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Small Businesses Affect on Unions Term Paper


The following is an essay on small businesses and their effect on labor movement. This essay will describe what small businesses are and how they affect the operations of labor movements both positively as well as negatively.

Definition of small business

Small businesses have different definitions and their classification is according to different countries. In United States, a small business is the one, which has a minimum of ten employees and a maximum of two hundred and fifty employees. The definition of small business in Australia is a business whose employees do not exceed fifteen. European Union defines a small business as the one with less than fifteen employees.

Other than size parameter, there are other measures used to classify the business as a small business enterprise. They are the value of total assets or the net worth of the business. The turnover is another parameter used to classify business as small business but these parameters differ from one country to another (Cox, 2011).

The characteristics of small businesses are that they are owned by one person or as a partnership. They have low capitalization, which is the reason for their size within the industry. Due to their low capital, they are sometimes characterized by high rate of failure and bankruptcy because they are the owners’ sole source of income.

When the owner mismanages finances or is not well prepared to handle low seasons the risk of failure is evidently high which leads to loss of jobs. This triggered the need for workers in small business to protect their work as well as for collective bargaining through labor unions (Hill, 2011). The discussion in the essay is about the effect of small businesses on the labor movement.

Effects of small business on labor

The first effect of small businesses on labor is about membership. Most people in the United States prefer to be employed by private sectors. Half of those who work in the private sector work in small businesses. The labor unions on the other hand are mostly involved in the public sector and large enterprises. Most of the small businesses are undercapitalized and they rely too much on the labor to make profit.

The small businesses owners have always opposed any attempt by their workers to unionize or to belong to any major labor union. This has denied the labor union the number of people they would wish to have in order to acquire social political influence (Hill, 2011).

The other effect, which the small businesses have on the labor unions, is that they have intensified use of violent ways of negotiations adopted by labor unions. Some labor organizations result to use of threats for their demands to be met. The threats are criminal as they not only withdraw labor from the small business but also threaten lives of the owners of small business most of whom are opposed to the small businesses (Cox, 2011).

Due to the myriad of businesses, which various small businesses engage in, the small business employees have formed their own union for collective bargaining. The mushrooming of these small unions from the small businesses has led to the formation of labor cartels within a given industry.

The cartels have made the public to view the labor movement as unreasonable and their collective bargain usually affects the prices of goods and services negatively. The public refer to labor unions as mafia movements, which hurt the labor movement in different countries all over the world (Cox, 2011).

Other than undercutting the influence of labor unions, the small businesses have also affected the nature of labor movements. Earlier on, the labor movement was composed of workers in major organizations. Nowadays, even organizations with as little as fifteen employees have permit to unionize.

While most of the effects of the small businesses on the labor movement maybe considered negative, the small businesses have also had a positive contribution to the labor movement across the world.

The first major contribution is that they provide alternative source of income to employees in the public sector when they are engaged in strike. This gives the labor movement a lot of negotiating power because the employees are not fully affected by the strike economically as they are working somewhere else.

In 1970, the small businesses financed the activities of major labor movements in large corporations in their attempt to undercut the influence and operations of major corporations which they felt that they were having undue favors and that they were working to edge them out of the market.

This made the labor union a powerful force to reckon with and enabled workers to have a great bargaining power with the major corporations to the detriment of the corporations’ profits and influence. However, it is notable that this symbiotic relationship usually does not last for long especially if the small business grows into a large corporation (Cox, 2011).


The effect of small business on labor movement is worthwhile to note as the small businesses can deny the movements the number of people needed for bargaining. The labor movement therefore needs to have a symbiotic relationship with the small businesses.

As small business look forward to grow into large corporations it is necessary that they allow their workers to unionize as early as possible to avoid unruly labor, which will affect them negatively.


Cox, W. (2011). Small business owners and labor in America. The Backbone of the Nation. London: Word Press.

Hill, K. (2011). Ohio business owner Terrorized & shot for being non-union. North Carolina: University of North Carolina.

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1. IvyPanda. "Small Businesses Affect on Unions." December 20, 2019. https://ivypanda.com/essays/small-businesses-affect-on-unions/.


IvyPanda. "Small Businesses Affect on Unions." December 20, 2019. https://ivypanda.com/essays/small-businesses-affect-on-unions/.


IvyPanda. 2019. "Small Businesses Affect on Unions." December 20, 2019. https://ivypanda.com/essays/small-businesses-affect-on-unions/.


IvyPanda. (2019) 'Small Businesses Affect on Unions'. 20 December.

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