Are Small Businesses Better?

            My latest Northern Sun Catalogue offers a bumper sticker which reads, “Break the Chains—Shop at independent Stores.”  I assume that the author believes that if only we could rid ourselves of the shackles of the Walmarts, Best Buys, and Targets, and all the other big box chain stores, we could return to some halcyon age of kinder and gentler commerce.   Well, let me first say that those who believe this are probably among the kindest and most well intentioned people around—but I don’t think they have any idea what they are asking for.  There is an old Irish proverb:  “Be careful what you pray for—you might get it.”

            We live in an age now where everyone seems to accept without any evidence that smaller is automatically better; that smaller stores would somehow treat their workers better, or perhaps treat their customers, their communities, and their local environments in a more responsible manner. They accept the “sacred cow” belief that the small yeoman businessman is the salt of the earth.  And apparently, they believe that greed moves men to commit theft and chicanery only when enterprises are so large that the individual perpetrators  have no noticeable  stake in the outcome; that it never occurs to small entrepreneurs to steal for their personal enrichment, but that corporate minions will eagerly risk going to jail to enrich a million anonymous stockholders whom they have never met.

            Of course, neither the small business model nor the large corporation model applies to the financial sector.  Major investment banks are in a category all their own.  The high stakes traders act with considerable autonomy and behave as if they were individual entrepreneurs or outside contractors, and that’s how they’re paid, even though they bet the company’s money.   Yet the thousands of accountants, statisticians, and actuaries etc are simply part of the general corporate culture. The high stakes traders are driven by an individualistic risk taking mentality, whereas, in a typical day, the biggest risk an accountant might take would be deciding what color tie to wear.  But crime is risky, so when it occurs, it is usually in the part of the operation where individuals operate as if they were running their own small businesses.

            I suspect that those who entertain illusions about the purity of small business are mainly those who have never actually worked for a small business.  I entered the work force in the late 1950s, and by the time I retired I had worked for at least 75 employers, including some of the largest corporations on the planet.  But most of my employers were small, family owned operations.  With just a few exceptions, all my employers were scum bags.   Some were intelligent enough to maintain a warm and cheerful surface veneer, and some were too stupid to bother. Some would screw their workers and customers only whenever they could make a fat profit by doing so—and some would do it just for practice.  But they were all scum bags.  And by far, the worst were the smallest, and this was true across a variety of industries.   I did have the opportunity of working for one small family outfit where I was treated like a member of the family.  And I worked for four other outfits, two large and two small, where I was treated fairly and never lied to or cheated.  That’s five out of 75.  Let me give you some examples:

            Back in the 50s, there were no large retail chain stores in our area except Sears, Penny’s, and Ward’s.  People who actually wanted to spend their lives in retail sales stood in line for jobs at these places because the chain stores paid better.  All entry level retail sales jobs paid lousy wages, but at Sears at that time, if you could really sell and if you stayed several years, you could actually work your way up to making a living wage.    A friend of mine who was an electrician had a wife who worked for Sears till she retired, and she ended up with a better pension than his electrician’s pension.  Back then a typical family retail operation would employ half a dozen non-family members. The family might or might not derive a good living wage from the business, but the hired help almost never did.  During high school, I was hired as non-family help for several of these companies. I worked for a paint store when I was 15.  My job involved taking palates of paint cans on a horrible old freight elevator up to a second floor warehouse. The elevator was completely open with no guards or railings of any kind, and was propelled by huge old wooden pulleys driven by flat belts. There was no safety stop, so if a belt ever broke, I assume the thing would plunge clear to the basement.  Looking back, I suspect that I was hired so that if an accident did occur, it was me that would die instead of a family member.

              I was also hired to cut glass there.  The boss said that I was to take a new glass cutter off the retail display, take it out of the box, make one cut and then put it back in the box and back on the shelf—but never use the same one again. He explained, “These cheap cutters are really only good for one perfect cut, so always use a new one.”  This respected local businessman and prominent church member knowingly sold his customers cutters that were already used and worthless when he sold them.  Tip:  Don’t ever buy a glass cutter from a store that also cuts glass, unless it comes sealed in plastic. 

            Another job I had at 15 was a summer job loading hides from the hide cellar of a local rendering works.  These would be hides of animals which had died of disease.  The stench was unbelievable. Of course, this was industrial work, and could only legally be done by workers over 18. (And considering the nature of the carcasses involved, I suspect there would be a legal requirement that all workers touching them be properly vaccinated.)  But they just hired 15 year olds off the street. It was a small, family business.  I also worked at a bakery when I was 15.  Both of these jobs were clear violations of child labor laws, but small businesses can “fly under the radar.”  They’re too small to be noticed.

              After I was 18 and out of school, I worked for the largest company in town:  John Deere tractor works.  I was on a piecework job on a machine that had formerly been run by a giant of a man who could run the operation quite fast by doing things in a way that were not part of the procedure, and that no one except a gorilla could do. Every time he ran over 140% of the basic quota, they re-timed the job, till eventually even he could not make any money at it.  He used his seniority to bid on a different job, and I was hired to replace him.  At 18, I was a powerfully built young man, and I think that was why they thought I could probably do the job the way the previous guy had. They were wrong—I couldn’t even make the base rate quota.  Although I was doing my best, they kept threatening to fire me if I couldn’t do the job faster.  I finally told them to take the job and shove it.   I don’t believe that they ever did find anyone who could run that job at the speed for which it was timed, and they eventually split it into two jobs.   But if I had been assigned to any other job in the department, I would have stayed for life, and probably made more money and fringe benefits than any job I’ve ever done.  As a skilled electrician working on big overtime jobs, I’ve often had a short surge of cash, sometimes grossing a couple thousand in a week.  But for year in, year out wages, I’ve never done anything that could beat a union job in a big factory.  Mind you, working piecework for a large factory is not usually pleasant—but it’s often well paid, or at least it used to be.   After leaving Deere’s, I spent a couple years in college as a physics major, and then I went to California. In the next phase of my life, I performed work that was pleasant, high tech, and low wage.  I wore clean clothes, worked in a clean, air conditioned environment on state of the art technology, had lunch with the engineers and venders, and was paid slightly over the minimum wage.  Many of these high tech companies are small, family businesses. And except for a handful of weasels at the top, no one makes any money.

            One of the ploys which these small outfits use to lure well trained people into working for crummy wages is to promise a grand future.  They explain that some new operation is just starting out and there is no money in it yet, but if someone can get it going it will soon be an operation requiring several workers-- and there will be a really good supervisory position for the guy running it. So you take the job and bust your guts building it into what they wanted it to be, and lo, there really is good supervisory job at the top—but not for you.  They bring in a family member.  On some Monday morning, your boss walks up and says, “This is Bob, my brother-in–law.   He’ll be your new boss.  Oh, and could you show him the ropes?  He’s never done this stuff before.”   (This happened to me twice in a row.)   This kind of trick could happen anywhere, but it happens universally in any small family business.  The reason is that any family business has some family members stuck in lousy jobs.  They resent this, but they put up with it as long as there are no outsiders placed in jobs that are any better.  So the rule of thumb is:  On the rare occasions that a good job is part of the picture, you give it to your brother-in-law and screw the outsiders. (But first you have to sucker some outsider who understands the technology into working out all the problems to the point that your idiot brother-in–law can handle it.)

            I then spent three years in the Army as a communications specialist in the Signal Corp, and when I got out I eventually became an IBEW electrician, but not before I spent a few years working for a small, family owned, non-union company.  This company installed cable TV, sound systems, intercoms, etc in large buildings. I was the cable guy.   Eventually I became foreman, and one day my boss told me to fire a guy.  There was no doubt that this man had to go; he was utterly incompetent. As my boss walked out the door, he reminded me that our company had a one week paid vacation for any worker who had been there for one year, and the worker involved was just one week short of having one year.  I thought, “What an unexpected show of compassion.  He wants me to wait one more week, so that the poor guy isn’t cheated out of his vacation.”  No--he wanted me to fire him just before he would qualify for that vacation.  At that point I decided that I was working for a no good son-of-a-bitch, and should start looking for a new job.  Shortly after that, I was introduced to one of my boss’ old cronies who was to be my new boss, and I was asked to please help him learn his new job. 

            Have you ever noticed that small businessmen always belong to various organizations where they attend testimonial dinners where they all get up and expound on what a warm, wonderful human being Old Joe is? Why do they need to do this? They need this approval from each other because there damn little chance they’ll ever get it from anyone else—at least, not from anyone who knows them very well.  And notice, at none of these testimonials is there time allowed for dissenting opinions.  Nor do they invite the guy’s ex-wife, his ex-business partner, and certainly not the ex-worker who spent 30 years there, but who was fired after his back was worn out and he could no longer do the heavy lifting.  

            After leaving the cable installing company, I became an IBEW Journeyman inside wireman, and spent nearly 40 years working for nearly 50 different contractors, ranging from Bechtel, the largest in the country, to small family owned outfits.  So who would I prefer to work for—Bechtel or Billy Bob’s Electric?  I’ve found, over the years, that the bigger the better.  A very friendly, intelligently run, small shop can be delightful if you can find one.  But the overwhelming odds are that any small business will be run by either an ass or a moron. And a small shop run by some horrible beast can be a living hell. But if you work for a very large concern, you don’t have to worry about it, especially if it’s a union shop.  When you work under a union contract for a large company, you have no way of knowing whether you are working for saints or for beasts, nor will it make much difference.  It’s more like being in the Navy.  If you were a Navy Electrician’s Mate 1^st Class, and you read that the Secretary of the Navy had died and would be replaced, would you really care?  Would it make the slightest difference in your daily work?  You would certainly care who your immediate supervisor was; that would make a difference.  And a different Executive Officer in your unit might make a difference if you ever got into trouble.  But the two things that would determine your daily existence would be your immediate supervisor, and Navy regulations.  The Navy runs by rules. And on a big construction job, there are also rules:  OSHA rules, the customer’s own safety rules, National Electrical Code rules, Federal wage and hour rules, and the union contract’s rules.  You have to abide by these rules, yet so does the contractor.  But a small outfit will often completely ignore the rules and dare you to do anything about it.  And they usually get away with it because they are too small for anyone to bother with. But if you are the poor worker who is being asked to do something patently unsafe, then you are the one who has to choose between being fired or risk being injured or killed.  On a big job, you don’t usually have that problem.  It isn’t that the owners of large companies are always nice people.  But they are usually smart enough to understand that with 5,000 pairs of eyes watching them, there is not much they can get away with.  Even on a non-union job, there would always be a whistle blower.

            So far I’ve examined only whether small operations are better for workers.  I spent about 50 years discovering that they are not.  Some small employers are pleasant and some are unpleasant.  But they almost all pay lousy wages and no benefits, and most of them are non-union. And even in industries where small business are often union, such as the skilled trades, big jobs with big companies are usually preferable to small jobs and small companies, even with the wages and benefits equal. But let’s look at this from the consumer’s standpoint.   

            When I was growing up in the years just after the war, food was sold at little neighborhood grocery stores. Safeway and other supermarket chains had not yet come to our area.  There were five stores within three blocks of our home.  These tiny markets had only two or three choices of meat on any given day, and if some of the meat the grocer bought went unsold, it spoiled and was thrown away.  What you did buy from this meager selection was often nearly spoiled by the time you got it, and was extremely expensive because the sale price of the meat which was sold had to pay for other meat which had spoiled, and also pay for the cost of having meat trucks deliver a paltry amount of fresh meat every day to every tiny store in town. The fresh vegetable selection was just as bare, often wilted, and always expensive. 

            But they built a Piggly Wiggly store, and soon there were several other chain supermarkets.  And this opened a whole new world for us.  Every day, we were offered every cut of pork, beef, lamb, and poultry, all perfectly fresh and priced at half what the tiny markets had charged.  And produce was also cheaper, fresher, and more diverse than anything we had ever known.   Cans of processed food of every kind and description were stacked for half a block, at prices starting at a dime a can.  Understand that this was a working class neighborhood, populated mostly by packing house workers. The advent of the supermarket, in and of itself, had nearly doubled our standard of living. And as other big box stores began to replace the family owned hardware, clothing, and appliance stores, this too radically increased our standard of living. Did these new stores replace hundreds of small businesses? Yes, they did.  And were these new stores all non-union, low wage employers?  Yes, they were.  But what were the small stores they replaced?  Were they not also low wage, non-union jobs?  Occasionally, one of these small outfits made a decent living for the owner’s own family—but never for the half dozen he had employed.  If one of these former independent businessmen ended up stocking shelves for Walmart for slightly above the minimum wage, what is his real complaint?  That he now has to work for the same wage he paid others?  I think there’s some irony here.

            One last question:  Some of you are probably repulsed by the political views of the owners of some of these big box chains.  Guess what?  So am I!  And I actually know a handful of small businessmen who have decent, compassionate values.  That’s a half dozen out of 500. There are at least 500 small businesses in my county and over the years I’ve dealt with most of them.   Let me tell you about their political instincts.   If you’ve noticed the crowd of deranged candidates cueing up for the Republican Caucuses in Iowa, you might wonder what kind of right wing degenerate morons could support such nonsense. It's not mainstream Republicans. The Tea Party crazies are fun to watch, but they are totally wrecking the Republican Party, and most mainstream Republicans are intelligent enough to understand this--and they are not amused.  In Iowa, the Republican Party is a minority, and only a minority of that minority participates in the caucus. The few Republicans I know don’t particularly like any of the announced candidates.  (They would probably prefer someone like Bob Dole.)  So who are the raving right wing sociopaths who attend rallies for these loonies?  It’s the small business community.  And if you ever give these people any of your business, whatever profit they get from you could end up in the campaign coffers of the most extreme right wing political elements in the country.   In most parts of Iowa, the Tea Party is the small business sector.

            As far as workers’ rights, women’s rights, or minority rights of any kind are concerned, for all of my life the most strident and regressive voice in Iowa politics has been from the small business sector.  Right now they’re upset about federal child labor laws.

            The main problem for workers in the retail sector is that it’s all non-union.  Walmart, Target, and Best Buy are non-union, but so were the small companies they replaced. The large chains are still non-union because we have labor laws slanted against organizing.  Canada does not.  And workers in Canada succeeded in organizing a Walmart store.  But even if we had the same laws as Canada, there is no way anyone could ever have organized a significant percentage of the kind of small stores which these chains replaced.   Any basic history of economics text will tell you that in the Nineteenth Century, the reason that union organization took hold is that industrialization brought large numbers of workers together within the same company--and that makes them easier to organize.  As industrialization gave us the motive to organize, it also gave us the means and the opportunity. 

            Having said all of this, let me also say, just for the record, that I do not shop at Walmart, though I often shop at big box stores.  My reason is not that they are non-union, but that they have made it such a grand and expensive project to stay that way.  As a union member, I find that insulting.  But if they ever start signing union contracts, I would find it not only permissible to shop there but would feel a moral obligation to do so.   And that’s a promise.

            I have painted with broad strokes, and there are certainly exceptions.   In a liberal college town like Iowa City, you can find scores of local businessmen who are decent, intelligent and civic minded leaders of their community.  But they are the way they are, not because they are in business—but because they are in Iowa City.  The same situation obtains for many other liberal college towns, such as Madison WI, Ithaca NY, etc.  And I suspect that whoever wrote the slogan about breaking the chains probably lives in such a place.   A word of advice:  If you ever leave that liberal academic enclave, be ready for some surprises.