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USPS Loss, Hostess Bankruptcy Due To Greedy Unions?

twinkies anti union

Commentary | The end of Twinkies and the news of a USPS loss of $15.9 billion in their most recent fiscal year has led to a predictable anti-union backlash on social media, but widespread reaction to the stories this week reveals more about the state of workers’ rights and a stunning inability to see beyond the role of “greedy unions” in our current state of affairs.

The Hostess strike and USPS loss may seem to be, at first, unrelated tales of union excess, two examples in the same day of spoiled workers forcing the hand of otherwise potentially profitable outfits to fail. But the stories are being held up, unsurprisingly, as a pool of data to discredit unions, when backstory to the incidents paints a far different picture.

News outlets were afire this week reporting that the USPS loss hit nearly $16 billion in the fiscal year ending on September 30. Inevitable comparisons to Obamacare were made by the punditocracy, suggesting that government-linked agencies are fiscally irresponsible and making comments such as this one seen on Twitter:

“The USPS lost $15.9B last year. Amtrak lost $345M. I’m sure once the government starts running healthcare everything will go great!”

Or this one seen on Fark:

Postal Service reports $15.9 billion annual loss – this brought to you by the same people that will be running your health care

(Similar versions abound on social media, often tying in the widely-debunked Sandy-related slander that non-union crews were blocked from assisting in recovery efforts. They were not.)

But what many fail to realize is that the USPS is in large part facing these financial difficulties due to an unreasonable demand that pensions be funded 75 years in advance, a rapid-impact effect of the Postal Accountability and Enhancement Act of 2006 — which many have called a “poison pill” planted to deliberately bankrupt and destroy the USPS and in turn, divest it of its unionized employees.

Without the requirement — one that exists for no other agency, governmental or private — the USPS would actually be in the black, Ralph Nader has suggested:

“By June 2011, the USPS saw a total net deficit of $19.5 billion, $12.7 billion of which was borrowed money from Treasury (leaving just $2.3 billion left until the USPS hits its statutory borrowing limit of $15 billion). This $19.5 billion deficit almost exactly matches the $20.95 billion the USPS made in prepayments to the fund for future retiree health care benefits by June 2011. If the prepayments required under PAEA were never enacted into law, the USPS would not have a net deficiency of nearly $20 billion, but instead be in the black by at least $1.5 billion.”

usps-closings-2012 postal office closings list

But it’s not always behind-the-scenes machinations that spark anti-union grumbling, and the USPS loss situation is just one example being framed in an anti-union way in most media coverage. The Hostess strike and fear of the end of Twinkies is another in which Americans rushed to blame unions, when Hostess had already filed for bankruptcy back in January.

In a May letter to employees, the head of the union blamed for the end of Twinkies had this to say about the poor, insolvent company being allegedly bankrupted by greedy workers:

“In all pre-bankruptcy and post bankruptcy discussions, the company representative repeatedly stated that the financial investors of Hostess, the management and the union and non-union workers would have to make shared sacrifices (concessions) if Hostess were to have a chance of coming out of bankruptcy. However, such statements were disingenuous.”

Frank Hurt continued:

“The BCTGM was informed (via the Unsecured Creditor Committee) that the Hostess CEO was awarded a 300% raise (from approximately $750,000 to $2,550,000) prior to the January 11, 2012 bankruptcy filing. Additionally, at least nine additional top executives also received incredible raises ranging from 35% to 80%. For example, one such executive received a pay increase from $500,000 to $900,000. The chief negotiator for Hostess received a pay increase from $375,000 to $656,256.”

These compelling factoids seem to have been washed away when the public narrative regarding the end of Twinkies is repeated. In it, we hear that workers seeking a single-digit raise cheated themselves out of 100% of wages. That these poor executives receiving three-digit percent raises were forced, forced by demanding employees to shut their doors and cash in their chips rather than honor their commitments to their workers.

hostess union killed twinkies

The facts in both scenarios — the Hostess strike and the USPS loss — are not even very difficult to uncover. Earlier this week, the mayor of St. Louis, Francis Slay, commented on the threats made by Hostess to punish workers:

“I was told months ago they were planning on closing the site in St. Louis … And there was no indication at that time it had anything to do with the strike the workers were waging.”

As the debate rages on, there is a surprisingly low level of attention given the disparity in reporting that seems all too keen to favor capital’s sob story over the union plight. But AFL-CIO President Richard Trumka released a brief and unambiguous statement on the matter today, lamenting that blaming unions as Wall Street skips away with the fruits of American blood, sweat and tears is par for the course in today’s political climate:

“What’s happening with Hostess Brands is a microcosm of what’s wrong with America, as Bain-style Wall Street vultures make themselves rich by making America poor. Crony capitalism and consistently poor management drove Hostess into the ground, but its workers are paying the price. These workers, who consistently make great products Americans love and have offered multiple concessions, want their company to succeed. They have bravely taken a stand against the corporate race-to-the-bottom. And now they and their communities are suffering the tragedy of a needless layoff. This is wrong. It has to stop. It’s wrecking America.”

Indeed, if America needs anything right now, it is the security in and reliance on good, fair union contracts and wages. But as the American workforce becomes ever more fearful of corporate and anti-union sanction, it seems all too willing to accept the prolific propaganda circulating to further restrict the rights of workers in this great, union-built country.

Lest we forget, these basic rights we have enjoyed up until the Bain Capitalization of America were not handed to us. Men died striking for fair conditions. Children labored double-shifts in dangerous environments and sick days, pensions and workplace safety were hard-fought concessions we’ve been all too willing to give up to fund skyrocketing CEO pay packets.

So before you send that tweet jeering at the Hostess workers who have been played and pilloried, or before you lash out at the service guaranteed to get your letter anywhere in the United States for under 50 cents, spare a moment to consider who really benefits when all worker rights are stripped away.

Here’s a hint. It ain’t the unions.

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Comments

44 Responses to “USPS Loss, Hostess Bankruptcy Due To Greedy Unions?”

  1. Rickey Pullen

    The USPS also has 40 vice presidents serving in a capacity that can be greatly reduced instead of so much cutting at the lower levels. The unions are indeed a big problem with 4 of them to fight daily in a large facility.

  2. Lenny Skibicki

    Whatever happened to all the district and area consolidation that was supposed to happen? That's right, the people that don't touch the mail and do not bring in any revenue are needed more than the people on the front line. And let's go through with ideas like postplan which they say we will not lose ANY revenue…. We all know where the real cutting needs to take place.

    1999-2010: 1/3 decrease in front line employees
    1999-2010: 25% increase in upper management

  3. Doc Piper

    Let us look at what the Postmaster General said here on Postalnews.com He retired 7,500 senior managers and saved $750Million. Almost 1 Billion for useless Desk Jobs alone. We have 85K postmasters alone, plus district personnel and 10s of thousands more. Point being, there are people who work and handle the mail, and there are people who stand around "Watching" people who handle the mail. The USPS is and has been for along time VERY TOP heavy, and far too overpaid. Bus. 101 says eleiminate overhead (non-productive costs) this includes Administrative costs.

  4. Lenny Skibicki

    He can brag all he wants about retiring managers, but they merely get replaced by more paper shuffling ad hoc managers with new titles and we are at the same point all over again.

  5. Doc Piper

    There are Billions wasted in unneeded Managerial costs, Inspection service costs and waste. We need to return to "Delivering the Mails", our basic purpose.

  6. John R. Windsor

    This is nothing but a hack piece, "commitment to their workers", "Bain Style Vultures", the raises to execs were apparently poorly timed, and questionable, but the company is a private company, we don't live is a damn Socialist Gulag yet. They can do within the law (bounded by the Constitution) what they wish with their capital, and incomes, the workers, and pension funding (which virtually no company offers to non-union employees, who are typically more valuable – in that they are paid more per year) have broken the deal. They tried to draw to an inside straight, and not amount of Socialist balderdash by someone who either knows nothing of or willfully chooses to ignore that knowledge can change the fact that the Unions as to Hostess chose poorly.

  7. Kim LaCapria

    it was clearly marked opinion, sir. And your feelings aside, tripling executive salary while crying insolvency is disingenuous.

  8. Kim LaCapria

    Doc, one billion is a lot less than the 11 billion in pre-funding pensions. Whatever small potatoes stuff the USPS has to deal with, the issue is that this was a deliberate and orchestrated attempt to hobble a basic service.

  9. John R. Windsor

    Opinion that is dishonest or misleading does not get a pass! It may be disingenuous, but it is a PRIVATE company and they can do with their capital/assets as they see fit, whether others see it as stupid or not, including making what would be universally considered bad decisions. The attempt to make it sound like a Republican bastardization of the country, morals and the economy is disingenuous – and no I am not a Republican, but I am tired of pettifogging to try to blame a group for some decline that has nothing to do with this matter.

  10. Kim LaCapria

    John, of course, they can. But they are telling the public unions bankrupted the company when in fact, it has run itself into the ground via inflated executive compensation and an acquisition binge. It's fine to DO that, but asking workers to pay the piper for their sins and then blaming said workers for saying "hey, wait a minute" is not going to sit right with a lot of working Americans. As it shouldn't.

    No one is asking the government to step in, or force the execs to act right. But simply pointing it out on an op-ed piece is not a bad thing to do. They should be called to account for their anti-union propaganda, and had they just closed shop without trying to shift blame, they'd not be scrutinized like this.

  11. John R. Windsor

    That is only (probably) partially true. They have a track record of management issues, but they also have tremendous legacy costs in health care/retirement benefit costs to union employees and those absolutely contribute to the demise in a challenging economic environment for the company. Workers are owed nothing but their wages, and this notion that their is some "social contract" that workers deserve the spoils of the business is poppycock, they don't risk capital, beg bankers to lend them money, stay up evenings trying to figure out how to expand, or stay in business, they show up, do the work and go home, with a check on Friday. They are not equal in the economic equation. They may be valuable more or less to a given enterprise and no one deserves to be treated unfairly (a conclusion of reasonableness), but people are mistreated, the world over every day through no fault of their own. In this case they absolutely contributed to exacerbating the situation and over played their hand and lost.

    I don't begrudge you the right to express your opinion, but to fill it with buzz words designed to cast blame on a political party "Bain Style Vulture Capital", or other conclusory terms designed to cast it on those of a particular political persuasion, does not contribute to a debate of the issues, and is a straw man argument that deserves challenge. Opinions get challenged, and an opinion piece has no special protection from that and unions have no more right to blame companies without challenge than the other way around. You don't have to agree with me, nor do I with you, and I have a right to challenge your characterizations that are, in my opinion inflammatory, and misleading about, at least the weight of contribution to the company's closure.

  12. Johnny Dee

    you kow its funny but I no longer believe anybodys story about any of this crap anymore…

  13. Cathy Clark

    As with any large government agency, there are too many at the top receiving excessive salaries and doing nothing. This is also true of many unions as well. Unions are fine when they protect the worker's rights and do what is expected of them; but too many are out to get what they can at any cost. This does not help the U.S. in any way and destroys the faith of the public in getting workers back to work. The greed of top management is overwheling in any large company. They take the money and run in most cases. Not sure if the employees of these defunct companies can sue the CEO's for breach of contract concerning their salaries and raises into the millions.

  14. Patrick Frye

    Sounds like the executives realized they might not be able to turn around the company and decided to cash in by raising their salaries.

    Caveat: I have not researched the Hostess story other than reading this article.

  15. Scott Mckee

    If they do not pre-fund we will be like social security, California, and most other state governments with billions in pension liabilities and no way to fund them except raise taxes. Besides if it is prefunded they may actually recieve interest income instead of just taxpayer subsidies.

  16. Scott Mckee

    We talk of executives getting fat salaries and excessive bonuses but we fail to see that the union bosses and organizational leaders pay falls within the same catagory. Giving over sixty million in campaign contributions to the president and other democrats while those who contribute the money are getting pay decreases or losing thier jobs. Hopefully the company who picks up the hostess brands learns a lesson and relocates to right-to-work states.

  17. Kim LaCapria

    Prefunding is one thing. Prefunding 75 years on a company that is self-sufficient- a demand made of no other entity, private or public- is the only way the USPS could be killed to be privatized.

    Why impose an unnatural, destined to be a distaster circumstance like that? Why not a reasonable plan for pensions?

  18. Kim LaCapria

    Can you please link me to something that says that? I have never heard of union presidents making money comparable to vulture capitalists. I'd be interested to see some data.

  19. Doc Piper

    Kim, read all of what I said. The postmaster saved 1 Billion with eliminating only 7,500 managers. we have over "85 thousand postmasters", thousands of District Managers and their Yes men. To save 10 Billion, you eliminate 75,000 useless, repetitive management, and inspectors.

  20. Corinne Grillo DiAngelo

    you have countless teams of people coming into our offices on a daily basis armed and ready with their clipboards. they have no clue as to what our daily workday is like being carriers.They are chockfull of ideas as to how we should do the job yet none of them actually have experience doing it. We who handle the mail service the customers are the backbone of this institution.They on the other hand are the very reason we are in this predicament. huge numbers of them making too much money watching us break our backs for a fraction of what they make. I have no faith in postal management but I hope some reasonable people in congress will see what we have been saying for years. Save the service do it right. Postal management wants to run my healthcare? are they for real?

  21. Doc Piper

    Kim, Prefunding is an evil, no doubt. However, time and time again the USPS Management has proved that if they have a extra dollar they will give it to themselves as a bonus, office furniture, 1 million dollar party for the inspection service, more useless management (who cannot write or spell). Right this moment, as we fall 15 Billion behind there is an article on Postalnews of wage increases Senior management gives themselves. Management is "Raping " the USPS pure and simple.

  22. Darlene Quinn-Gobbi

    Your point does not make sense… there is usually only 1 spv and the postmaster for an office and small offices only have a postmaster. their job is not to just oversee as you state people sorting mail they are in charge of their stock, budgeting balances and many other aspects of operation as well as monitoring carriers. I see more mngt at MACY'S!! As far as over paid… where do you get your info from can you show the over payment? I am a carrier and I avg under 50k a yr and work 6 days a week due to route cuts. Our unions are not "greedy" and the financial crisis of the post office is unrelated to operations, in fact the post office would have been profitable had we not had the gvt mandated retiirement prefunding imposed by legislation which is NOT required of any other corporation but because we are a gvt umbrella corp. we are required to prefund for retirees that have not even reached an age old enough to work yet! and that money has been borrowed against by the gvt so they wont fund back overpayments. research your points better very biased

  23. Doc Piper

    Darlene, don't know who you are commenting to, However, your facts are not FACTS. They are opinions based on your office. The average pay per carrier is 55,600. Manager/Postmaster is 101,000. There is a national managerial quota of 1 managerial person per 4 employees. They may not be in your office, but they are used in positions in your district. I don't feel unions are greedy, just uneducated. Our crisis is DIRECTLY RELATED TO OPERATIONS, OR THE FAILURE OF~ FSS machines working at 40%, idiots incharge of DPS, that cannot clean machines, using Union UPS instead of cheaper FEDX to ship in our mail. 60 minutes investigation of Million dollar Parties by the Inspection Servic, Postmaster postter taking a sweet deal from Countrywide ,and a 800,000 bonus during the 2008 financial collapse. Yes sister, Piss poor managmement has been our actilles heel..

  24. Darlene Quinn-Gobbi

    No not opinions based on my office. maybe you have your facts wrong, Im a rural not city. We get paid our evaluation regardless of how long we are out there. City carriers avg more.
    In regards to mngt comments, my OPINION is im sick of the mngt vs craft remarks I hear all the time. If most city carriers -cause there is tons of OT hogs out there – got back in their 8 how much money could be saved? And if the clerks mailhandlers at plants who like to stand around and stretch out their day cause volumes are down or practice the bang in rotations just did their jobs maybe our service wouldnt suffer. TRUTH IS… their is bad on both ends!! so spare me the self rightous Im a carrier and mngt sticks it to me plee. Honestly, mngt spends more time running around babysitting than they actually should get paid for. Im a carrier but have supervised ALL crafts in past. City, rural, and plant personell so i beleive I have a realistic perspective on this. honestly we should focus our attention on growing revenue with our customers and think out of the box. it is not a role carriers have had to play in the past but if we want our CO as a whole to survive we need to start marketing more effectively. BTW I heard the same complaints from my city carrier grandfathers about DPS only time will tell on FSS but we cant stop progression we have to learn to adapt whether we like it or not.

  25. Darlene Quinn-Gobbi

    Doc Piper – I tried 3x to reply but website keeps going down… Im not bashing city craft dont misinterpret my remarks. I am merely trying to bring to point that there is flaws at many levels, then again it is to be expected with a CO the size of the USPS. I do think local mngt has too much freedom of some functions. For instance there is way too much nepotism in the USPS for a gvt agency. I never intended to be a full time carrier. After 911 the financial firm I worked with closed firms. I had my financial license and was a sales asst for several brokers. Went back to school to be a nurse when my ex was injured at home and became permanently disabled. I was a sub while in college again – the money was decent and the economy bad and well 12 yrs later Im still here!! I am proud to be a carrier. I am proud of offering service and providing my customers with a positive experience. I do not think that there is enough craft today that carry the "postal pride" that myself and yes – my grandfathers who became carriers after WWII had. These are also things that have hurt our USPS.

  26. Anonymous

    Nothing the Union has ever done has ever helped anyone except the union. What a private company does is nobody's business and the future is going to be all about Government job's and very little income, lot's of welfare and massive debt and it will not matter who is in office or what the issue is. You are living in a short lived fantasy world America.