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STRATEGY

Labor Has a New Target

Guess what? It's you! Unions target small business.
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A year and a half ago, the employees of Drakka Computer Solutions in Everett, Wash. -- including some network administrators, a graphic designer, and a bookkeeper -- established a collective bargaining agreement with the Communications Workers of America. A union would naturally give DCS's workers, who install and manage computer networks, leverage in negotiations with president and founder Neil Sidhu. Astonishingly, none of this upset Sidhu. In fact, it was his idea. "I paid my way through college as a union carpenter," says Sidhu. "I think if my employees are happy they present a better image of the company with clients."

And it so happens that many of those clients are impressed by Drakka's union credentials, largely because they are unions themselves. Sidhu, who aggressively marketed his company to labor groups after the agreement was signed, says that new business increased by a third. But he realizes that either his relationship with the union is uncommonly civil, or they are still in a honeymoon period. "At some point the union could be a hindrance," he concedes. "You start to worry about how much you are paying the truck driver who is a Teamster. And problems could arise as the company grows and as I set up new divisions with different roles. It is going to get more convoluted and complex." Still, he says, "I don't ever see this being a nonunion company."

Few entrepreneurs, of course, are going to follow Sidhu and encourage their employees to unionize, but like it or not, more and more are going to be dealing with collective bargaining. True, union membership as a whole continues to decline. But groups active in professional and service industries are booming, their ranks swelled by workers who fear increased health insurance costs and the outsourcing of jobs to Asia. IT staffers, graphic designers, and engineers -- this is the new face of labor. And guess where many of them work? The average workplace organized last year had just 53 workers. "More attention is being paid to smaller workplaces," says Bob Bruno, a labor and industrial relations professor at the University of Illinois at Chicago, who adds that "organized labor has a higher success rate in small businesses." There are several reasons for this. Labor activists have discovered that unlike large corporations, small businesses often lack the resources and the know-how to fight unionization. Plus, their employees are are often more receptive to organization because union reps can make a personal, individual appeal for their support.

Old-school union bosses, sensing a rare opportunity to grow, are devoting more resources to small-company campaigns. For example, the International Association of Machinists and Aerospace Workers, whose members have traditionally come from the likes of Boeing and General Electric, recently launched a Web-based effort to organize technology workers. Other established unions have made inroads in a variety of traditionally nonunionized sectors, ranging from restaurants to nonprofits to health care, where even doctors are now pursuing collective bargaining with HMOs. But it is tech workers who are, without question, the group that unions are focusing on with the most intensity.

"These are upper-level professionals who have historically been among the least organized sectors, but they are terrified of outsourcing," says Andy Banks, organizing director at the International Federation of Professional and Technical Engineers, or IFPTE, an 86-year-old union based in Maryland. Banks's group has boosted membership by 53% since 1997 and now covers more than 86,000 workers. Most of that growth came in increments of only a few dozen workers at a time. "We just wrapped up four campaigns this month that range in size from 10 to 40 employees," Banks says, adding that he receives several calls each week from small specialized engineering firms interested in organizing -- some with only a handful of employees.

A spokesman for the Washington Alliance of Technology Workers, a local arm of the Communications Workers of America, reports comparable activity. The group has three small businesses currently under collective bargaining agreements, with two more to follow shortly.

The chief motivation for employees who unionize these days is the cost of health care, which is increasing at double-digit rates. When the phone rings at the offices of Local 17 of the Hotel Employees and Restaurant Employees Union in Minneapolis, for example, the person on the other end of the line is often a disgruntled worker at a sports bar or a mom-and-pop restaurant, says Martin Goff, Local 17's director of organization. "Many times it is a hot-shot call," he says, by which he means that the call is made in a moment of rage. "The employer has just done something like raised health insurance costs or done away with a benefit."

For tech workers, at least, the threat of offshoring is also a strong motivator. The CWA and IFPTE routinely ask for employer concessions ranging from promises to eliminate offshoring completely to requiring that current employees have a chance to compete for work that may be sent overseas. "You are going to hear more about this because the outsourcing issue is giving union organizers ammunition," says John Budd, a University of Minnesota human resources and industrial relations professor. "If workers see that they can be outsourced at the drop of a hat, that is a pretty stark message."

"The only thing we knew about unions was that they went on strike."

Entrepreneurs are predisposed to fear that unions will inevitably disrupt the harmony of the workplace, but some business owners who have recently gone through collective bargaining for the first time seem surprisingly sanguine. Neil Sidhu of DCS is one example. Bill Powers and Keith Fields, co-owners of Blacksheep Technology in Seattle, are another. When a client suggested that they unionize, they were reluctant. "At first we said no way," says Powers. "The only thing we knew about unions was they went on strike." The client persisted, however, and finally, last December, the partners signed a collective bargaining agreement replete with wage hikes. Since then, Blacksheep has leveraged its union credentials to close more deals, which have more than offset the raises the workers negotiated. "It is a slow change," Powers says, "but more companies want to support union tech companies."

Sidebar: Coming Soon to a Sidewalk Near You?

The uptick in small-business union organizing comes at a time when strikes at Maytag, SBC Communications, and California grocery chains have been widely publicized. Small employers have been the subject of angry placards too: At press time, some 130 workers at the Congress Hotel in Chicago had been walking the picket lines for more than a year.

So, should you fear a strike? Probably not. Fewer than 1% of all bargaining table sessions result in a strike. And the protracted California grocers standoff has probably put the kibosh on other job actions. Right after it ended in February, a chain of Minnesota grocery stores that was deadlocked in contract talks almost immediately reached a decision. The Minnesota workers saw that their West Coast peers "didn't get everything they wanted, and they suffered through a five-month strike that affected their business," says University of Minnesota professor John Budd. "Also, management took notice."

If you do happen to find yourself on the wrong side of a picket line, history dictates that the longer the strike, the greater the chance that management will win in the end. "Unions want to get these things done within a few months," says University of Illinois professor Bob Bruno. "It is hard to man a picket line and keep up morale."

Last updated: Sep 1, 2004




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