Small Business Issues in the Ballot Box: the Employee Free Choice Act

In terms of the issues that small-business owners belonging to any political party care about most, labor is one of the least talked about, taking a back seat to general economic issues, tax policy, energy, and health. But the results of this election could make the difference for the passage of what many observers are calling the most sweeping change in labor laws in 70 years—and one that could affect millions of small businesses for better or worse.

One of the issues where the difference between Republicans and Democrats in this year's election is most stark is the Employee Free Choice Act. The bill contains several provisions that would make it easier for workers to form unions. It passed the House of Representatives on a highly partisan vote in February 2007, but was killed when all the Republicans in the Senate (except Sen. Arlen Specter of Pennsylvania) filibustered it, with almost all Senate Democrats supporting the act. But one point on which members of both sides agree is that it is the most significant piece of labor legislation since the National Labor Relations Act of 1935.

Josh Goldstein, spokesman for the labor advocacy nonprofit American Rights at Work, which supports the bill, says, "It's pretty clear that it's one of the most significant reforms of our outdated labor laws." Supporters of the bill say that it is necessary to create a fairer process for forming a union. "It's time to adjust the playing field back to a level where both parties have equal voice," says Goldstein.

Glenn Spencer, executive director of the Workforce Freedom Initiative at the U.S. Chamber of Commerce, which has strongly opposed the bill, agrees on its significance. "It would be the biggest change since the 1930s," he says. But opponents of the bill argue that it would impose unfair and burdensome costs on businesses of all sizes.

Just how much do small-business owners need to be concerned about the Employee Free Choice Act? Some small-business advocacy groups have stressed its potential costliness. Raymond J. Keating, chief economist for the Small Business & Entrepreneurship Council, has said that "in the long run, both business owners and employees would suffer" if the bill was passed because it would "boost costs, restrain productivity," and make businesses "less competitive."

But others say that this is overstating how many businesses the bill would affect. Dawn Rivers Baker, author of the MicroEnterprise Journal, has written that "the vast majority of small businesses [are] just too small to have to worry about" the issue of unionizing.

Some businesses certainly will not be affected. The National Labor Relations Act—which the Employee Free Choice Act amends—applies only to retail businesses with over $500,000 in sales a year (and deals in some products traded over state lines) or nonretail businesses with over $50,000 in sales a year.

The key provision of the Employee Free Choice Act could make it more feasible for the workers of smaller businesses to unionize. Under current law, in order for a union to be recognized at a business, 30 percent of the workers of the business in question must express support for joining a union. This is then followed by a secret ballot election where half of the workers must vote in favor of joining. The Employee Free Choice Act would make this election unnecessary and allow the union to be recognized through a process known as "card check." A majority of workers simply need to sign cards expressing their intent to join the union, and this process need not be secret. At a business with just 20 workers, "you could get 11 people to sign [cards] in a half-hour," says Spencer.

Todd Steenson, a partner in labor employment at the law firm Holland & Knight in Chicago, says that this easier process would allow unions to be formed at businesses where they could not before. "It's going to cost them money to go out and organize. There is going to be diminishing returns [for a union] when a business gets small enough." But allowing card check, he says, would reduce those costs of organizing and thus make it worth it for unions to look at smaller employers. Steenson says this is especially true in the case of retail businesses, because they cannot move overseas if they do not like U.S. labor laws.

Corrected on 11/03/2008: An earlier version of this article incorrectly stated that all Senate Republicans filibustered the Employee Free Choice Act. Sen. Arlen Spector (R-PA) supported the bill.

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