What is the Market Price for Labor?

Adam Hartung tries to convince us that unions didn't drive Hostess out of business.  Look, generally a company goes out of business because it's not making profits.  There are two sides to the coin, revenues and costs; if the revenues can't cover the costs--bingo--bankrupt.  Mr. Hartung argues that Hostess saw problems from both sides, no one was buying their products, they didn't adapt, and costs of materials were rising.

He then argues that the unions were only working for "market prices."

In a last, desperate effort to keep the outdated model alive management decided the answer was another bankruptcy filing, and to take draconian cuts to wages and benefits.  This is tantamount to management saying to those who sell wheat they expect to buy flour at 2/3 the market price – or to petroleum companies they expect to buy gasoline for $2.25/gallon.  Labor, like other suppliers, has a “market rate.”  That management was unable to run a company which could pay the market rate for its labor is not the fault of the union.

This is doesn't seem right.  It's hard to reconcile the idea of unions and market prices.  Unions exist to increase wages from the market prices.  Imagine if there wasn't a union in this case.  Then Hostess would have slashed salaries.  If Hostess's salaries were below the real market price, then employees would leave.  Hostess would then either raise salaries again or try to get by with fewer workers.  They may still have gone bankrupt; we'll never know, but that's how the market is supposed to work.  The union, though, was pushing to keep the wages up, which doesn't reflect the "market price."

The analogy Mr. Hartung is flawed.  It's more like the wheat sellers or oil producers all getting together and agreeing on a minimum price for Hostess instead of competing with each other to sell to Hostess.  Additionally, they would tell Hostess that it can't purchase less of their products than they have in the past but they still need to pay the same amount.