E&W Blog

One of the most persistent myths about the anti-worker card check plan is the notion that small businesses would be exempt from its damaging consequences. In an opinion piece published today in The Washington Times, Rep. Howard P. “Buck” McKeon puts the myth to rest once and for all.

What small-business exemption?

By now, the dire consequences of Big Labor's card check scheme are well known. Workers will lose their right to be heard, both on the question of whether to unionize and on the details of their first contract. Businesses will be unable to communicate with their own employees about what's best for their shared future.

Less well known are the dire consequences in store for the biggest job producers of the American economy: small businesses.

There is a persistent myth that card check will not harm smaller firms. "The legislation doesn't apply to small businesses, so the corner grocery probably won't face an organizing drive," Matthew Cooper confidently claims in Portfolio magazine. "[Binding arbitration] would not apply to small businesses, which have no collective bargaining rights under the NLRA," reports Congress Now, a trade publication. Unfortunately these eminent journalists are wrong.

The myth of a small-business exemption is just that, a myth. There simply is no exemption for small business in either current law or the proposed legislation. Like many myths, it contains a small truth. Card check is economically damaging. So many in the small-business community contend that no rational person would want to undermine the nation's largest source of innovation and growth. Actually, some union organizers would be willing to do exactly that if it means that private-sector union membership, which has been declining for decades, can rebound.

Some entrepreneurs and observers wrongly believe that firms with fewer than 100 employees are already or soon will be exempt. While it's true that the National Labor Relations Act relies on administrative guidelines for deciding whether a business falls under its requirements, there is no single cutoff point based on the number of workers a business employs. Under current law, card check could indeed be applied to the corner grocery store-and probably will.

The only thing close to a small-business exemption is a patchwork of standards relating to the dollar volume earned by business (not profit). In practice, this extends the law's requirements to establishments doing as little as $50,000 per year in gross receipts, earning far less in profits, if they're in the black at all. These parameters were established in 1959 and have never been adjusted for inflation. So that mom-and-pop grocery on the corner? You bet it would be a target. The local deli with a few high-school students washing dishes and working the cash register after school? They're a target too.

Small businesses are an obvious target for union organizing, with just a handful of individuals needed to sign the infamous "cards."

Consider a family-run business with seven employees. Four of these workers are caught off-guard, in the parking lot after work or with a knock on the door at home during dinner. They are pressured to sign cards on the spot, expressing interest in the possibility of joining a union.

No one speaks to the other three workers. No one notifies the family that owns the business and provides the jobs and economic benefit to the community. Days later, the National Labor Relations Board notifies the employer that its workers are now unionized. Communication with the workers could now be considered an inappropriate labor practice. Workers are no longer empowered to speak for themselves, but the family trying to eke out a modest life for itself and its people now finds itself at a bargaining table with savvy union leaders who could just as likely be looking out for their own interests as for those of the workers they "represent."

Will the business have to create a human-resources department? Hire costly attorneys and labor negotiation experts? Labor contracts are notoriously complex to understand and implement. Just look at the 22-pound, 2,200-page contracts automakers are faced with in Detroit.

And who will set the terms of that first contract? Still reeling from the speed at which a union effectively took control of their family enterprise, the small-business owner has just 90 days before the contract goes to a federal mediator. Another 30 days without agreement on complex new work rules and a federal arbitrator steps in. Suddenly, years of work and knowledge about how to run the business are cast aside in favor of a federal bureaucrat empowered to tell that family how much to pay its workers, what type of work they can do, how much vacation they are entitled to and all the other nuances of their day-to-day operations.

Seem far-fetched? It's not. In 2007, the National Labor Relations Board asserted jurisdiction over a gas station and sandwich stand with just nine to 13 workers.

Small businesses are the largest source of new jobs in this country. With nearly 600,000 workers being hit with pink slips last month, crippling the small-business community with card check might just be the worst thing we could possibly do for job creation and retention.

But that is exactly what the Democrat-led Congress is poised to do.

Rep. Howard P. "Buck" McKeon, a Republican from California, is the ranking minority member on the House Education and Labor Committee.

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