SoCal Loves Its Thousands of Mom-and-Pop Stores — But They Can Mistreat Employees, Too

SMALL BIZ---In an address to the National Federation of Independent Business (NFIB), a non-profit which counts over 325,000 small business owners among its members, Vice President Mike Pence gushed that small businesses “create jobs.

You provide a pathway of opportunity for generations of Americans. And you are literally the cornerstone of American communities from the smallest towns to the largest cities.” Paraphrasing President Donald Trump, Pence added that small businesses “embody the American pioneering spirit and remind us that determination can turn aspiration into achievement every single day.”

This veneration of small business is by no means specific to the Trump administration. A recent Gallup poll found that 70% of Americans have “a great deal” or “quite a lot” of confidence in small business, compared to 21% for big business.

It’s little wonder that, in pushing its unpopular tax plan, Republicans have focused on how it will benefit scrappy mom-and-pop business owners. Trump crowed that his proposed tax cuts will benefit over 30 million small business owners, cutting their tax rate by 40%. Never mind that this isn’t true, and that one of the small business owners advocating his tax plan actually runs a lobbying firm for big business. His promises have sparked optimism among some small business owners, and gushing stories in conservative outlets about how his plan is helping the little guy. (It’s worth noting that support for small businesses is not entirely partisan, with liberals often using it to promote “buy local” campaigns — but it’s conservatives who exploit the reverence to achieve their tax-slashing aims.)

“I know that a small business is really all about family — whether it’s your immediate family, your extended family, or the family of your employees,” Pence said in his comments to the NFIB.

Even liberals may find it easy to buy into this vision of the earnest, family-run small business embodying everything that makes America great. But the fact is, many small businesses treat their employees just as poorly as more readily criticized corporations. And importantly, employees in these situations are often left with fewer resources to fight back. 

The employer-employee relationship is inherently unbalanced; treating small business owners as the benevolent personification of the American dream just tips the scales even more in their favor. In a system that so adamantly favors small business owners, worker self-advocacy and unionization efforts can seem like a kind of betrayal.

This is a dangerous view — not the least because, as it turns out, small business owners don’t always treat their employees all that well.

The NFIB page, despite its cheery presentation of facts, isn’t actually very impressive. In “The Benefits of Working for a Small Business” infographic, under the headline “Major Benefits,” the association boasts that a mere 38% of small businesses offer a retirement plan, while 42% offer disability insurance and 25% offer dental. The survey that provides these numbers also reveals that 21% of respondents exempt all their employees from overtime pay, while only 53.2% offer overtime to all qualifying employees.

Meanwhile, 95% of large firms offer a retirement plan (and such plans are often better than those offered by small firms) and 89% offer dental. According to an analysis from the Bureau of Labor Statistics, an average 34.4% of employees at large firms have access to disability insurance, compared to 23.4% of workers at businesses with under 50 employees, and a mere 10.9% of those employed by businesses with 50–99 employees. As for overtime pay, the 2016 Obama overtime rule would have made it harder for small businesses (and businesses in general) to exempt employees by raising the salary threshold for overtime by 100%. This law, however, was struck down in late 2016, a defeat celebrated by the NFIB.

In fact, compared to large firms (over 500 employees), small businesses are consistently less likely to offer benefits, and 2017 data from the Bureau of Labor Statistics find that access to benefits like health care, retirement, and paid leave decrease along with the size of the business. This is, of course, unsurprising, and it’s true that small businesses have a harder time meeting the costs of these benefits. But that fact does nothing for the workers going without health care and fair pay.

And it’s not just large corporations that find themselves embroiled in scandal — some high-profile labor cases have involved small businesses exploiting and mistreating immigrant workers. In 2012, Flaum Appetizing, a food distributor in Brooklyn, New York, paid a $577,000 settlement to 20 former employees, mostly Mexican immigrants, for withheld compensation. Workers were denied overtime for work weeks as long as 80 hours, and also endured discrimination and verbal abuse, including anti-immigrant comments, from senior management. From 2002 to 2003, there were a total of 1,441 lawsuits against small businesses, with the most common reason being civil rights (15.7% of all cases).

In his August remarks, Pence declared that every member of the NFIB “has a story that springs straight out of the American dream.” But this dream — that the U.S. is a fundamentally fair meritocracy in which anyone can succeed through hard work and determination — is not reflected in small business demographics. In fact, 2013 data from the Small Business Administration show the same racial and class divides prevalent in all sectors of society. People of color are far more likely to be employees than owners, and owners’ education levels are comparatively high — 39.2% have a Bachelor’s degree or higher, compared to 29.2% of their employees and 31% nationwide. Employees are also more likely than owners to have a high school degree or less. The same SBA report notes that the numbers of female and, especially, Hispanic business owners have increased over the years; even so, the idea of the small business as the embodiment of the American dream — at least, for anyone not already highly privileged — simply isn’t supported by the available data.

Yet still, the image persists — and so does the centering of small businesses in debates over worker rights. Not only are small businesses used as arguments against regulation, opponents of a $15 minimum wage often invoke the plight of small business owners as well. The Faces of 15 campaign, launched this year by the right-leaning think tank The Employment Policies Institute, profiles small business owners who have been forced to shut down, allegedly due to minimum wage increases. In short videos set to melancholy music, with frequent cuts to locked front doors and empty shelves, small business owners share their stories, often stating that, as much as they would like to pay their employees more, they simply aren’t able to. In some videos, former employees mourn the loss of their jobs. Notably, it is rarely just minimum wage increases that force closure; numerous owners refer to such increases as “the straw that broke the camel’s back.” But Faces of 15 never addresses the other straws.

These concerns are, of course, legitimate — but so are the rights and livelihoods of workers. In these efforts to not only humanize, but glorify the small business owner, workers often disappear.

I corresponded with several small business employees about the labor abuses they have experienced. All asked that their last names be withheld, due primarily to fear of retaliation from their employers and people in their communities. While their experiences vary, all have faced obstacles in reporting violations and advocating for their rights, due in part to the image of the noble, well-meaning small business owner.

When she was 16, Emilee started working at a store that sold food and camping supplies in a state park and employed eight students (high school and college) each summer. For most, including Emilee, this was their first job. It was, she wrote via email, “a good situation compared to other prospects,” as the work was fairly easy and employees had significant latitude and free time. Yet Emilee also describes a toxic environment made possible by the exploitation of youthful naiveté and the manager’s community standing.

Basic cleaning and safety standards weren’t met — according to Emilee, “It was a running ‘joke’ that if the food safety inspector ever actually came out we’d all be out of a job in a heartbeat.” Employees received no breaks, no overtime, and had to underestimate total work time when clocking out. Sexual harassment was a pervasive problem: “The boss would rub the female employees’ shoulders, hug them frequently, [and] kiss them on their heads,” she says. When the girls, most of whom were underage, complained, the boss argued that “he knew most of the girls growing up so it couldn’t be inappropriate because the relationship was like a father/daughter, or so the claim went.”

Since there were no other supervisors and no HR department to field complaints, pursuing grievances would have required filing a lawsuit, which none of the young employees were empowered to do. Because the community was small — approximately 4,500 people — and the manager so well-respected, even disclosing their frustrations to others could result in pushback from people in the town and difficulty finding future employment. With regard to the sexual harassment, the female employees worried about being dismissed as lying attention-seekers: “It was young, underage girls against a married man with children who was also a revered community member.” That the manager was a teacher who had taught some of the employees in the past made it even harder for them to report infractions. Emilee says the boss “saw himself as a father figure to many of his employees […] and the converse was also true. Many of his employees felt a kinship to him.” Even those who didn’t feel this way “had a great deal of ambivalence about doing anything that might cast him in a bad light.”

If they had done so, they would have had to contend with a lack of community support. Emilee notes that people in small towns not only “know everyone’s business,” but that “everyone has an opinion — usually a very strong one — about everyone else’s business,” which can “concretize in behavior that can ultimately harm the complainants.” Thus, Emilee worried, “Would I be shut out from other jobs because public perception tends to favor men in situations of assault while framing women as liars? Would I even want to work in the community anymore because of the oppressive environment?” For her and many of her coworkers, she concludes, “it was a deeply unsettling, frustrating entrée into employment.”


(Samantha Yonger Cremean writes for The Establishment … where this piece was first posted.)