A very interesting article came out now that Hostess has closed its doors. It was a diary from the Daily Kos and describes a Hostess employees world from 2005 to 2012…..
It was as if a window had opened up and one was able to see outside again.
The story starts with the first paycheck. Stapled to it was a notice of how well that company had done, how prosperous it was, and who rosy it’s future appeared to be. The next paycheck also had a note attached; that said “oops, we made an accounting error.” But not before all the execs had sold their stock at the inflated price.
This worker went from making… $48,000 through labor concessions, down to making $34,000 now. His pension, the reason for which he stayed, was stolen through the bankruptcy process. It went through a convoluted process to wind up in executives’s bonuses.
The current contract, which is being hailed by today’s Republicans as a really fabulous offer, “that’s what’s wrong with unions these days” drops his pay to $25,000 in 5 years…….
Over this same time, the new head of Hostess pocketed $4 million into his own pocket…
All of that money divided up between all 18,500 workers would have only given each of them, an additional $216 dollars over the course of a year. For most of America not living on either coast, that would cover utility bills for two months. There are 2080 work hours in a year… $4 million translates to a 10 cent hourly wage increase for every hour of every employee over the course of a year,
We’re here to look at the big picture. So let’s step back.
We have an industry that paid $48,000; now in 5 years it would be paying $25,000. That is a loss of $23,000 of purchasing power.
Assuming the same wage scale applied to all of Hostess employees, then 18,500 times $23,000 is a net loss to our GDP of $414 million.
Essentially that means that what used to be flowing through our economy in 2005, would be five years from now, be $414 million less. Just this one company.
Now to get a the total cost, if we assume $14 dollars an hour in 2005 was average, and that similar companies are asking for similar concessions so this trend affects all workers, then if we put this number to the total employed in the USA, (155 million) the amount of spending power differential, … is…. $3.5 trillion…
What that means is that per year, we could have $3.5 trillion flowing through our economy that is not flowing through it now. This is $3.5 trillion divided up among cinemas, restaurants, fast food places, convenience stores, grocery stores, gas stations, clothing stores, Wal*Marts, K-Marts, JC Penny’s, car showrooms, realitors offices, bank CD’s, motorcycle shops and marinas….
That $3.5 trillion bumps it’s way from one establishment to another and on its way, it boosts the spending confidence of whosever hand it touches…
In case you didn’t follow the math, there is no new money being created here. The total pie amount does not change. It is coming from the $8 trillion of corporate profits now recorded per year.
Currently that $3.5 trillion that was once part of our flow through economy before the Bush Tax Cuts were implemented, is now in the hands of those few at the top.
That $3.5 trillion in excess, is today what is used to buy various companies like Hostess from their original owners, only to fire their employees in order to then make profits higher. This process works so well for them that they can soon buy another company and do the same to them.
As a result, people accept less, get fired, or whatever, and there is now a shortage of $3.5 Trillion flowing through our economy being spent buying things.
No wonder there is a Recession…..
Ok, so now to fix it.
Somehow, someway, someone, has to start paying America’s workers more. We know who has the money. Corporate America: $8 trillion a year. We need a vehicle to move that money stuck at the top, back down to the bottom where it can rise again.
A. Raise their taxes. Once given a choice between reinvesting in their business (a gain to them) or giving money to Uncle Sam, most will wisely reinvest into their business.
B. Give Unions more power, and let unions increase their ranks. It use to be that a business policed itself adequately to keep unions at bay. But now they no longer fear unions, and for good measure, Today’s unions should picket Papa Johns, Denny’s and Appleby’s. The union needs to re-educate America that it was the threat of unions which kept up everyones wages. Hmmmm, what’s the average wage difference between New York and Texas?
C Political Power. One of the two major political parties, needs to get solidly behind unions and workers. Roosevelt did in the Thirties. The choice should be obvious as to which political party that would be….
D. Strikes. When was the last strike that inconvenienced anyone? Usually strikes are held, well, use Twinkies as an example… Will life go on? Yes. But in our parent’s past, coal production ground to a standstill. Trains refused to run. Mail was never delivered. Kids had to stay home from school… Yes, these do interrupt society.
But they do far less damage than having a working economy being run on $3.5 trillion less.
Wouldn’t you be mad if your gasoline purveyor, lightened your octane in your gas from 87, down to 54? And your car was barely able to put-put its way home? My guess is you’d be outraged.
Well, America. Get outraged.