Only Silver Point and Monarch could have kept Hostess out of liquidation and kept the Twinkie bakery ovens firing. But they were, ultimately, unable to reach a deal with the unions that represents the workers who make and deliver products like Twinkies, Wonderbread and Ding Dongs. Without large union concessions—what some would say, total union capitulation—the hedge funds decided Hostess would have to die.Hostess has clearly been mismanaged in recent years after having grown through the previous decades in ways that make its structure, including its labor force, especially complicated. But the end game is that private equity firms came in to do what they do: squeeze profits for their own multimillionaire investors at whatever cost to workers and to the company itself. Who cares if tens of thousands of workers are left unemployed and without the means to retire? Not Silver Point or Monarch, as long as they get their money. Who cares if Hostess exists tomorrow? Not Silver Point or Monarch, as long as they get their money.
These union members had faced a slow bleed for years. The only question for them was whether to accept an accelerated bleed and hope it would stop in a few years—but hope that in the knowledge that that was not a priority or even necessarily a desirable outcome to Hostess' private equity owners—or to fight for what they earned. We're hearing, and can expect to keep hearing, a lot about how it's so unreasonable of union members to expect to get the pay and benefits they negotiated and worked for, the pensions they've planned their retirements around. Because this is coming after a generation-long war on pensions and unions and middle-class wages. As AFL-CIO President Richard Trumka said in a statement, "What’s happening with Hostess Brands is a microcosm of what’s wrong with America, as Bain-style Wall Street vultures make themselves rich by making America poor."
It boils down to this: You don't get to complain about income inequality and the obscene wealth of the top 1 percent and say that it's unreasonable for industrial bakers and truck drivers to send their kids to college and retire before their bodies are completely broken. When we complain about income inequality, we have to understand both sides, that the chipping away at the compensation and value accorded jobs that were middle-class jobs not too long ago is, by design, the flip side of the 400 households with a combined $1.7 trillion. It's not for sport that we think the top 1 percent shouldn't hold nearly 35 percent of the wealth; we have a problem with that because of the poverty and struggle such concentration of wealth creates down the line, where 50 percent of people hold just 1.1 percent of the wealth, where people from the 50th percentile to the 90th have less than 25 percent of the wealth, leaving nearly 75 percent in the hands of the top 10 percent.
Hostess workers are real people, fighting for what they've earned and facing personal economic disaster. But, as Trumka said, this struggle is also part of exactly the broad economic forces Occupy fought and Mitt Romney represented. This is growing economic inequality in action, and standing for these workers' pensions—even if you don't have one yourself—is fighting an economy of hedge funds and for the top one percent.