Hostess Diversion of Pension Money Caused Strike, Death of Company

Hostess Diversion of Pension Money Caused Strike, Death of Company

The demise of the Hostess company, leaving Twinkies’ future in doubt, was widely blamed on the bakers’ union’s strike.  The real story is more complicated.

The bakers union agreed that their 2010 wage increase of 30 cents per hour would be almost completely devoted to pension contributions.  So they took a two cent raise, and the company promised to put the other 28 cents per hour in their pension fund.

It broke the promise.  For more than a year, no money went to the pension fund.  Of course the workers did not get the raise, either.  Instead, the company spent the money on other things including, eventually, large bonuses for its top executives.  The bakers walked out over the missing pension payments, and the company decided to liquidate its assets.

While Hostess still owns some property, such as the names and recipes for iconic products, no one apparently expects the pension fund to benefit from their sale.

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