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|The Employee Free Choice Act: Good for Small Business|
A Competitive Economy Needs Labor Law Reform
Small businesses are the backbone of our economy, employing almost half of the American workforce. Small business owners strongly believe that their employees are a vital asset to their success. Yet, our labor law is not ensuring a level playing field for responsible businesses, large and small.
Businesses that comply with the law face unfair competition from companies who refuse to respect the rights of their employees to join unions. The current labor law system allows employers to veto the will of workers, violate the law with relative impunity, and systematically delay sitting down at the table to negotiate a first contract.
The Employee Free Choice Act makes no changes to the existing National Labor Relations Act’s definition of a small business, which is largely based on revenue and type of business. It does, however, restore the role of our labor laws to act as a watchdog to make sure every business is playing by the rules, while at the same time restoring every American’s right to join or form a union so they can reach for the American Dream.
The legislation will give back to small businesses the freedom to compete based on innovation and quality instead of
who can afford the most expensive anti-union consultants. In this economic crisis, the nation has a duty to enable
entrepreneurs and start-up companies to focus on building sustainable, long-term success, instead of being forced to
compete against irresponsible businesses in an unwinnable, low-wage race to the bottom. Urgent action is needed if
we are to join together, management and workers alike, and climb out of this economic recession. The Employee Free
Choice Act provides a process to get us there that is streamlined and efficient.
Claims of Negative Impact Simply Not True
Small and large businesses across the nation who have respected their employees’ choice to form a union have reported that the sky did not fall – far from it. In fact, a 2005 report by an economist on behalf of the Small Business Administration found that a higher percentage of unionized workers in a state significantly reduced the probability of small business failures.12More generally, University of Michigan scholar John DiNardo has a body of research demonstrating that firms that become unionized are no more likely to fail than comparable firms that remain non-union.
Moreover, workers emerge from successful organizing drives with an enhanced sense of their common stake in the long-term stability and profitability of their company. This results in negotiated wage increases that are commonly designed to be implemented slowly over time.3 This stability can help small employers plan and forecast better.
Finally, if we look at the larger context, we see economic policy that has allowed a handful of greedy speculators to wreak havoc. Their power has been unchecked. Small businesses are not receiving bailout funds, but they are certainly paying the price. This country has been at its strongest when it has made sure that the voices of the most powerful among us are balanced with those with less power, like small business owners, family farmers, and working people. The Employee Free Choice Act is explicitly designed to help restore that balance.
A Win-Win for Small Businesses
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American Rights at Work is a nonprofit advocacy organization dedicated to promoting the freedom of workers to organize unions and bargain collectively with employers.