply denied it on the ground that it fails econ 101. I think the onus is on you to prove how exactly it fails.

Oh, you had a problem with

Oh, you had a problem with the exclamation points. My apologies. I'm quite passionate about economics, and I get a little excited when I see an opportunity to spread the knowledge to others.

I guess I can rebut your idea. It is a very old thought, and one that can be dismantle quite easily (If your not a keynesian, lol)

Here we go. Machinery does not cause unemployment. It frees up resources(labor)to pursue other ventures. The worker that is replaced can move on to creating one of those new gadgets that you may not value, but others do. The undeniable result is another human satisfaction being met, and all involved become more prosperous.

We humans do not labor for the simply purpose of curing boredom, we labor to produce more goods, thereby increasing our material welbeing. We prefer to have all the material possessions we can get WITHOUT the labor required to produce them. However, the real world exhibits scarcity, human labor being one of the scarcest resources, if not the most scarce. I say human labor is scarce because it is disutility, and we would prefer to avoid it if possible.

Of course, the links I provided explain this a lot better, and in much more detail than I can on a forum post, which is why i provided them.

All of this revolves around the fact that production is performed for the sole purpose of consumption.

BTW, I am of the opinion that the laws of economics are 100% valid in all places, at all times, and in all situations, just like the laws of mathematics and physics. I also agree with Einstein when he says that any new theory must expand upon the older theory it replaces. Therefore, any valid economic theory must necessarily agree with econ 101.

There you go, no exclamation points.

The floor is yours, good sir.

"I do not add 'within the limits of the law,' because law is often but the tyrant's will, and always so when it violates the right of an individual."

Only a couple minutes left before I have to leave for the day...

but in short, I totally agree with your explanation of how it works. ...right up to the point where you say "we labor to produce more goods".

Actually, we labor to earn the funds to purchase more goods. That is yet another business decision on each individual's balance sheet. At some point, we decide we have enough stuff and we value staying at home more than increasing our stuff quotient. :) We call this retiring.

As tech increasingly consolidates functions into fewer and fewer devices, we get more satisfaction from fewer devices. I track many new technological advances and from what I see, that trend is going to increase very rapidly here real soon. But even without the future advances set to come, the recent past has showed the same result. People are able to buy one device that does 50 things and avoid buying 49 other devices. Think computers vs. all those features sold separately in the early 90's.

The result of this feature consolidation has yet to begin however. That's because we're still robbed of all our fruits of our labor. If that should turn, we will have increased wealth. That increased wealth will buy higher quality devices (since more features is ubiquitous these days). As that happens, the employment required will further drop.

That's happening now but I'm proposing that should it increase (both the skilled job quantity and the wages earned), the result will begin to lower the retirement age. At that point, the rest of what I suggested will begin to occur. This will likely happen in individual industries at first, but there will be cross industry effects so it will end up being exponential.

Cyril's picture

Thanks for your link refresher.

Thanks for your link refresher. I might "bite" on it some time later, actually. ;)

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Both liars imo

They both destroyed the company.

I would neither believe a CEO or union leader. People on the lower levels should be asked.

CEO and Union leaders is what is the problem. Ie. Having an MBA is garbage imo. These people have no loyalty to the company and a union leader is just a parasite who sponges off the labor of the members.

Companies are stupid to hire MBAs. There is the web now, most info is readily available and university libraries accessible.
What business has a business prof run? Guest speakers could be hired.

donvino

Let they who have eyes, SEE and ears, HEAR.

DEAR AMERICAN COMPANIES: Here's How To Fix The Economy

In 1914, a business executive named Henry Ford did a startling thing:
He announced that he was going to more than double the wages he was paying his employees, from $2.34 to $5 a day--the equivalent of $120 a day in today's money.
The country was as shocked by this then as it would be today.
A powerful company voluntarily sharing some of its profits with its rank-and-file workers and paying them more than it absolutely had to?
Had Henry Ford gone mad?
Didn't he understand that the only goal of a business was to make money?
Didn't he realize that, as a successful business executive, he was entitled to make as much money as he could possibly make--the financial health of his employees being nobody's business but their own?
Didn't he understand that smart executives pay their employees no more than "market rates" because the executive's job is to "create shareholder value," everyone in our economy gets what they deserve, and the financial well-being of employees is not something that business owners or bosses or shareholders should be concerned with?
Yes, Henry Ford understood all that.
The story you hear frequently about why Henry Ford made this decision was that he wanted to allow his workers to be able to afford to buy his cars. The wage increase certainly made the cars (and many other products) more affordable for Ford employees, but the historical consensus is that Ford actually made this decision for a different reason: To reduce employee turnover--and, in so doing, reduce recruiting and replacement cost.
Regardless, it worked.
Thousands of people immediately lined up to get jobs at Ford. Employee turnover plummeted, and recruiting and training costs dropped. The new wages allowed Ford employees to live middle-class lives, instead of being poor. And it presumably made Ford, Ford's senior executives, and Ford's shareholders even more proud of what they had created.
In short, instead of viewing "shareholders" and "customers" as the only two corporate constituencies that matter, Ford introduced the idea that great companies should also serve a third constituency:
Employees.
And because one company's employees are another company's customers, Ford's decision helped spread the country's wealth to more citizens and expand the purchasing power of the country as a whole. And, in so doing, it helped the overall economy.
Specifically, Ford's unprecedented move also helped usher in an age in which the middle class became the driving force in the American economy, turbo-charging the nation's economic growth right up through the early 1980s, when relative middle class wages began to decline.
Henry Ford's story is highly relevant today.

Why?

Because we are facing a very similar economic problem as the country did in the early 20th century. A glut of labor was allowing companies to pay a pittance for a day's work, leaving most of their dedicated employees destitute. Business owners and executives (the equivalent of today's 1%) did fine, but most rank-and-file workers did not. And this lack of spending power in the middle class crimped overall economic growth.
If we want to fix today's ailing U.S. economy, we need many of our large corporations to do what Henry Ford voluntarily did:
Share more of their vast wealth with their rank-and-file employees.
If the companies don't eventually see the benefit of doing this and do it voluntarily, the government (an extension of the people) will likely the mandate that they do it--either through taxation or by radically increasing the national minimum wage.
And given that government solutions are often terrible solutions, it would be best for everyone if we persuaded corporations to do this voluntarily. So what follows is an initial effort to do that.

http://www.businessinsider.com/henry-ford-salary-increase-20...

-
"Stand up for what you believe in. Even if you stand alone."
~ Sophie Magdalena Scholl
"Let it not be said that we did nothing."
~ Ron Paul
"You must be the change you want to see in the world."
~ Mahatma Gandhi

Henry Ford was a statist, and

Henry Ford was a statist, admirer and supporter of socialist such as Adolph Hitler, and followed the same path as the Federal Reserve Notes, big boom followed by big bust. In 1914, one year after the Federal Reserve was put into effect, the money was flowing like Niagara Falls. It followed that wages increased, and not just at Ford Motor Company. The beginning of the Federal Reserve led to an enormous economic boom(the roaring 20's), followed by an equally large bust(the Great Depression).

These increasing wages were not the cause of this booming economy, the Federal Reserves new elastic currency was the cause, and Henry Ford's wage increase was a RESULT of this rapidly expanding currency. It was not the American Companies that fixed the economy, it was the Federal Reserve that fixed it, but at GREAT COSTS in the long run.

Over the boom and bust cycle created by the Federal Reserve, Henry Ford was just as damaging to employees during the bust as he was rewarding to them during the boom.

Katherine, where the HELL are your eyes and ears???

----------------------------------------------------------
"Ehhh, What's ups Doc?" B.Bunny "Scwewy Wabbit!"E. Fudd
People's Awareness Coalition: Deprogramming Sequence

Why stop there. Follow your

Why stop there. Follow your logic to the end:

An employee is nothing more than a 1 person enterprise. This fact utterly decimates your "third constituency" idea.

If I'm willing to pay more for a product, then companies will compete to aquire my patronage. along the same logic, if a company is willing to pay more for it's resources(increased wages) then potential employees will compete for those positions.

And the grand conclusion: prices/wages are determined by competitors outbidding each other... at every level

This ain't altruism or syndicalism. It's basic economics involving supply, demand, and marginal utility.

The misunderstanding of economics stems from believing that a business can ALWAYS make more profit by raising prices and lowering wages. Henry Ford proved that idea WRONG. The curve isn't exponential, but a bell curve. Henry was intellegent enough to notice which side of the curve his enterprise was on and restructured accordingly.

The result? Everyone benefited, which is how free, voluntary exchange always works. Henry's enlightened self-interest made himself, his shareholders, his customers, AND his employees better off.

"I do not add 'within the limits of the law,' because law is often but the tyrant's will, and always so when it violates the right of an individual."

Employees are not entitled to have a job

let alone dictate what the wage is. That is just stupid. They wanted more than the company (ie. owner of the job) was willing to give. Part ways, move on.

If I can't find someone to cut my grass for what I'm willing to pay then I don't hire them. No different.

Likewise, if someone doesn't like what the offered wage is then move on to someplace else.

Blaming either side is stupid.

The biggest problem is the guys that were willing to take the deal got screwed by those that wouldn't.

But they're entitled to a work environment

where they have a snowball's chance of starting up a competing company. When corporations buy off politicians and regulations, they kill their leaner startup competition and create a monopoly. That removes the higher paying jobs from the market and leaves employees with no choice but to take crappy jobs for low pay. That's not a free market.

For this, the blame lies on the banks who have set the playing field up this way.

once again it's a government created problem

nothing to do with the company or employees.

government is the problem

Government has so many hands in hosstess, as it moves to divide Americasn from production, business can't operate.

Wall Street was to blame, not execs or workers

Wall Street was to blame, not execs or workers. Hostess was in trouble. They needed financing. There were NO banks that would help em. Banks these days do useless mergers and acquisitions, not real productive financing. That's the Wall Street model.

So Hostess went to the loan sharks: hedge funds and Bainist capital firms. They said, "you will pay us 25% in three years or we will bleed you dry". Hostess said "...sure."

Three years later, Hostess had no more options but to shutter. The loan sharks will strip em to the bone to get back whatever they can.

At least that was three years of good wages for the workers, and millions in dues to the union. If it wasn't for the greedy loan sharks, they would've shuttered years ago.

Not a nice situation. But it could have been worse.

"Cowards & idiots can come along for the ride but they gotta sit in the back seat!"

Greed.

Twinkie maker Hostess pissed off a lot of reasonable people by not only cutting worker pay while leaving the CEO's pay untouched, but also giving executives $1.75 million in bonuses at the same time they are liquidating the company and laying off 15,000 workers. More enraging is how typical such behavior is.

http://gawker.com/5965493/executives-love-to-give-themselves...

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"Stand up for what you believe in. Even if you stand alone."
~ Sophie Magdalena Scholl
"Let it not be said that we did nothing."
~ Ron Paul
"You must be the change you want to see in the world."
~ Mahatma Gandhi

I don't think you understand

I don't think you understand the world of executive compensation. The executives are going to be out of a job once Hostess shuts the doors. Why can't they leave now and move on to better pursuits? A person who has the knowledge and experience to run a company is worth quite a bit to most of the companies out there. If you were an executive at Hostess and another company wanted you to start right away, would you stick around at Hostess to see the company through to its bankruptcy or would you jump on the other company's offer? For most, it comes down to compensation. If Hostess didn't pay anything to keep the execs around during bankruptcy, they would leave at the first offer presented to them. Hostess had to make a decision once the workers went on strike to decide how best to keep upper management in place throughout the entire bankruptcy.

This issue is simply one of perceived value. People say that corporations don't value workers because they don't pay them enough. I say that workers don't appreciate executives enough. They think they are overpaid but that is just the cost of keeping the right talent within your company. If you want the executive pay, I suggest going back to school and pursuing a Masters instead of going back to the union hall to learn how to press the on/off button on the Twinkie stuffer.

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Executives are worth less and workers worth more

Executives are worth less and workers worth more. Executives are worth a lot more than their workers, but nowhere near as much as the current levels of compensation. Its gotten ridiculous. The markets judge a corporation on its executives these days, and NOT on profits, product, or reputation. Those things used to be the hallmarks of a successful business. No more.

"Cowards & idiots can come along for the ride but they gotta sit in the back seat!"