No More Twinkies: Unions to Blame

Enjoy Twinkies while you still can. Hostess Brands just went bankrupt. This morning the company announced that it will suspend operations and lay off more than 18,000 employees. The Bakery International Union put them out of business.

Hostess has struggled financially for years. The company tried to stay competitive by cutting costs, but these cuts enraged its unions. The Teamsters ultimately accepted concessions; the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union would not.

Despite warnings from management—and the Teamsters—the Bakery union went on strike and refused to return to work. Hostess lacked the funds to carry on, and the company will now liquidate.

This has become the story of the labor movement. Companies like Hostess need to be nimble, but unions make it difficult to respond to a changing marketplace. This makes unionized firms less competitive. So unionized firms invest less, create fewer jobs, and earn less than comparable non-union firms.



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