On August 7, the freight trucking company Yellow announced it is filing for bankruptcy, putting 30,000 people out of work. Yellow is a major player in the small-freight logistics industry. Before ceasing operations on July 30, Yellow was the third-largest carrier of “less-than-truckload” freight. Yellow truck drivers carried goods from factories to distribution centers to stores all across the country, producing $5.2 billion in revenue last year.
The company is attempting to lay the blame for its bankruptcy on the International Brotherhood of Teamsters union, which has 22,000 members at Yellow. They claim that the union’s resistance to Yellow’s restructuring plan, which would have jeopardized many workers’ livelihoods, caused the company to go bankrupt. This false narrative ignores Yellow’s decades-long history of mismanaging huge sums of money.
Yellow execs took home millions as company floundered
Union workers took over $3.7 billion in voluntary wage cuts and over $1.4 billion in pension reductions since 2009 in an effort to keep the company afloat, but the incompetence and greed of Yellow’s management drove the company into the ground.
Over the past twenty years, Yellow took on billions of dollars of debt to acquire other small-freight companies, including Roadway Corp. and USF Corp. The company never consolidated its new regional networks, causing it to run inefficiently and struggle under the burden of its self-imposed debt for over a decade.
In 2019, Yellow reported losses of over $100 million. That same year, the company settled a lawsuit by the U.S. Justice Department which claimed that the company defrauded the government over seven years. The following year, Yellow received a $700 million bailout from the federal government — a bill footed by U.S. taxpayers. Yellow has only repaid $230 of the principal owed on that bailout loan.
These dire financial straits haven’t seemed to hurt the company’s executives. Yellow’s 2021 report to the Securities Exchange Commission showed that all six of the company’s executives were paid seven-figure salaries, with one executive making over $5 million that year. Yellow CEO Darrel Hawkins made over $2.1 million in the 2021 fiscal year, over 26 times more than the median employee wage of $80,000.
Yellow’s financial ‘solution’: put workers’ wellbeing on the chopping block
On May 30, Yellow attempted to push through a new round of restructuring. This phase of the so-called “One Yellow” plan would have converted 20% of drivers into “utility roles,” who would be required to perform extra work at docks and multiple terminals, with no guaranteed wage increases. It also would have allowed Yellow to outsource its transportation services to other companies for up to 29% of all road miles.
“When mismanaged companies like Yellow cry about needing more flexibility to modernize, they’re telling you they want to take advantage of workers,” said Fred Zuckerman, General Secretary-Treasurer of the Teamsters. “They want to pay workers less, kill their pensions, and stop paying their benefits. They want to force workers to perform labor they weren’t hired to do.”
Yellow wanted to make these changes without going through the standard contract bargaining process, in which workers organize membership meetings, elect a committee to negotiate with management, and ultimately vote on their new contract. Instead, the company insisted that the Teamsters sign a letter of agreement accepting these changes, which the union refused to do.
Yellow responded with more attacks on the workers. They hit the union with a baseless $137 million lawsuit for refusing the restructuring. In June and July, Yellow refused to make its obligatory payments into the Central States Funds, which pays for its workers’ health care and pensions. The company announced it would do the same in August, effectively deciding that 11,000 employees should work without access to health care.
When the Teamsters threatened to strike to protect their workers’ health care and pensions, Yellow appealed to the courts to stop the workers from striking. The courts refused to grant this ridiculous request, and a strike was only averted due to a last-minute agreement for the Central States Funds to provide 30 extra days of health care coverage to union members.
On July 30, a week after this agreement, Yellow announced that they would cease all operations and lay off their entire workforce, except for a skeleton non-union crew. One week after that, they filed for bankruptcy.
‘Despite its extraordinary debt, Yellow owes more to the workers who kept it running than to anyone else‘
When a group of capitalists can’t pay their debts and other financial obligations, they can file for bankruptcy protection, initiating a feeding frenzy where the company’s wealth and assets are liquidated and sold to various creditors. Unions are typically placed at the end of the line in this process, fighting for scraps after banks, businesses and financial institutions have had their fill. Yellow may even try to reject the existing contract with the Teamsters in the sell-off process.
One example of the post-bankruptcy feeding frenzy is MFN Partners, a Boston-based hedge fund, which spent over $23 million to buy a 42.5% ownership share in Yellow in the weeks leading up to their bankruptcy. Hedge funds make purchases like this in an attempt to gain control over the restructuring process and squeeze out profits during bankruptcy. Multiple companies are competing to finance Yellow’s bankruptcy period with new loans, another attempt to capture the company’s remaining profits.
The fact that creditors and hedge funds are given the legal right to pick over Yellow’s corpse while 30,000 unemployed workers are left to fend for themselves is criminally unjust. The workers have the strongest claim to ownership in the company’s assets, since they alone were indispensable to its operation. Their work produced all the wealth at Yellow, which various capitalists are now clamoring over.
The workers are also the company’s biggest creditor. Every day the workers went into work before receiving their paycheck, they loaned enormous amounts of value to the company. If every worker made the median wage of $80,000, then the Yellow workforce loaned at least $92.3 million in value to the company every two weeks, or $2.4 billion every year. They should have the first claim to any assets and the last say in any restructuring. As the Teamsters General President Sean O’Brien said in a recent statement, “Despite its extraordinary debt, Yellow owes more to the workers who kept it running than to anyone else.”
Ownership of the company should default to the union, who could run the company far better than management ever did. The billions of dollars of land, machinery, and other assets should be used to keep the workers and their families financially secure, rather than to swell the pocketbooks of ultra-rich speculators and financial vultures. And the former Yellow executives should be punished for their criminal mismanagement of workers’ livelihoods.
Bankruptcy is a class struggle, which means that we will have to struggle to make this vision a reality. All workers have a responsibility to fight for a world where workers are in charge of the economy, not the other way around. Workers make the world run, workers should run the world!