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Employee Strikes

Strikes may affect a small business in one of two ways.

First, its own employees may go on strike or carry out some collective action functionally equivalent to a strike.

Second, the small business may be unable to carry on as usually because some other company or industry is experiencing labor disruptions and thus denies the business vital services or supplies.

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Status And Trends In Unionization

Employee or labor strikes are called by labor unions usually after a strike-vote by its membership. The strike may be directed at a single organization or may be industry-wide. Two major tends in unionization suggest that small business is very unlikely to be unionized and therefore directly threatened by a strike. Based on data from the U.S. Bureau of Labor Statistics, in the 40-year period from 1964 to 2005, union members have declined from 29.3 percent to 12.5 percent of the labor force.

Even as the total unionized work-force has declined, the private-sector’s share of total union labor has declined and the share of the public-sector has increased. In 1983, for example, private-sector union employees were 67.2 percent of all union laborers; the public-sector share was 32.4 percent. By 2005, the private-sector share was 52.6 percent, the public-sector share 47.4 percent.

As a consequence of this general decline in the unionized workforce, labor stoppages have also declined.

Major work stoppages involving 1,000 or more workers averaged 352 in the 1950s, 283 in the 1960s, 289 in the 1970s, 83 in the 1980s, 35 in the 1990s, and 28 in the five-year period 2000-2005.

In 2005, union membership was highest in the transportation and utilities industries in the private-sector (24 percent) and lowest in finance and related services (2.3 percent). In construction and manufacturing, union membership was 13 percent of the labor force; in wholesale and retail (where the highest proportion of small businesses operate) the rate was 5.2 percent. In professional and business services, another important small business sector, the rate was 2.7 percent. Furthermore, unions target for organization efforts large operations rather than small for pure cost/benefit reasons.

Therefore unionized small businesses are rare. Finally, unions call strikes only when grievances are of long standing and long unresolved. Not surprisingly, a search of the business literature does not turn up any cases of small businesses struck by strikes.

Types Of Strikes

The National Labor Relations Board (NLRB) provides legal protections for economic strikes and strikes based on unfair labor practices. In the first category, workers attempt to garner improvements in their wages, benefits, hours, or working conditions. An unfair labor practices strike is called when the employer allegedly violates NLRA rules that protect workers during collective bargaining. The small business owner faced with a labor organizing action is well advised, early in the process, to consult with a competent labor lawyer in order to get guidance on how to comply with NLRA regulations.

Fundamental rules to observe include: 1. The business must bargain in good faith throughout the process. Workers have a fundamental right under U.S. law to organize and to bargain collectively.

2. The business must provide the union with all information to which the latter is legally entitled.

Under U.S. labor law, unions can request information about management’s plans regarding various operational aspects of the business during the strike. For example, the union can ask for information about where the business plans to get replacement workers and the wages that they will be paid.

3. The business has and can exercise rights of its own. It can freely communicate its own plans to employees, point out how they differ from the union’s proposals, and ask employees to vote on the business’s final offer. In many strike situations, the business has the option of utilizing replacement workers without penalty.

Avoiding/Managing A Strike

In the case of a small business especially—where contact between management and the work force is closer— avoiding a strike is obviously the best strategy. If the shop was unionized during the current ownership’s tenure, that fact alone should have signaled to the management that something was drastically out of order.

Unionization is fundamentally an adversarial process intended to force the business to behave in certain ways by threatening to deny the business an indispensable resource. If the union shop was acquired, the new owner can build a new relationship with labor and, often, after some period of time—during which the labor force has learned to trust the management—even succeed in decertifying the union. If, despite best efforts, a strike appears unavoidable, early planning and effective implementation are the only ways to minimize damage. Such planning will include at minimum:

  • Obtaining early legal counsel to determine if hiring replacement workers will be possible and, if yes, making early arrangements for such help.
  • Effectively communicating with suppliers and customers to tailor deliveries to the new situation and to warn customers of impending problems affecting prompt shipment of products. Where possible, inventories might be built up in advance.
  • Communicating effectively with non-striking employees to maintain morale.
  • In the most drastic situation (more likely in a small than a large business) planning termination of operations, up to bankruptcy, if the strike will cripple the business.

Managing Supplier’s Strikes

Employee strikes most likely to damage a small business are likely to be strikes by other people’s employees, not its own. In the industrial climate of the mid-2000s such disruptions were most likely to result from transportation strikes, especially if a business was highly dependent on a single delivery channel. As John Boyd pointed out in Traffic Word, “With a host of U.S. air cargo carriers locked in labor disputes as 2006 gets under way, shippers are bracing for what could be a turbulent year in the air but one they’re hoping doesn’t leave them grounded.” Boyd cited a shipping manager who said: “I’m not panicking. But I am starting to think ‘What if,’ and planning ahead.”

Boyd pointed out that FedEx, UPS, and DHL were all negotiating with union pilots.

The situation described by Boyd could arise, of course, in some other sector than transportation and affect for the small business, but the generic aspects are the same. The forward-looking manager will keep up-tospeed on the issues that impact its most important suppliers of goods and services, anticipate problems, plan for a workaround, and do the necessary contingency planning and budgeting that may be necessary. For example, large customers might be notified if the business anticipates shipment delays or shortages of parts—thus giving customer’s opportunities to acquire additional supplies early.