Friday, September 01, 2006

Big Labor in Small Companies

As The Street steps away from the trading desk for the long week-end, it is appropriate to remember that the holiday is a celebration of labor. Since small business employs about 50% of the U.S. private sector workforce and is estimated by SCORE to have generated as much as 75% of the new jobs over the last ten years, it is clear that small companies are big in labor.

The
U.S. Department of Labor is a good resource for labor data. Their use of a small green dinosaur as an icon on their web site is interesting, if not a little disturbing. Is there a message for labor in that reference to extinction?

It is true that U.S. labor has gone through some tumultuous times. In September 1875, for example, Irish miners, called Molly Maguires, were using quite violent tactics to get better working conditions and more humane work schedules in Pennsylvania mines. Mine operators were using bribes to get around the few regulations that were in place at the time. The fight ended with a murder trial.

Labor issues in the U.S. today fail to spark such passions. An increase in the
federal minimum wage is among the most controversial labor issues in play. However, the discussion so far has been limited to the halls of Congress, where it seems legislators have not even mustered a loud argument. (The Economic Policy Institute provides a good summation of the proposal.) The debate over immigration is a labor issue as well as a matter of national security, but the most “outrageous” behavior so far has been displays of flag waving nationalism.

It is just as well. U.S. workers need the rest. According to a study by the National Sleep Foundation, the average employed American works a 46-hours work week and as many as 38% of the respondents worked more than 50 hours per week. Contrast this to the 37.5 hour work week in Germany. Ten years ago the Chinese capped their work week at 49 hours - 40 hours regular and 9 hours “voluntary” overtime - after they discovered that workers were punching in as many as 105 hour per week.


While maybe a bit dry for the last week-end at the beach, a recent publication of Emile Durkheim’s The Division of Labor in Society provides some solid insight into why the Chinese need a law to keep them from working long hours while the Germans have trouble keeping people at work. Durkheim’s work was first published in the early 1900s but with an introduction by Lewis Closer, the principal messages have a contemporary ring. Durkhiem also had some insight into the role of small companies in creating employment.

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