Industry Trends

What the Trend Toward Unionization Could Mean For Small Businesses

May 11, 2022 • 4 min read
will recent news of unionization impact small businesses
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      unions and small business - cnbc - may 2022

      Recent news of workers organizing at large employers in the U.S. begs the question: will the same happen at small businesses, too? Credit: CNBC, May 5, 2022.

      What It Means: Unions And Small Business

      Regardless of where any small business owner sits in the union debate, the fact remains that no one wants an employee-employer relationship to sour. 

      While the AFL-CIO lists higher wages, improved benefits, and better workplace conditions as the key drivers for unionization, it may be easier to sum it up as employee frustration — one of the same motivators behind the “Great Resignation,” too. Starbucks employees, for example, have cited everything from corporate greed to COVID working conditions behind their organizing efforts.

      Still unionizing may not be the end-all for workplace happiness: studies dating back to the 1970s found union members were less satisfied with their work than their non-union peers, although a 2017 analysis of those same studies hypothesized that workers who joined unions did so because they were dissatisfied rather than the other way around. Go figure.

      Building A Workplace Where Employees Feel Happy, Heard, And Valued

      Unions aside, for small business owners, retaining employees is an economically sound strategy. Building a workplace where employees feel safe and valued is on the shortlist of “must-dos.” Unlike bigger organizations with teams and processes in place for training, surveys, and wide-ranging improvements, small business owners often need to take the lead in these conversations and tap into external resources to assist with feedback and improvements.

      In that case, tackling the following three areas becomes essential:

      1. Compensation (wages and benefits), including competitive market pay and benefits packages and cost-of-living increases. Employees can offer insight into acceptable tradeoffs, too — a team may be more motivated by an employer matching 401K plans than in an all-inclusive, fully paid healthcare plan. 
      2. Workplace conditions (safety and efficiency). This may require investments in upgraded workplace facilities and equipment as well as training. As a bonus, even if external financing is required, upgrades in these areas can result in greater profitability.
      3. Communication (open communication and action), including feedback from employees. Employees may have already brainstormed solutions to the problems they see in their workplace. Discussion and transparency that leads to a compromise solution that works for everyone is the goal here — and ultimately boosts employee retention rates, too.

      BTW, a  2021 analysis published by the Brookings Institution noted that union membership frequently “make[s] employees less likely to quit their jobs. A combination of better pay and benefits, more upward mobility, and the ability to exercise voice gives unionized workers reason to stay.” Still, simply ensuring the workplace you build is a place where employees want to be can have the same effect, too — without adding an employee union to the mix.

       

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      About the author
      Jeanie Croasmun

      Jeanie Croasmun is a writer, editor, and all-around news junkie who voluntarily (and gleefully!) listens to economics podcasts while she runs. She writes on current issues and other topics related to small business finance for Lendio.

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