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The Progressive Economics Forum

Small Business and the Attack on Unions

In case you had any doubts where the escalating attack on Canadian unions is coming from, check out the web site of the Canadian Labour Watch Association.

The Labour Watch site provides detailed information and advice to individual workers and employers on how to fight unionization drives and how to decertify existing unions, including by providing a list of legal firms. It strongly opposes compulsory union dues and use of union dues for political purposes. The site promotes legal provisions which make it more difficult for unions to organize.

Not surprisingly, Labour Watch supports Bill C-317, the Conservative private members bill which seeks to impose massively detailed and intrusive public financial rules on unions, including details of all contracts over $5,000; salaries and benefits of individual officers and staff, and disclosure of funds spent by precisely specified area of activity, including political activities and lobbying.

The list of Labour Watch members includes the leading small business lobby groups – the Canadian Federation of Independent Business; the Canadian Restaurant and Food Services Association; and the Retail Council of Canada; plus the Conseil du Patronat du Quebec. All are represented on the Board as well.

The CFIB has long been attacking the pay and benefits of unionized public sector workers in the form of (misleading) studies but has become more and more extreme of late. Recently, President Catherine Swift went so far as to say  “(w)hat would be ideal is getting rid of public-sector unions entirely”

Labour Watch illustrates a recent trend towards greater co-ordination of efforts among organizations which are hostile to organized labour.  As Jim has noted on this blog a propos of the financial disclosure bill which was originally championed by the Fraser Institute,  “(t)he most ominous aspect of this charade was the very quick, orchestrated way in which Mr. Hiebert’s initiative was ringingly endorsed by a whole community of anti-union and right-to-work lobby groups.”

It is interesting to pose the question why major small business organizations have begun to work so closely with the most extreme anti labour think tanks.

This is not because the members of the CFIB and their like-minded private service industry associations generally have to deal with unions on a day to day basis.  The latest data (for 2010) show that union density is just 7.4% in accommodation and food services, and  14.4% in trade (where union members are to be found mainly in wholesale trade, large grocery chains, and retail liquor operations rather than in small, independent businesses.) Small enterprise union density has not been significantly rising from low levels (unfortunately.)

An economic case can be made that it is rational for non union small employers to dislike unions. Small businesses generally pay lower than average wages and offer more precarious jobs than larger enterprises. Research shows that unionization raises the relative wages of workers who are most likely to be at the lower end of the wage scale in the absence of  a union, notably women, racial minorities, young workers, and the relatively unskilled. Unionization raises the pay and benefits of these groups in highly unionized sectors, such as public services. Unionization also generally improves access on the part of lower paid workers to pension and other benefits.  To some degree, higher wage and benefit standards will spill over from unionized workplaces into non union private sector firms and thus raise overall labour costs.

That said, small business today hardly seems to be under much pressure to pay higher wages to match those in the unionized sector. To the contrary, union wage settlements are low and competition for jobs is fierce.

Moreover, rational small businesses should be looking at the role of unions from a demand size perspective. Overwhelmingly, small businesses supply the domestic, and usually quite loca,l market. Those providing goods and services to local communities  – which accounts for the vast majority of CFIB,  Canadian Restaurant and Food Services Association and the Retail Council of Canada members – depend on the purchasing power of households in the communities where they operate.

One in three workers in Canada – about 4.5 million in total – belong to unions. Taking into account the fact that union members earn a bit more than non union members and are more likely to work full-time, full year, they collectively account for a greater share of total wages and salaries.

Seen from this perspective, it does not seem especially rational for small business to embrace so fervently the extrmist anti union ideology of the Fraser Institute and their political allies.

 

 

Enjoy and share:

Comments

Comment from Kelsey
Time: October 14, 2011, 11:59 am

Do what Union haters do. Rebrand yourself as Federation of Independent workers or Conference board of employees or such stuff which the thinly disguised lobbyists of Big Corporations call themselves.

By inserting “Union” in all your associations you are setting up yourself as targets for these Fronts of the NWO.

Union or no Union, what has Small Business Fronts done to protect mom and pop stores anyways? Turn this question to your critics like Swift and see what is her response to your sole ownership stores going the way of dodo.

Like the sort of cases where a International Franchise needs a premium location which was currently occupied by a sole proprietor owner with solid business relationship with manager at one of the five major banks. They got it by replacing bank manager with a new dude who closed in the line of credit forcing the owner to go bankrupt and eventually vacating the desirable location.

Comment from Josh
Time: October 14, 2011, 5:45 pm

Unions definitely need re-branding and should hire PR expertise.

Comment from Richard
Time: October 15, 2011, 4:59 pm

Unions.Eighty % of all unionized employees in Canada are Government.This organized group of people are exploiting the TAXPAYER .The demands of wages,benefits,and pensions are consuming to much of government budgets.Example,ONTARIO GOVERNMENT’S 100 BILLION $ dollar budget 50 Billion $ goes to Salaries,Benefits and pensions.The Toronto POLICE; 88%of 1 Billion $ goes to Salaries,Benifits,and Pensions.The list goes on and on.The discussion is not over unionized employees but over Governments cost of labor and their demands .If Unionized labor really believed in union solidarity maybe a 10% wage cut for the TORONTO police would allow 1000 police people to remained employed.

Comment from Purple Library Guy
Time: October 15, 2011, 10:48 pm

Sure, Richard. People working for the government really ought to work for free out of the goodness of their hearts so nobody would have to pay taxes. It’s not like they’re delivering valuable services or anything.
Could we get real here? Much of what government does is provide services. Nearly all of a police force’s job involves the direct presence of warm bodies. Of course most of the bill is for salaries, duh. What else is it going to be for, bionic enhancements for Robocop?

The problem here isn’t that government workers make too much (well, except possibly cops–as I saw someone point out recently, you can’t offshore a good beating so they’re well protected from globalization; for the cops, social unrest is a growth opportunity) it’s that non-unionized workers make too little. The problem is not that government workers are unionized, but that it has been made increasingly difficult to unionize anywhere else, leading to poor wages (and a reduced tax base).

Comment from marjorie
Time: October 17, 2011, 8:40 am

It was distressing to see the CBC discussion on trade unions last night. The assumption of Wendy Mesley was that the Occupy Wall Street movement was a show of dislike of trade unions. She pushed the issue by explaining how those in trade unions made more money than others, so there was resentment. For some unexplained reason those commenting didn’t take issue with the assumption.

Comment from Marc Lee
Time: October 17, 2011, 9:24 am

Nice post, Andrew. I try to make the very same point all the time when I debate the CFIB (every two weeks on CBC radio). It is possible to argue in support small business by noting that the very policies the CFIB champions undercuts the demand for what small business does. Small business is best served by a large and strong middle class, and those conditions in turn support the ability of small business to pay union wages, which bolsters demand ….

It would be interesting to have a dialogue with small businesses to show them how the CFIB misrepresents their interests, and maybe have them drop their membership.

Comment from Kim
Time: October 19, 2011, 8:06 am

Thanks Andrew and Marc.

It is an uphill battle arguing about unions with small businesses, particularly those in the competitive sector, which is most of them. They are on the front lines of the class struggle, and they see every cent going to a worker as a cent coming from their bottom line. In that sense, they can be more hard-nosed than large corporations, which normally have more surplus to play with.

Certainly, if they were to improve the wage rates of their own workers, it would put them at a competitive disadvantage with businesses that don’t. And even a general rise in wages (such as that brought by greater unionization) that affected all competitors would still be feared because they could not be sure that those increased costs could be passed on to customers.

So even if you could help small businesses realize that greater unionization raises demand through more equal income redistribution, it won’t be clear to them that their net position will be enhanced. If their business model is predicated on low wages and workers are no longer forced to accept those low wages, then they will have to hope that demand will raise the prices of their own products to compensate. In a super-competitive environment, that may look like a risky prospect; the outcome depends upon income elasticities of demand facing the small business and it will also depend upon the supply response of all its competitors. These are unknowns out of the control of the individual business.

One of the problems of competitive markets is they create sizeable and influential constituencies for policies that hurt the economy and worsen income distribution. This is hard to work around.

But more power to you if you can persuade small businesses to do otherwise.

Comment from Mike
Time: October 26, 2011, 4:53 am

“One of the problems of competitive markets is they create sizeable and influential constituencies for policies that hurt the economy and worsen income distribution. This is hard to work around.”

When you sign a deal with the devil, you get what you deserve.

Comment from Randy Robinson
Time: November 25, 2011, 1:58 pm

Well, it’s one of the main contradictions of capitalism that what may be profitable for an individual business (e.g., low wages) is bad for businesses in general (because poor workers make poor customers). Interesting how under neoliberalism the ruling class just said, “What the hell, let’s just go with the low wages.” The reason this strategy has worked for them is that it has taken a long time for almost all workers to be broke and indebted. But now that they are broke and indebted, well, capital will need a new plan. Could involve guns…. Will certainly involve pepper spray….

Comment from Heather Park
Time: December 6, 2011, 2:21 pm

The problem with unions in general is the fact that workers hide behind the “union”. They become unproductive, make it difficult for employers to complete the job on budget and on schedule, ensure that jobs take as long as possible to finish, thus securing their paychecks a longer than necessary. As the owner of a non union trade shop, we pay our employees a fair wage based on their skill level, raises are given out when employees show on a consistent basis that their skills are improving or as leadership skills emerge. We pay benefits and offer full time work.
We run into unions everyday as we provide a service that NO UNION can do. Not one person in the union has the skill set or have had the training that our employees have had – nor could I offer the training I do if I had to pay union wages.
Every Canadian has the right to work, yet everytime we have are scheduled to work with a union “site”; the work slows right down or comes to a stand still. They take issue with the fact that we are there but cannot offer the skill set that we do – right there you can see the problem. I’ll say it again, every Canadian has the right to work; whether someone is union or not, they should have the right to work without being interfered with or being accosted to join at every job site they go to.

Comment from christopher dupuis
Time: February 9, 2012, 8:38 am

I have yet to talk to a person who does not agree that unions have raised everyone’s standard of living. Union and non-union workers alike.

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