This piece by Seth Ackerman is a fascinating take on the Hostess situation. He argues that the way neoliberals disparage unions for enforcing ‘uncompetitive’ wages can be traced back to—literally—medieval notions of moral worth, class status, and the economic value of one’s labor.
First, Ackerman points out how rare it is for wages to be cut. Employers tend to fire workers rather than cut wages because doing so risks walk-outs and decreases in morale and productivity:
…Judging from the commentary, you would think that out there in the real world, 30% pay cuts are the norm and people just suck it up. In reality, nominal pay cuts are rare. This is a well-known phenomenon in economics: it’s called downward nominal wage rigidity. Companies rarely impose actual reductions in the dollar amounts of pay for existing workers. In the most reliable studies, using company payroll records, about 2%-3% of workers experience a pay cut each year. Data from national surveys are notoriously prone to measurement error, but after correcting for it, 4%-5% of workers are observed experiencing falling wages.
[Yale economist Truman] Bewley summarized what he found this way: “All employers thought cutting the pay of existing employees would cause problems. The main argument was that employee reactions would cost the firm more money than a pay cut would save, so that it would be profitable only if workers accepted it.”
Interestingly, while many are eager to criticize unions for enforcing ‘uncompetitive’ wages that hurt firms, those same critics fail to discuss how those firms can hurt themselves by not offering competitive wages (emphasis mine):
In a piece for Salon, Jake Blumgart quoted a bakery worker who had been at the company for 14 years. “In 2005, before concessions I made $48,000, last year I made $34,000…. I would make $25,000 in five years if I took their offer. It will be hard to replace the job I had, but it will be easy to replace the job they were trying to give me.”
What we have here is a situation where a company offered a wage in the marketplace and couldn’t get any workers to accept it. Consequently, it went out of business. The word “competitive” gets thrown around a lot, often with the murkiest of meanings, but in this case there can be no doubt at all that a company, Hostess, was unable to pay a competitive wage. Ninety-two percent of its workers voted to walk out on their jobs rather than accept its wage, and they stayed out even after they were told it was the company’s final offer.
By all the canons of competitiveness, it was the company that was deluded. Hey, it’s a tough labor market out there. Hostess just couldn’t compete.
Yet many were quick to blame the Hostess unions for the company’s failure to stay competitive. Here’s the thing, though: if you can’t run your business without making your employees so unhappy that they’d rather walk out and forgo pay than continue working, then you probably shouldn’t be in business. Cutting wages is not the only way for a business to remain competitive. In fact, doing so can be bad for business, as the employers interviewed by Bewley point out.
So if there’s no objective, economic reason to blame unions for Hostess’s failures, then why do so many do it? What do they really mean when they say unions are harm businesses by demanding ‘uncompetitive’ wages? (emphasis mine):
But the union got blamed instead, and that points to a fascinating aporia in neoliberalism. The competitiveness ideology keeps a double set of books. On the surface, it celebrates free individuals making voluntary agreements on a footing of formal equality. But look just a little deeper and it turns out to be a musty, medieval system of morality that venerates human hierarchy and inequality. If taken literally, an accusation of insufficient “competitiveness” would refer to a failure to buy or sell on the terms objectively demanded by the dispersed actors of the marketplace. But nine times out of ten, this literal meaning is just a facade for the real underlying meaning, which is all about policing the socially accepted rules concerning who is a worthy human being and who is not. Workers at an industrial bakery are losers. They need to take a pay cut — not so much to make the numbers add up…but as a ritual affirmation of their debased social status. The refusal to take the cut was shocking and revolting — an act of lèse-majesté. It’s in that sense that the union was uncompetitive. The workers didn’t know their place.
Erik Loomis neatly sums up the ugly classism lurking beneath complaints about uncompetitive union wages:
So much of our ideology about workers is looking down on blue-collar labor. They aren’t educated so they deserve to be at the bottom. Plus I have a college degree and I have an unpaid internship. I am so lucky to get this “job” and I am so valuable with my bachelor’s degree in journalism from Michigan. So if I’m not getting paid, certainly those losers should be getting even less.
When a business fails, why should workers, rather than management, be blamed? It was the bakers’ job to bake. It was management’s job to make sure the company stayed in business. This included making sure they were paying wages that would attract and retain workers. The Hostess bakers were doing their jobs. The people running Hostess failed to do theirs. To argue otherwise is to suggest that blue collar employees are somehow more responsible for keeping a company successful than the white collar people paid handsomely to manage it.