Labor Unions and Small Business
The labor movement had its origins in the rise of the industrial revolution beginning around 1750—whereas small business is ancient, its twin origins being family farms and craftsmen's shops of ancient times. Craft guilds, which formed during medieval times and were central to the bourgeoisie of early market towns, in part later also inspired labor associations. Although later the interest of small business and unions diverged, ironically the first strike in America took place in New York City in 1741 when bakers rebelled against price-setting by the municipal authorities and stopped baking to make their point. Union time-lines cite the 1741 Bakers' Strike but scholarly opinion is divided—precisely because the Bakers' Strike was by small business owners against "the public sector" (not then called that, of course) rather than by labor against capital.
Careless use of language by many pundits and observers classifies small business as just another battalion in the army of capitalism, although the monumental work of the French scholar, Fernand Braudel, Civilization and Capitalism (Harper & Row, 1979) draws distinctions which leave small business out. Small businesses, of course, sometimes behave in typical capitalist ways (one thinks of highly exploitive sweat-shops) but in the overwhelming majority of small business enterprises the relationship between owners and workers is close, sometimes the two are members of the same family; the scale is such that blatant exploitation is not even a temptation. Small businesses are also much more vulnerable; an extended strike against them will put them out of business. Primarily for these reasons, the labor unions and small businesses have had little effective contact. To be sure, some small businesses are unionized, but they represent (as best as one can discover) a tiny minority of such enterprises.
The history of unionized labor shows that severe down-turns in economic activity have hurt labor temporarily; coincidentally long periods of expansion have caused labor unions to go into decline. Union membership stood at a peak of 19.4 million members in 1972 but had declined to 8.25 million by 2005. Membership as a percent of the work force stood at 29.8 percent in 1962 but had declined to 12.5 percent by 2005. As membership has declined, the percentage of unionized labor working for the public sector has increased, private sector unionized labor has decreased in share. In 1983 more than two-thirds of union members were in the private sector (67.2 percent). By 2004, the private sector's share was down to just over a half (52.6 percent)—47.4 percent of unionized labor worked for government or other public sector agencies (e.g., public schools).
In 2005, the highest rates of unionization (24 percent) were in the transportation and utilities industries. Finance and related services had the lowest rate (2.3 percent). Thirteen percent of construction and manufacturing labor was unionized. In wholesale and retail (where the highest proportion of small businesses operate) the rate was 5.2 percent. In professional and business services, another important small business sector, the rate was 2.7 percent. These percentages do not tell the whole story. For cost/benefit reasons unions have tended in the past to target large operations—unless unusual grievances caused unusual organizing activity. In practice this means that small businesses have gotten a pass from the union movement—unless, as it were, they drew unwelcome attention to themselves by aggressive moves and harsh practices. In the mid-2000s there were some rumblings that this may be changing, but little evidence.
LABOR LAW
The six most important pieces of legislation governing business-labor relations are the National Labor Relations Act of 1935 (NLRA), the Labor Management Relations Act of 1947 (LMRA), the Fair Labor Standards Act of 1938 (FLSA), the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), the Civil Rights Act of 1964, and the Occupational Safety and Health Act of 1970.
The National Labor Relations Act, which created the National Labor Relations Board (NLRB), gives employees the right to organize and bargain collectively with their employers—in essence, it gives them the right to unionize. It also confers legal protection on employees who try to organize their fellow workers into a union—but also protects nonunion employees from being forced or otherwise coerced into joining a labor organization or engaging in collective bargaining. The act ensures that employees can choose their own representatives for the purpose of collective bargaining, establishes procedures for secret-ballot elections, and defines unfair labor practices, to which both employers and unions are subject. This law is also known as the Wagner Act in honor of New York Senator Robert Wagner.
The Labor Management Relations Act, known as the Taft-Hartley Act, amended the NLRB in ways that are generally thought to benefit business owners and management. It forbade businesses from launching unwarranted or sudden lockouts of union employees but also imposed restrictions on some union activities in the areas of organizing, picketing, striking, and other activities. It also outlawed the "closed shop" (which required that employers hire only union members) and gave the government the power to obtain injunctions against strikes that "will imperil the national health or safety" if they take place or continue.
The Fair Labor Standards Act, also known as the Wage-Hour Act, established the minimum wage for hourly employees and mandatory overtime pay for work in excess of 40 hours a week. This is the law that created the "exempt" and "non-exempt" employee categories, the former being salaried employees who are not subject to FLSA and are therefore "exempt" and hourly workers who are subject to the law and therefore "non-exempt." All states also have minimum wage rules; where the state minimum wage is higher than the federal, employers must pay the state-set rate.
The Labor-Management Reporting and Disclosure Act, also known as the Landrum-Griffin Act, was in large measure shaped to regulate the internal affairs of unions and to provide additional safeguards to ensure that the rules laid out in the Labor Management Relations Act of 1947 were adhered to.
