Hostess went belly up in late 2012 thanks to unmanageable costs. There were some serious infrastructure and logistics issues but the biggest weight around the company neck was union contracts. The Union bosses bled the company dry until it could no longer afford to operate. Hostess closed up shop, Twinkies disappeared from store shelves, and thousands became unemployed overnight.
Some folks who believed in the brand paid hundreds of millions to pick up the pieces.
They fixed the infrastructure issues and streamlined logistics but the biggest change was the workforce. Fealty to unions was not one of the assets they purchased so instead of bowing to labor bosses they embraced modern technology. Mechanization and scientific innovation allowed them to cut the workforce from 8,000 (no longer employed persons thanks to the union) to 1,170 people with jobs.
This brings us to the most important lesson from the Forbes article if it’s not already obvious.
As we must keep reminding ourselves, jobs are a cost of doing something, not a benefit. And we need to recall this when we talk about the minimum wage. We will be raising the cost to people of getting things done. Businesses will either therefore do less or they will employ fewer people to do them. In this case, Hostess decided to change the technology to rely less upon human labor.
Meddling has consequences.
The idea that anyone other than an employee and employer can define the value of an exchange of labor in any given marketplace, let alone every one of them, is absurd. The cost of living can be wildly different from town to county to state, as is the value of the work in those places. And yet planners believe they know better, or is it best?
They believe they can define what a living wage is and force companies to pay it without regard for the real consequences. But the living wage is not an island on the horizon to which we can all arrive at the same time or from the same direction. It doesn’t even need to be the same damn island. “Living” like happiness is an abstract concept based on any given individual’s sense of what provides them joy or value or purposeor…satisfaction, no two of which shall ever be identical. You literally cannot put a price on it.
Some people don’t even work for the money. They don’t care how much they get paid. They do it to get out, be with people to stay busy, or because they like the company and want to be a part of it. But if you make employers pay people twice what the job is worth to the employer (or even the employee) employers have to make choices about how to keep the doors open and the customers satisfied, things over which the government bureaucrats and career politicians never feel any concern.
The are happy to salt the earth so they can meddle more under the banner of fixing what they probably broke. Their government gets bigger, bureaucrats get richer, all on the labor of those they are crushing.
“Jobs are a cost of doing something, not a benefit.”
The arc of this sad story ends with an economy ruined by the heavy hand of government, littered with the unemployed followed by unemployable public servants whose hands are stained with the blood of the golden goose they crushed to death under their own weight.
The evolution descends toward Greece until we are Venezuela.
And that, by the way, is why the same people are so obsessed with gun control. Somewhere, deep down, they know where this is headed. It’s part of the planning. If the populace is still armed when we’ve been confronted by all the consequences of their meddling, it may not go well for the ‘experts.’
One more aside. Who among you is not flabbergasted at the idea of a living wage defined by a party that can’t even figure out when life begins?
