Total manufacturing employment from 22% of workers in 1979 to just 8% today

100 year old Yellow trucking goes bust pic.twitter.com/1NbQKdBfGA

— Peter St Onge, Ph.D. (@profstonge) August 8, 2023

The hundred-year-old Yellow trucking company, familiar to generations of road tripping Americans everywhere, went bust last week despite a $700 million taxpayer bailout and throwing 30,000 mostly blue- collar workers out of a job.  What put Yellow down was a three punch from government mandates, sophisticated Financial engineers, and old-fashioned Teamsters.  And more are coming.  I mentioned in a recent video how the worst inflation in 50 years is finally trickling down to workers kicking off eye-watching wage demands from unions.  The Teamsters were demanding from Yellow freight a $20,000 pay hike, while blocking the company's efforts to reduce costs to keep more people on the payroll.  They knew Yellow could not pay that.  Yellow was just this side of solvent with a debt totaling $1.5 billion dollars or 57 times their annual profit.  But the teamsters appear to have made a strategic decision to kill the company, to mount it on the wall as a warning to the bigger negotiations to come, the parasite killing the host to warn the rest.  So Yellow freight will not be the last.

In another recent video, I mentioned that hundreds of thousands of union workers are on the edge of striking, meaning this existential game of chicken is just beginning. The United Auto Workers just issued a 46% hike to the three big automakers that reads more like a hostage negotiation.  United Airlines just agreed to a 40% hike.  Rail workers got 24%, and even the post office, which cannot strike, still snagged $6,000 a year. Biden's inflation is going to keep disrupting and, hitting especially manufacturers, emboldening unions that have spent decades turning swaths of America into Rust Belt with an invaluable assist from governments laying impossible regulations and mandates, especially on manufacturing and financiers who drain out the company before the union does it for them.  For decades now, thousands of manufacturers could not survive all that.  Already millions of manufacturing jobs have been wiped out bringing total manufacturing employment from 22% of workers in 1979 to just 8% today.  Those companies who have survived this gauntlet are now pinched between debt regulators and unions looking for payback for 3 years of inflation all competing to fleece what's left of American manufacturing.  

So what happens next?  The companies that can handle the unions and their pricing power will pass the cost on to customers, so expect to pay thousands more for cars and expect cheap flights to evaporate.  But many companies won't be able to handle the pay hikes, and they will slip under the water, their business gobbled up by the big guys, or by China.  Many of those like Yellow, which was founded in 1929 on the eve of the Depression, many of those will be multi-generation businesses, legacies of that age before politicians financiers and unions salted the earth for American manufacturing.  Once they're gone, they will stay gone.