May/June 2011 The Real Enemy of Unions

Why organized labor should join with entrepreneurs to bust the corporate monopolies threatening them both.

By Barry C. Lynn

Admittedly, today, it can be hard to conjure an image of labor leaders and small business leaders marching arm in arm toward the political barricades. On the contrary, small business and labor groups find themselves almost always on opposite sides of the line. There’s little mystery as to why. The nation’s main small business group, the National Federation of Independent Business, is even more intricately woven into the structure of the GOP than labor is woven into the structure of the Democratic Party. Last November, twenty-five members of the NFIB won new seats in the House or Senate. Every one was a Republican.

Yet a closer look reveals that this iron alliance between small business and the GOP may be much more brittle than it first appears. For one thing, recent surveys of small business owners show the portion who identify themselves as Democrats is roughly equal to the portion who identify themselves as Republicans. For another, many of the most energetic and creative of today’s small businesses are in sectors—restaurants, brewing, organic farming, technology and information—that tend to attract more progressive entrepreneurs.

Further, the traditional mom-and-pop businesses that have long been the backbone of the NFIB are in deep trouble, often precisely because of concentration. Between 2006 and 2009 the NFIB reduced its membership rolls from some 600,000 enterprises to roughly 350,000. Although the organization claims most of the drop was the result of better accounting, a spokesman recently admitted that it is also due to the fact that the number of “main street businesses” in America have been “diminished by the big box stores.”

Which leads us to what appears to be the NFIB’s failure to stand up for some of the most basic interests of its members. As Inc. magazine reporter Robb Mandelbaum wrote recently in the New York Times, the NFIB has “never made halting the big box expansion … one of its battle cries,” despite the fact that the big box stores are crushing its members. On the contrary, as Mandelbaum noted, NFIB members have found themselves roped into supporting tax cuts for the very big businesses that already enjoy such a huge advantage of power against them.

All of which means there’s a good chance that many existing members of the NFIB are looking for a new date.

Labor may never be able to ally effectively with the present leadership of the NFIB. But a well-structured appeal to Congress and the administration to take real practical action now to protect America’s independent proprietors from being wiped from the land by a few giant corporations might open the way for all sorts of new partnerships. At a minimum, such a strategy will attract the support of at least some individual small businesspeople and smaller associations. And it is not inconceivable that an honest discussion of monopolization in America today will weaken or even split this pillar of the GOP, much as labor’s push for a more aggressive response to China’s trade policies has helped to whittle down the once-great power of the National Association of Manufacturers. But even if labor does not win a single small business ally, there’s another reason for it to ramp up attacks on the enclosure of America’s markets. Defending open markets may well prove one of the most effective ways to educate unorganized groups of workers of the need to support stronger unions. After all, even if Congress and the administration moved tomorrow to take on America’s many monopolies, few of these powers will go easily into the good night. Which means that in many cases, employees would be wise to work together to protect themselves now.

To understand the potential stakes, consider the Justice Department’s revelation last September that Google, Apple, Intel, and other tech giants had secretly colluded not to hire each other’s workers. The agreement, the DOJ said, had “eliminated a significant form of competition to attract highly skilled employees.”

The fact that some of the world’s biggest and richest firms openly conspired to drive down wages and to restrict the most basic freedoms of individual employees would be, one might think, of some use to organized labor. Here, after all, is a perfect story to illuminate the fact that even the smartest and best educated of Americans—PhD scientists and PhD engineers—sometimes need protection when their markets are enclosed, just like autoworkers and nurses and teachers. Indeed, given that such concentration has begun to destroy the open market systems that have long helped to protect all sorts of white-collar professionals—ranging from book editors to advertising executives to doctors—a generalized attack on monopolization might prove to be a highly effective way to go on the offensive among groups of salaried employees who have, until now, viewed themselves as, somehow, immune to such rude treatment.

But when I recently mentioned the DOJ’s Silicon Valley settlement to a top executive at the AFL-CIO, he had never even heard of the case. It wasn’t that he and his team didn’t understand the value of the story. On the contrary, he immediately interrupted our talk to pick up the phone to yell at one of his subordinates. It was just that, as he explained later, he and his staff were not used to sifting for prospects in antitrust cases.

He needn’t fret about missing this particular opportunity. The Obama administration’s settlement will remain in place for only five years, so unions will soon enough have another chance to point out the Silicon Valley hiring cartel as an appeal to America’s high-tech workers.

Seven years ago, Thomas Frank wrote a book, What’s the Matter with Kansas?, about “people getting their fundamental interests wrong,” because they voted for Republicans rather than Democrats. Six years ago, Reihan Salam and Ross Douthat, in an article for the Weekly Standard, largely agreed with Frank. After noting that a large portion of GOP voters were “comfortable with bad-but-popular liberal ideas like raising the minimum wage, expanding clumsy environmental regulations, or hiking taxes on the wealthy to fund a health care entitlement,” they concluded the GOP was out of touch with many of its own voters. Then two years ago, after watching their leaders join Democrats in using tax dollars to bail out banks that had been made “Too Big to Fail,” a goodly portion of this same GOP wandered off the ranch to form the Tea Party.

The achievement of convincing so many hardworking entrepreneurs and farmers and salaried workers to vote GOP, supposedly against their own interests, is usually credited to the schemes of party hacks, or the purchase of votes by the malefactors of great wealth, or the pounding of propaganda machines like Fox News. And certainly, all of these have some effect.

But this version of recent political history seems to get cause and effect backward. Our parties today, just like the parties of yore, are merely the tools of the groups who know how to use them. And given that today labor and small business, two very large and politically active groups of American citizens, find that neither party works for them, it may be worth assigning at least some of the fault to labor and small business.

Barry C. Lynn directs the Markets, Enterprise, and Resiliency Initiative at the New America Foundation.


  • Lou Siegel on May 13, 2011 10:23 AM:

    Great ideas Barry, but your piece lacks sensitivity about the enormous pressure unions face every day just to survive.

    Look, for example, at the Communications Workers of America active support for the AT&T / Team-Mobile merger, hoping that the anti-union Team-Mobile can be organized as a result.

    It's not that labor leaders don't understand the consequences of concentrated corporate power, it's just that, in the face of extinction, they're compelled to take expedient action.

    So please don't accuse us of failing to connect the dots.

    Make your case persuasively without condescension and you'll find a tremendously receptive audience at all levels of the labor movement.

  • fig8jam on May 17, 2011 4:05 PM:

    Great article Barry.

    Wondering if it will be pulled however, since Susan Chambers the ExecVP of WalMart sits on the Leadership Council of the New America Foundation.

    I think you did a good job of explaining how the monied interests/oligarchs in the country have successfully aligned and split the common laborer into two different camps so that they are opposing themselves to the benefit of big business.

    Reminds, me of the Southern Strategy.

    If we agree that this is about money and power we also know that the unions have an uphill battle convincing white collar they need to align with blue collar workers and that small businesses need to align with labor to ensure an open and competitive market.

    However, Governor Scott Walker and Governor Daniels have done a lot to take off the blinders in their states and show the teachers, nurses, and others just what side their bread is buttered on. This should make the unions job easier in 2012.

    Obama would be an individual who would sign a new low against these major conglomerates usurping the free market.

    Capitalism can't thrive with monopolies.

    Let's hope that 2012 is the beginning of major legislative acts that redesign and align the America market place in favor of labor and small businesses.

  • Robert Searle on May 18, 2011 11:56 AM:

    I think my project maybe of interest in connection with all this.


  • Norma Rae on June 12, 2011 1:38 PM:

    The ongoing travesty of this country is that too many people are too stupid to vote their own economic interests. What we need is a law to help union organizers encourage people to vote for unions. One good idea would be to give people a union card and ask them to sign it. Anybody who refuses to sign it, we will know immediately is a scab. We can then bring all kinds of encouragement for the scabs to vote for the union, like "gee, it would be a shame if something should fall on your head while you're working". Or we could visit their homes at night and talk to their children about it. Or we could just beat the crap out of them. Whatever. And if any of those filthy Republicans accuse us of intimadation, we can just say "who, us? we would never do that!" This is the kind of stuff our national unions need to favor.

  • John on June 23, 2011 6:04 PM:

    Many economists believe that a strong economy has a large middle class. In the modern society, that is skilled labor and small to medium business. They are the biggest contributor to a strong economy because of the number of them and because of their disposeable income. Without their spending, the economy suffers. An intelligent economy, indirectly managed by big business leaders and government leaders recognizes the economic sustainability of these two groups and control their own greed to maintain the financial balance of power. Of course, big labor must do the same. With capitalism, business can price themselves out of business and labor can price themselve out of a job.

  • Jessica Zembala on June 23, 2011 8:15 PM:

    John on June 23, 2011 6:04 PM:

    "Many economists believe that a strong economy has a large middle class."

    You know, Joe, you are so right. Your point reminds me of a story. During WWII, Americans built airstrips in the jungles of many aboriginal South Sea islands and brought in wealth beyond imagination of many of the South Sea islanders they encountered. When the war ended, these islanders wondered what went wrong when the Americans went home and the flow of wealth stopped. To address the issue of the missing wealth, they built airstrips of their own, and just waited for the planes to land. When they didn't land, they even constructed mockups of airplanes out of bamboo and palm fronds, kind of to attract airplanes. Your economic theories, would be much admired by these South Sea islanders.