Home > Uncategorized > Unions in America: Poking Walmart, choking Twinkies | The Economist

Unions in America: Poking Walmart, choking Twinkies | The Economist

December 2, 2012 Leave a comment Go to comments

Unions in America: Poking Walmart, choking Twinkies | The Economist.


Some say the current protests have less to do with convincing Walmart’s workers to join unions than with stirring up antipathy towards the company. Paul Osterman, an MIT professor who studies part-time and low-wage work, notes that Walmart comes out of the rural south, infertile ground for unionising, but is trying to move into more heavily unionised cities, particularly in the north-east. To do so the firm will need political support. Events like this week’s protests, Mr Osterman says, “are aimed at organising a constituency that will ask hard questions of Walmart.”

Others are asking hard questions of American unions. They may have won great victories in the past, winning higher wages and better safety standards in mines and factories. But as the economy has shifted from heavy industry (which is relatively easy to unionise, since a firm that has invested a billion dollars in a factory will be reluctant to close it) to services (which are more mobile), union membership has fallen, from 24% of private-sector workers in 1973 to a mere 7% in 2011 (see chart). Within industries, the firms with the most demanding unions have lost out to those with more moderate ones, or none at all.

In the public sector, by contrast, union membership has risen from 23% in 1973 to 37% in 2011. Governments have no competition, so they cannot easily go bust. The politicians who negotiate wage deals with public-sector unions are often funded by the same unions. This is one reason why America’s municipal finances are a mess.

Walmart discourages its workers from unionising partly because it sees what has happened to firms like Hostess Brands, an 85-year-old company that entered liquidation on November 21st. Hostess makes some of America’s most beloved and revolting snacks (among them Wonder Bread, Ding Dongs and the almost food-like Twinkies, a kind of sugary cream cake). Last January Hostess filed for bankruptcy, saying it owed $1 billion to various creditors, including the pension fund for the union that represents 5,600 of its bakers.

Hostess’s baking operations are reasonably efficient, but its distribution is not. Union rules required cakes and bread to travel in separate trucks, and barred drivers from helping load or unload them. Nimbler firms were eating Hostess’s lunch.

Faced with doom, the Teamsters union, which represents many delivery workers, accepted hefty pay and pension cuts. The bakers did not. They went on strike on November 9th, despite warnings that Hostess did not have enough cash to survive a stoppage. A week later, Hostess ceased operations. Another round of mediation on November 20th failed. Some 18,500 jobs may disappear.


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