Posted on May 7, 2008

Will organized labor finally make its peace with local business? Having just addressed the annual convention of the British Columbia-branch of the Canadian Union of Public Employees (CUPE) – the largest union in the country – I'm pleased to report that the answer is increasingly "yes," if we’re willing to learn from our wise neighbors to the north.

Labor in the United States has long regarded small business with, at best, deep skepticism and, at worse, derision. After all, small businesses constitute the petit bourgeoisie, in Karl Marx's terminology, the class committed to thwarting economic progress of the proletariat.

The deep-seated doubts of labor are not without merit. Historically, U.S. small businesses have paid about a third less, both in salary and benefits, than larger businesses. Small businesses have also been notoriously difficult to organize. Better to have one big, globally owned, export-oriented auto plant where a union stands a shot at representing several thousand workers in one big contract.

And the representatives of small business, whether the U.S. Chamber of Commerce or the National Federation of Independent Businesses, also have been deeply hostile to stronger labor laws, policies, and standards. (Consider that the NFIB was one of the few organizations in Massachusetts to fight Governor Mitt Romney’s milquetoast health-care reform.)

But this analysis is increasingly obsolete, for at least five reasons.

First, one of the biggest areas of growth of union membership, in both the United States and Canada, has been the public sector. What's the key to a healthy, growing public sector? Tax receipts. And a growing body of evidence suggests that local businesses generate significantly greater taxes than do global corporations. The latter customarily not only deploy battalions of lawyers to find loopholes and escape tax obligations altogether but also generate smaller "economic multipliers" that result in fewer tax proceeds even if they were paid. If you want more public employees, your community needs more local businesses to pay their salaries.

Second, in the private sector, the difference between wages and benefits of large versus small companies has been steadily declining. Large manufacturers have transformed well-paying U.S. jobs into poorly-paid overseas jobs, while large retailers like Wal-Mart have created a gigantic new class of poorly-paid domestic employees. If these trends continue, there may soon be little or no difference between the conditions facing workers in large and small companies.

Third, shouldn’t the goal be labor rights in general, rather than just the expansion of dues-paying union members? And if that's the case, then shouldn’t labor be embracing all kinds of worker-friendly models, including cooperatives, enterprising nonprofits, companies with robust employee stock ownership plans – even if the scale of these enterprises is small? Anyone who attends the annual conferences of the Business Alliance for Local Living Economies (BALLE) knows that small business leaders – people like Paul Saginaw of Zingerman’s Deli in Ann Arbor or John Abrams of the South Mountain Company on Martha's Vineyard – have been zealots in raising wages, benefits, health care, and pension benefit levels for their employers, all in the name of effecting justice for working Americans.

Fourth, enlightened small-business leaders are increasingly seeing common interests in teaming up with labor on certain legislative goals. Take, for example, living wage ordinances. Smart small businesspeople are increasingly realizing that living wages are to Wal-Mart what kryptonite is to Superman. What could be a more effective deterrent to big boxes than a law that makes their existing model of labor exploitation commercially unviable?

Finally, an implicit goal of the living economies movement – which is largely led by small businesses – is to break up monopolies and undo the unfair special treatment global corporations get from all levels of government. There is common interest for the living economy and labor movements in eliminating corporate subsidies, strengthening anti-trust laws, closing tax loopholes, and generally holding companies more accountable in communities everywhere. In both the United States and in Canada, the most impressive reforms in all these areas are happening at the provincial, state, and local levels. In other words, decentralization – once feared as a way states could thwart strong national labor laws through right-to-work statutes – is increasingly understood to provide as a way of countering unjust, co-opted, and corporate-controlled national governments with more innovative grassroots reforms.

There are a few labor leaders in the United States, like Andy Stern of the Service Employees Union International (SEIU), who are starting to understand these points. But if you want to see someone who really gets it, check out Barry O'Neil, head of the CUPE in British Columbia. A lion of a man, with an ebullient personality that instantly fills even the largest ballroom, O'Neil recently took 28 days to visit small communities in his province devastated by the flight of global companies. In his hand was a marked-up copy of The Small-Mart Revolution.

O'Neil is now harnessing the CUPE to implement a comprehensive localization agenda. He wants to build a coalition of unions and communities throughout the province promoting leakage analysis, small-scale entrepreneurship, business alliances, buy-local campaigns, reinvestment of pension funds locally, and enterprising local governments. And by splitting the once monolithic business community and expanding the political base of labor, O'Neil hopes to push provincial and national governments to provide tax credits for local investment, to launch programs of preferential government purchasing for local companies, to end pork programs for unworthy corporate giants.

In case you suspect CUPE is out of synch with the rest of the Canadian labor movement, I should report that at a small lunch I attended with O'Neil, his lieutenants, and Jack Layton (the national leader of the New Democratic Party) there was unanimous agreement about the need for placing community empowerment at the center of a Canadian pro-worker agenda.

O'Neil now wants to take his message to the United States – and I sincerely hope that communities and unions around the United States invite him to visit and learn from his breathtaking ideas.

By Michael H. Shuman