Unions Shut Down Hostess

[Iliad]

btw, this link has been "corrected" At first I was just going to point out that these management pay raises were "claims" from the union, but it doesn't matter anymore anyways...

Yes it does matter. It could explain part of the reason why the employees would accept the pay cuts.

An earlier version of as well as an earlier headline of this post incorrectly stated that Greg Rayburn received a 300 percent raise as CEO of Hostess as the company approached bankruptcy. Rayburn wasn't CEO of Hostess until after the company filed for bankruptcy. The post also incorrectly stated that he was paid a salary of up to $2,550,000 per year. His salary when he joined the company was $100,000 per month, according to a company spokesman.

The name given was wrong but that doesn't change the fact about the pay increases or at least the attempt at the pay increases.

Hostess’ creditors accused the company in April of manipulating executive salaries with the aim of getting around bankruptcy compensation rules, the Wall Street Journal reported at the time. In response, Rayburn announced he would cut his pay and that of other executives to $1 until Dec. 31 or whenever Hostess came out of bankruptcy.

I bet this won't matter though. The incorrect information has been corrected, but the opinions of posters that have been strongly shaped based solely on the size of the pay raises and salaries for the CEO and management will probably stay the same...

Actually it does matter. It show me that he might have taken one for the team but we don't know about his whole pay and compensation package.

Here is an article explaining the CEO changes at Hostess. http://blogs.wsj.com/deals/2012/03/09/h ... as-sought/

ty again for the link. I am eating them up like candy!

However, it does show he certainly did his part, basically taking a 99.9% pay cut on his standard salary. If that isn't good enough, then I'm not sure if anything would have been good enough. He not only took one for the team, he sacrificed so that there was still a "team" at all. He's probably pretty pissed now that after what he gave up to keep the company going and keep the workers working, and they just walked out on the company. I'm more pissed at the employees now too.

Let me read your link

Why are you pissed off at the employees? Why is this an emotional event at all?

Isn't this your fabled free market at work? A company can't operate unless it pays its employees below market rate wages.
Clearly it's inefficient relative to its competitors if it can't maintain a profit and pay its employees the market rate for their wages, so by going bankrupt it's opening up market space for its more efficient competitors. Its employees, as rational self-interested individuals, as all are in an economist framework, have no interest in sacrificing their own wages to perpetuate inefficiency. If a company can't pay its employees the average market rate wages and maintain a profit, then i don't see why it should be in business.

Why is it, when tax hikes are proposed, even by 1 or 2% the lovely business owners can threaten to flee and relocate and this is celebrated as the 'market' in action, but apparently employees are supposed to accept a 5% pay cut just after concessions two years ago. Like their jobs are some kind of gift bestowed on them and their rational self-interest is not at stake.

You make for a shitty economist if you can't even adhere to your own ideology and just blindly shit on the poorer side in an argument.

Still no-one even trying to refute this.

[Phatscotty]

pff. #1, you think this is a free market? That is so friggin laughable, I don't blame anyone for not touching it!

This (Hostess) it what it looks like when the free market has been suffocated.

[Iliad]

pff. #1, you think this is a free market? That is so friggin laughable, I don't blame anyone for not touching it!

This (Hostess) it what it looks like when the free market has been suffocated.

Expecting basic knowledge of economics from you was a bit much I see. Carry on.

[Lootifer]

I understand the drop in demand, debt loading, and rise in costs. The response is to make cuts where you can, even in wages.

I'm really not trying to take the side of the management, I'm trying to take the side of the JOBS.

Fair enough; I would say though, a good portion of those jobs, from an economic/financial pov, needed to go even if Hostess were to survive. Just a sad consequence of a big business struggling.

Whatever it takes to keep them here, for however as long as possible.

Either we want a better economy with more workers and taxpayers and wealth creation, or we don't.

Yes but Hostess could have failed because the free market pushed them out, that means the market is signalling those workers would be better off doing something other than working for Hostess.

You could now think of it as a great opportunity for a other foodstuff or similar start ups or established businesses to move into places where the hostess previously were and get a nice big pool of labour to choose from.

[AndyDufresne]

This (Hostess) it what it looks like when the free market has been suffocated.

Pfft, Listen, I don't claim to know how suffocation works, but something seems off here.


--Andy

[thegreekdog]

pff. #1, you think this is a free market? That is so friggin laughable, I don't blame anyone for not touching it!

This (Hostess) it what it looks like when the free market has been suffocated.

What are you even talking about? There was no government intervention here at all that I could see. What am I missing?

Now, if Hostess got a bailout... then we'd have something to discuss.

[Neoteny]

Twinkies would have been saved by cap and trade.

[Phatscotty]

pff. #1, you think this is a free market? That is so friggin laughable, I don't blame anyone for not touching it!

This (Hostess) it what it looks like when the free market has been suffocated.

Expecting basic knowledge of economics from you was a bit much I see. Carry on.

what a pointless post....

[Phatscotty]

pff. #1, you think this is a free market? That is so friggin laughable, I don't blame anyone for not touching it!

This (Hostess) it what it looks like when the free market has been suffocated.

What are you even talking about? There was no government intervention here at all that I could see. What am I missing?

Now, if Hostess got a bailout... then we'd have something to discuss.

The market place in America is definitely not a free market or barely free market friendly, and highly over-regulated by both the government, and the union, in this case.

[thegreekdog]

pff. #1, you think this is a free market? That is so friggin laughable, I don't blame anyone for not touching it!

This (Hostess) it what it looks like when the free market has been suffocated.

What are you even talking about? There was no government intervention here at all that I could see. What am I missing?

Now, if Hostess got a bailout... then we'd have something to discuss.

The market place in America is definitely not a free market or barely free market friendly, and highly over-regulated by both the government, and the union, in this case.

Wait, what? The union is highly over-regulating the marketplace? Explain how that works.

I agree that the economy of the United States it not a free market, obviously. However, in this instance, with Hostess, I'm looking for where the over-regulation occurred that caused the company to go bankrupt. It seems that this is EXACTLY how the free market should work.

And again, we can see the difference between Phatscotty the supposed free market guy and Phatscotty the mainstream Republican, big business guy.

[jj3044]

pff. #1, you think this is a free market? That is so friggin laughable, I don't blame anyone for not touching it!

This (Hostess) it what it looks like when the free market has been suffocated.

What are you even talking about? There was no government intervention here at all that I could see. What am I missing?

Now, if Hostess got a bailout... then we'd have something to discuss.

The market place in America is definitely not a free market or barely free market friendly, and highly over-regulated by both the government, and the union, in this case.

Wait, what? The union is highly over-regulating the marketplace? Explain how that works.

I agree that the economy of the United States it not a free market, obviously. However, in this instance, with Hostess, I'm looking for where the over-regulation occurred that caused the company to go bankrupt. It seems that this is EXACTLY how the free market should work.

And again, we can see the difference between Phatscotty the supposed free market guy and Phatscotty the mainstream Republican, big business guy.

I think what he means (PS correct me if I am wrong), is that union regulations that the company has to abide by were a reason (not THE reason, but A reason) that the company failed. i.e. the fact that Wonderbread and Twinkies couldn't be shipped on the same truck.

In my experience, unions typically bog down companies and make them less efficient.

Also, to those who want to blame the union members, you should probably instead blame the union leadership, not the rank-and-file members. When votes come around in unions, the leaders basically tell the membership how they should be voting, and also control the level of information that gets out to those members. What do you think happens a majority of the time? The members vote as they are instructed to. Although I wasn't there, I bet the union leaders were telling their members not to accept the last proposal, and that the "company closing" was a bunch of BS just to get them to sign on the dotted line...

[thegreekdog]

pff. #1, you think this is a free market? That is so friggin laughable, I don't blame anyone for not touching it!

This (Hostess) it what it looks like when the free market has been suffocated.

What are you even talking about? There was no government intervention here at all that I could see. What am I missing?

Now, if Hostess got a bailout... then we'd have something to discuss.

The market place in America is definitely not a free market or barely free market friendly, and highly over-regulated by both the government, and the union, in this case.

Wait, what? The union is highly over-regulating the marketplace? Explain how that works.

I agree that the economy of the United States it not a free market, obviously. However, in this instance, with Hostess, I'm looking for where the over-regulation occurred that caused the company to go bankrupt. It seems that this is EXACTLY how the free market should work.

And again, we can see the difference between Phatscotty the supposed free market guy and Phatscotty the mainstream Republican, big business guy.

I think what he means (PS correct me if I am wrong), is that union regulations that the company has to abide by were a reason (not THE reason, but A reason) that the company failed. i.e. the fact that Wonderbread and Twinkies couldn't be shipped on the same truck.

In my experience, unions typically bog down companies and make them less efficient.

Also, to those who want to blame the union members, you should probably instead blame the union leadership, not the rank-and-file members. When votes come around in unions, the leaders basically tell the membership how they should be voting, and also control the level of information that gets out to those members. What do you think happens a majority of the time? The members vote as they are instructed to. Although I wasn't there, I bet the union leaders were telling their members not to accept the last proposal, and that the "company closing" was a bunch of BS just to get them to sign on the dotted line...

I don't disagree with anything you've typed, except that the union does not impose regulations.

Companies have no choice when it comes to actual state or federal regulations. They must abide by those rules.

In the context of unions, if a union negotiates a contract whereby twinkies and wonderbread couldn't be on the same truck, there is a negotiation. Negotiation. The company said okay to that at some point. The company is not forced into the decision.

The word "regulation" and "union" should not be used in the same sentence from my perspective. They are mutually exclusive.

[Funkyterrance]

I understand the drop in demand, debt loading, and rise in costs. The response is to make cuts where you can, even in wages.

I'm really not trying to take the side of the management, I'm trying to take the side of the JOBS.

Fair enough; I would say though, a good portion of those jobs, from an economic/financial pov, needed to go even if Hostess were to survive. Just a sad consequence of a big business struggling.

Whatever it takes to keep them here, for however as long as possible.

Either we want a better economy with more workers and taxpayers and wealth creation, or we don't.

Yes but Hostess could have failed because the free market pushed them out, that means the market is signalling those workers would be better off doing something other than working for Hostess.

You could now think of it as a great opportunity for a other foodstuff or similar start ups or established businesses to move into places where the hostess previously were and get a nice big pool of labour to choose from.

I think that ultimately yes, those workers will be more effective at another job but the problem is what happens in the meantime? Some people are so locked in to their current income situations they can't afford to go very long without work. I think this may be the point that PS is trying to make.
The fact is there is enough money to go around but nobody wants to accept the fact that your fortune, if you have any, is a product of the system and to refuse to give back to the system that put you where you are is short-sighted and small-minded. Bailouts obviously are not the answer but there ought to be some sort of program that specifically relocates workers such as these into another job of relatively equal prosperity. This program should be payed for by the taxpayers. To me the whole "What's mine is mine and what's yours is yours" mentality towards jobs/income is laughable. The rich get rich on the sweat of the working man.

[oVo]

Hostess didn't need a bailout. The reality here is this greedy group
of executives took their sweet golden parachute and bailed out.

[jj3044]

pff. #1, you think this is a free market? That is so friggin laughable, I don't blame anyone for not touching it!

This (Hostess) it what it looks like when the free market has been suffocated.

What are you even talking about? There was no government intervention here at all that I could see. What am I missing?

Now, if Hostess got a bailout... then we'd have something to discuss.

The market place in America is definitely not a free market or barely free market friendly, and highly over-regulated by both the government, and the union, in this case.

Wait, what? The union is highly over-regulating the marketplace? Explain how that works.

I agree that the economy of the United States it not a free market, obviously. However, in this instance, with Hostess, I'm looking for where the over-regulation occurred that caused the company to go bankrupt. It seems that this is EXACTLY how the free market should work.

And again, we can see the difference between Phatscotty the supposed free market guy and Phatscotty the mainstream Republican, big business guy.

I think what he means (PS correct me if I am wrong), is that union regulations that the company has to abide by were a reason (not THE reason, but A reason) that the company failed. i.e. the fact that Wonderbread and Twinkies couldn't be shipped on the same truck.

In my experience, unions typically bog down companies and make them less efficient.

Also, to those who want to blame the union members, you should probably instead blame the union leadership, not the rank-and-file members. When votes come around in unions, the leaders basically tell the membership how they should be voting, and also control the level of information that gets out to those members. What do you think happens a majority of the time? The members vote as they are instructed to. Although I wasn't there, I bet the union leaders were telling their members not to accept the last proposal, and that the "company closing" was a bunch of BS just to get them to sign on the dotted line...

I don't disagree with anything you've typed, except that the union does not impose regulations.

Companies have no choice when it comes to actual state or federal regulations. They must abide by those rules.

In the context of unions, if a union negotiates a contract whereby twinkies and wonderbread couldn't be on the same truck, there is a negotiation. Negotiation. The company said okay to that at some point. The company is not forced into the decision.

The word "regulation" and "union" should not be used in the same sentence from my perspective. They are mutually exclusive.

You are correct, "regulation" is a poor term for it, I was just trying to clarify what PS was talking about.