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The Value of Work

[ 86 ] November 21, 2012 |

Seth Ackerman has a really strong article at Jacobin on the Hostess shut-down. Much of it has great value for showing just how rare it is for companies to ask workers to take pay cuts. The reason is simple–it would destroy worker morale and production. But Hostess did this and it helped destroy the company. But I think the real insight gets at why Hostess would do this and how people buy into this idea of competitiveness.

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 (that’s a secondary consideration for all the commentators and columnists) 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.

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.

Comments (86)

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  1. wengler says:

    The biggest assumption made is that company managers are making the only rational decision they can make against the ‘irrational’ demands of workers. Implicit in this narrative is the hardscrabble ‘job creator’ being hobbled by the lazy ‘taker’, which apparently includes any task that requires manual work.

    Rich people can never be described as predatory, because money is the universal sign of virtue.

    • Sev says:

      Right. They must never be expected to take pay cuts, since this would destroy their incentive, but the lowly workers are expected to sacrifice to save the company and their jobs- and what reckless fools they are if they refuse!

      • Some Guy says:

        It’s the worker’s fault for not wanting to take a pay cut! It’s certainly not the fault of the executives for making a shitty product that no one wanted to buy! Stupid plebes!

        • DrDick says:

          Right. After all, it was the workers’ excessive wages that forced management to make all those lousy decisions that got the company in trouble in the first place. Given all the work they put into that management had to give themselves massive raises and bonuses just to keep morale up. Otherwise, heavens forbid, you might have had top managers leaping out of windows!

          • Malaclypse says:

            In fact, I believe the workers made the monumentally stupid decision to hire a CEO with no experience in food production, but 29 years’ experience in selling off assets as part of liquidations.

          • Ramon A. Clef says:

            it was the workers’ excessive wages that forced management to make all those lousy decisions that got the company in trouble in the first place.

            I once heard almost those exact words come out of someone’s mouth to explain why American-made automobiles were inferior in quality to Japanese cars.

    • djanglermust says:

      ‘taker’ and ‘maker’ are excellent terms for describing the modern workplace which Republicans have, in typical fashion, gotten people to use precisely backwards.

  2. Corey Robin says:

    It’s at Jacobin, Erik, not Dissent.

  3. Linnaeus says:

    The discussion I took part in (on Facebook, natch) was really frustrating. The original poster and most of the commenters thought that anything managment did was justifiable (they may have made some “mistakes”) and regardless of what management did, the BCTGM was still at fault because their decision was “the last straw”. I and one other person made the case that the history of mismanagement (deliberate or not) mattered when assessing responsibility, but that fell on deaf ears. The union was “selfish” for trying to hold on to what it had, but management trying to extract everything it could out of the company wasn’t. I just gave up.

    • Cody says:

      This is a crazy silly argument if you look at the company’s long term plans. They literally told the employees they were closing down the plants they were working at after the pay cuts anyways.

      In addition, everyone and their mother knew they were just selling off the company’s assets. They had already gone through bankruptcy and was fully intending on liquidation. It’s not like these people weren’t losing their jobs any ways…

      Hostess just wanted the better PR of a Union refusing to work for free.

  4. Linnaeus says:

    By the way, Jacobin has been publishing some great stuff.

  5. Aaron B. says:

    A big part of this is all in the American attitude, though. I have a friend who works for a German company that asked the union to agree to a pay cut during the worst of the recession (the execs, incidentally, took one too – and a quite substantial one, around 10% if I recall). Armed with the knowledge that everyone was sacrificing (really sacrificing, not “look how small my bonus this year is!” sacrificing) it actually served to inspire a “we’re all in this together” sort of attitude, rather than destroying morale. I think that speaks to the way in which America really lacks the basis of social solidarity that some of the more social democratic European states have. Meritocratic ideology pervades everything in America.

    • heckblazer says:

      IIRC, in Germany unions are allocated some board seats. I would imagine that helps the legitimacy of pay cut requests.

      • Aaron B. says:

        Plus, at the end of the recession the workers got their original pay restored and COLA adjustments and raises returned. Management never got their pay cut back.

      • DrDick says:

        It is also the case that the pay differential between the CEO and line workers is far lower than in the US at about 40:1 compared to 311:1 (down from 430:1 before the recession) here.

    • Curmudgeon says:

      The countries of north-western continental Europe were–before the invasion of neo-liberalism–societies that operated markets.

      America was, is, and always will be, a market free from the inconvenient demands of actual human beings.

      • Observer says:

        Here’s an idea…why don’t you use your money and start your own bakery and then you can run it any way you want?

        But then you’d have to worry about sales, projections, market share, meeting payroll, cash flow, OSHA, ROI and all that other stuff that the academics that write this stuff don’t really have any experience at or know anything about.

        They are the blind men that believe the elephant to be like a snake.

        • Emma in Sydney says:

          German bakeries, you know the ones with unions and living wages and health care and social security? Bake the best damn bread and cakes in the entire world. Cheap too.

          • Sev says:

            And I hear they make some pretty decent cars over there.

            • Observer says:

              So, go show Hostess how it’s done.

              But you won’t. You’ll sit behind a keyboard and whine and tell others that risk their money how to run their business.

              Look, I don’t think the unions tubed Hostess. I don’t know why Hostess was not doing well., but it wasn’t. Product lines get old. Management makes mistakes and yes, unions sometimes fuck the business up.

              What I *DO* know is businesses are only allowed to exist as long as they are efficient stewards of assets, and when they’re not, they go. It’s called ‘creative destruction’ and it’s a natural part of the free market. Darwinism of a sort for business.

              • Cody says:

                ?

                I missed someone arguing that Hostess going out of business was awful. The debate here is that blaming it on Unions is asinine, and you seem to acknowledge that. You’re apparently upset we all think we could do a better job running Hostess, when none of us care at all that Hostess went out of business.

          • DrDick says:

            And oddly enough face an even stricter regulatory environment than in the US. One might think that Observer is actually only observing the interior of his colon.

        • Barry says:

          A lot of people do, and they make it work, unlike the guys running Hostess.

        • Anonymous says:

          Observer, you are over-thinking this. Step 1) be financially independent. Step 2) use financial independence as leverage to gain concessions from those who live paycheck to paycheck.

        • Malaclypse says:

          But then you’d have to worry about sales, projections, market share, meeting payroll, cash flow, OSHA, ROI and all that other stuff that the academics that write this stuff don’t really have any experience at or know anything about.

          What a marvelous collection of barely-related buzzwords. You can really see the thought process that places OSHA next to ROI.

          • Holden Pattern says:

            The commies at a number of local cooperatives seem to manage all that just fine. And they don’t exploit the workers… they are the workers.

            • Observer says:

              Great!

              Get the commies to produce twinkies and hire back all the workers.

              Oh, that’s right…you need CAPITAL! The one thing you always forget…

              DAMN!!!

              There’s that real world stuff getting in the way of the dream AGAIN!!

              • Karl Marx says:

                Oh, that’s right…you need CAPITAL! The one thing you always forget…

                I do believe that would make a good name for a three-volume book I’ve been working on. Thank you, good fellow.

              • Cody says:

                So you’re saying we’re all failures because our parents weren’t super rich and able to provide capital for us?

                Shit.

                Got us.

    • I really don’t think it’s attitude though. You read histories of union conflicts in Germany in the late 19th/early 20th century and you find plenty of employers who were willing to go to the mattresses to retain their power over their workers, and they’re certainly happy to do the same today against workers who fall outside of legally protected categories.

      The difference is a set of institutional frameworks that make mutual sacrifice the norm: seats on the board is one of them, but the government provides generous subsidies to employers and workers entering into work-sharing agreements rather than layoffs, and so on and so forth.

      • mpowell says:

        What happened in Germany 100 years ago hardly speaks to the current relationship between labor and management. I’ll agree that this is something that has to be maintained through appropriate cultural expectations and practices (like board level representation), but it can be done.

    • DrDick says:

      Silly rabbit. Labor has no value in America. Only the rentier capitalist Job Creators ™ have any value. Workers are just takers, stealing money from the capitalists.

    • mpowell says:

      National Instruments did this and they are a well-rated employer. Ironically, I told some French colleagues about it and they were mortified. But I got the impression that the French have a very adversarial notion of the relationship between labor and management which is really in spite of the actual situation.

  6. tt says:

    Meh. I notice that Ackerman doesn’t quote any actual “neoliberals” in his piece. The neoliberal-leaning LGM commenters seemed to agree that the problem was that Hostess’ business model was uncompetitive!

    • Corey says:

      Of course, that’s the perennial issue with all this anti-”neoliberal” rhetoric: long on pomo vocabulary, short on, well, specifics and attribution.

    • Walt says:

      Neoliberal leaning? Words now mean nothing.

    • I just googled “Hostess uncompetitive union” and found a piece from the Weekly Standard, and here’s one from the Union Leader, just on the first page.

      • Barry says:

        That’s unfair! You looked, rather than whined.

      • tt says:

        The problem isn’t that Ackerman is strawmanning. There really are lots of conservatives who hate unions! The problem is that he’s engaging in mindreading of an undifferentiated mass of his political opponents. If you’re going to claim that 9/10 times your opponents say X they really mean Y, you need something better. Ackerman is making very strong claims about the psychology of millions of people, without, as far as I can tell, 1) having any training or specific expertise in such psychological analysis or 2) doing any kind of in-depth analysis of what they actually say.

  7. Lasker says:

    I thought the article was good too. But I don’t think we should get too excited about the fact that companies would rather lay off workers than reduce pay. Laying off workers may well be better for the morale of those who are left. But what about those who were laid off? I would think it would be pretty obviously better for society if the norm in situations where cutbacks were truly necessary was reduced wages rather than layoffs. Another commenter mentioned Germany, and I do believe that practice is much more common there.

    • Aaron B. says:

      The German government has actually a policy called “Kurzarbeit” where companies are provided incentives to reduce hours rather than lay workers off. Honestly, I think the best policy is a robust stimulus, but this Kurzarbeit has the advantage of helping prevent economic dislocation and mass joblessness.

      • Lasker says:

        Yes, that’s what I was thinking of, thank you. I think when similar policies are mentioned here they are usually called “work-sharing”. For example 40 workers would “share” the workload of 30, instead of having ten people laid off, and are all entitled to some kind of partial unemployment benefits in the meantime. I know Dean Baker has advocated for the wider adoption of this model and I think a few states have some sort of limited programs in place.

      • I’d argue that the best policy is to do both. Kurzabeit stabilizes the situation, stimulus gets the economy moving again; stimulus has to do less of a heavy lift, and kurzarbeit doesn’t have to swim against the current of a worsening economy.

    • Davis X. Machina says:

      Laying off workers may well be better for the morale of those who are left. But what about those who were laid off?

      This is America. You are what you do. Those who were laid off, cease to be. If they’re lucky, they just become invisible.

    • djanglermust says:

      “I don’t think we should get too excited about the fact that companies would rather lay off workers than reduce pay.”

      I don’t think anyone is getting excited about it, they’re just using it to show that the actions of Hostess’s management were unusual and extreme.

  8. MikeJake says:

    I think there’s something to the notion that the failure of the Hostess bakers to “know their place” killed the company, in the sense that the hedge fund owners were counting on that as part of their strategy for keeping the business operating (their compensation, of course, is never part of that discussion).

    But really, it’s the financialization of everything in our society that demanded the bakers know their place. When a business is viewed as nothing more than a generic bundle of assets and liabilites and cash flows that can be tweaked to increase net profit, as opposed to labor and capital organized to acheive specific ends, then workers become nothing more than a variable in an equation. In this case, scrapping the whole enterprise becomes as valid of a choice as attempting to fix it.

    Try and imagine Red Sox owner John Henry cutting payroll in order to set the franchise up to be sold, raising ticket prices, then suddenly shutting down the team in May when the fans refused to show up. Would the public blame the fans?

    • Fighting Words says:

      Well, if we were talking about the Montreal Expos, then yes, we would blame the fans.

    • Davis X. Machina says:

      Would the public blame the fans?

      They’d blame the players. They already do…

    • Davis X. Machina says:

      But really, it’s the financialization of everything in our society that demanded the bakers know their place

      Everything that is, can be bought and sold.
      Anything that cannot be bought or sold, is not.
      Everything that can be bought and sold, must be bought and sold.

      This is the whole of the law and prophets — the rest is commentary.

      Baruch atah ha Shuk, ha dayan emet.

  9. Jim Lynch says:

    Rod Sterling knew the score in 1963. Any fan of the Twilight Zone will recall the episode featuring Lumpy Rutherford’s father (later the flunky/in-law of Alan Brady), in which the machines he championed eventually replaced him.

  10. Sly says:

    Workers at an industrial bakery are losers. They need to take a pay cut — not so much to make the numbers add up (that’s a secondary consideration for all the commentators and columnists) but as a ritual affirmation of their debased social status.

    This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments.

    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.

    To attain to this envied situation, the candidates for fortune too frequently abandon the paths of virtue; for unhappily, the road which leads to the one, and that which leads to the other, lie sometimes in very opposite directions. But the ambitious man flatters himself that, in the splendid situation to which he advances, he will have so many means of commanding the respect and admiration of mankind, and will be enabled to act with such superior propriety and grace, that the lustre of his future conduct will entirely cover, or efface, the foulness of the steps by which he arrived at that elevation.

  11. Joel says:

    @Emma , that would be the French.

  12. Bruce Vail says:

    This is all very interesting but seems to miss the point that the owners of Hostess – Silver Point Capital, Monarch and GE Capital – always intended to close the bakeries, get rid of the worker, and sell off the assets, including the ridiculous ‘brands’ that are thought to be worth so much.

    • Linnaeus says:

      The more I read about the Hostess situation, the more I suspected that this was in fact the plan all along. Whether the unions went along with the most recent business plan wasn’t going to affect the ultimate outcome, only the timing of that outcome.

  13. Book says:

    Looking at what is going on with SAS in Scandinavia could be an instructive case study: http://cphpost.dk/business/latest-sas-news.

  14. Sebastian H says:

    This seems to be a case of extreme selection bias: everyone on all sides gets to believe everything they already believed without bothering to look at the facts of the case.

    Anti-union people get to blame the union. Pro-union people get to blame management. Yippee.

    Hostess, the company, was uncompetitive. This was largely because they didn’t transition very well from a fatty foods loving market to the slightly more health attentive market, and they didn’t respond well to the demise of ‘premium’ white bread. That is clearly the fault of management.

    The union, in face of dramatically declining business, chose to take 100% pay cuts by putting the final nail in the company rather than taking pay cuts in the high 20s or low 30% range. This union took its action with its own members, but also threw under the bus all of the other unions and their members who were willing to take cuts. Considering that they are throwing their union members and the members of the other unions into one of the worst labor markets in recent US history, that was probably a really bad decision. Obviously anyone who thought they could get a better job could have voted to end the strike and just quit when they got another job. They didn’t do that.

    That is clearly the fault of the baker’s union.

    I don’t see good decisions on either side of the union/management divide. I’d agree that the union wasn’t 100% to blame. But to pretend that it made no horrible errors, and to just move on as if other unions should follow its lead, is just crazy.

    • Cody says:

      Yes, because it’s better to live in America making minimum wage for another 6 months before they shut the company down then just start looking for work now.

      Hostess was counting on your argument to allow them to increase their profits and make themselves appear more lucrative. This would result in a more profitable acquisition for the current owners of Hostess.

      So the Union had two choices:
      A) Take a pay cut to line the pockets of capital till they got laid off a few months later
      B) Kill the company

  15. [...] The Value of Work: Erik Loomis This entry was posted in Potpourri. Bookmark the permalink. ← Reader Feeder Bits for (Wed. 21-Nov-12 1631) [...]

  16. Anonymous37 says:

    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.

    My mother and father were resolute Southerners, and we lived in the winter months in Camden, S.C., where they are buried. There was in Camden, when we settled there, a reigning presence, a 65-year-old widow whose approval everyone sought both because she was arbiter elegentiae in Camden and because she was the soul of high standards and kindness. Age 13, I heard her recount to my mother that a colored lady had put in for a job to replace the retiring cook/maid/laundress and when asked her name, gave it as “Mrs. Whittaker.” This brought laughter from Camden’s first lady, who said simply that of course she would not hire a servant who gave her name as “Mrs.” anything. — William F. Buckley
    __
    And no, there is nothing at all wrong in calling the cleaning lady Joan, even if she calls you Mr. Kinsley. What’s wrong is the ideological insistence on symmetry when usage cries out against it. — William F. Buckley

  17. Observer says:

    Here’s what’s been glossed over and not discussed. Every union proponent has simply assumed that the union position is perfect.

    Not so much…

    http://tinyurl.com/7nmdldp

    Hostess provides pensions via 40 multiemployer pension plans, Driscoll said. That has left the company on the hook for the obligations of other companies that have been driven out of business.

    Hostess is saddled with 372 collective bargaining agreements, 80 different health and pension benefit plans and workers’ compensation costs that last year hit $52 million–which works out to over $2700 for each of its 19,000 employees.

    Union agreements mandate pay raises and other compensation costs that will total $31 million this year. Ridiculous union work rules that are consciously engineered to increase inefficiency and create superfluous jobs are making Hostess uncompetitive with other industry players. If cakes and bread arrive together and are headed to the same place, they must nevertheless be split onto separate trucks; drivers are forbidden to load products onto their trucks.

    When the Hostess man delivers product to the store, he isn’t allowed to move items from storage to the shelves; instead, a different employee, called a “pull-up” worker, has to do that job. Oh, and if both cakes and bread are involved? You guessed it: there’s a cake pull-up and a bread pull-up. One guy couldn’t possibly do the same task.

    • DrDick says:

      And just who made the decision to do this? Was it the workers? Did the union demand that the company make such a risky and foolish move? Why, no. That, like all the other problems, was created exclusively by management. Thank you for making our case for us. Fucking asshat.

    • Malaclypse says:

      Ridiculous union work rules that are consciously engineered to increase inefficiency and create superfluous jobs are making Hostess uncompetitive with other industry players.

      You can almost taste the objective journamulism.

    • Observer says:

      Here’s another perspective on Hostess that I think you will find interesting.

      http://www.decodedscience.com/hostess-bankruptcy-no-more-twinkies/20491

      Snack alternatives have similarly changed in concert with these long-term trends. Needless to say, a niche for less-than-healthy alternatives still exists, but the laws of supply and demand are unrelenting: if demand remains relatively constant relative to supply, and if an ever-increasing percentage is for healthier choices, then demand for less-healthy alternatives must fall. Those were the macroeconomics facing Hostess, which was being edged out by not only healthier options, but expensive “premium” treats as well as low-cost alternatives. Hostess was caught in the middle, banking on a brand name that no longer carried the cultural impact it once did.

      Again, I think it’s more Business Darwinism rather than anything nefarious that the union or management did.

      Buggywhip manufacturers faced the same issues at one time, too. Times Change

      • Clearly when 8 in 1000 people by Twinkies as opposed to 12 the solution is to shut the whole company down because freedom.

        • Observer says:

          Economics

          Read a book sometime

        • Observer says:

          heh.

          Hostess filed for bankruptcy in 2004 and has been struggling ever since.

          And somehow you believe that it’s just awful that the market has changed and Hostess is gone. It’s part of the natural business cycle. Newsflash: Transistor radios and Dos 6.22 are also gone.

          I view it as the market responding to consumer demand as it should. Hostess was not selling what the consumer wanted to buy. It’s just that simple.

          The sweetest part of it all is although I don’t believe the union was the fundamental problem, they were the last straw and the public perception is they are the cause.

          The bad press for unions and how awful they are is priceless.

          • Malaclypse says:

            the market has changed and Hostess is gone

            So, not the union’s fault at all. Okay.

            • DrDick says:

              And once again he manages to overlook who made the decisions not the transition to a new business model to accommodate the changing market. Other snack food companies managed this quite successfully.

      • DrDick says:

        And exactly who made the decisions not to transition to more healthier products, but to stay with the declining death food market? It is indeed market Darwinism in action, but what is being selected against is stupid management.

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