Do the Math, Please

The union leadership and the media are making a point that if the Hostess brands CEO and senior leadership hadn’t taken their $1.75 million dollar bonuses and used the money on bakers salaries then there wouldn’t have been a strike and the company wouldn’t be shuddering its doors, if in fact they do since it appears that they are entering into mediation.

While the leadership does exhibit an exceptional degree of poor timing and arrogance, does anyone really think it would have made one iota’s difference to the outcome?  Lets run the numbers and see what we come up with.  To do this, I will make a simple assumption that the bonus would be spread equally among all employees.  The latest estimate I saw was 18,500 employees so if each is a full time employee working a 40 hour week/50 weeks a year, that would mean they worked 37,000,000 hours last year.  That means the $1,750,000 works out to a little less than $.05/hour pay raise. 

Let’s try another angle.  I am going to assume the bakers make up half the total employment, and only the bakers get the raise.  That comes to a little over $.09/hour or $3.78/week.  So essentially, if the management did the decent thing, in the eyes of the media, and gave up the bonus the bakers get a small raise, but the fundamental problems of profit and loss still remain, and simple things like paying for mandated health care, employee pensions, and taxes haven’t been figured into any of these equations.

On the bright side we tax payers will now likely become responsible for the pension plans, but we won’t be paying them at the same rate the bakers and teamsters were expecting as a part of their labor contracts.

So who wins here?