Businesses with less than 200 employees should not be classified as small businesses, unless there is some economy of scale for classifing them that way.
Tom
JessEcoh at cs.com wrote:
> doug --
>
> i read your "small is not beautiful" essay previously in an issue of *the
> baffler*, and was intrigued, but took issue with a lot of its conclusions.
> with some modifications, i still take issue with them...
>
> In a message dated 9/27/00 2:19:07 PM Central Daylight Time,
> dhenwood at panix.com writes:
>
> > Small business creates jobs, yes, but it also destroys them in large
> > numbers, since small firms go under so frequently.
>
> perhaps this is the case at present, but it needn't necessarily be. from
> some old notes of mine:
>
> SHARE (Self Help Association for a Regional Economy):
> local nonprofit corporation to encourage small
> businesses producing necessary goods and services
> for the region (already used in Berkshires,
> Massachusetts), which works in conjunction with a
> local bank. Members open a SHARE Joint Account
> with bank. Small interest received from account, but
> small loans can be given at less interest. Person
> receiving loan must collect lots of references from
> community, and show that proposed business will
> serve community well.
> SHARE
> PO Box 125
> Great Barrington, MA 01230
> CELT: Community Enterprise Loans Trust (New
> Zealand), a charitable trust to promote and support
> small businesses and co-ops. Provides advice, runs
> training sessions, gives out loans. Funded by
> subscriptions from public, donations, and
> government. Borrowers must be willing to work
> closely and regularly with CELT during loan (85% of
> small businesses normally fail within the first 2
> years; CELT businesses, funded by credit union and
> supported by local community, have a failure rate of
> less than 20%).
> CELT
> PO Box 6855
> Auckland, New Zealand
>
> the examples of the SHARE and CELT systems suggest to me an alternative
> model for "economic development" which is socially responsible (regulated by
> locally-controlled, democratic institutions which are accountable to the
> community) and productive (even by capitalist standards). if the statistics
> i jotted down are to be believed (they come from bill mollison's intro text
> on permaculture), such institutions would help small businesses to provide
> more stable and secure employment... and in the case of CELT, they also serve
> to promote the growth of cooperative, worker-owned and -controlled
> businesses, which are less often "nasty places to work" than their
> conventional counterparts.
>
> > What about job quality? Let's start with pay.
>
> start with pay, by all means, but don't finish there. what i mean is that
> you do well to address the overstated claims made for small businesses by
> conservatives touting a mythology of entrepeneurial capitalism, and an
> attention to blunt statistical realities like pay scales helps you to do this
> -- but that you seem not to engage some of the claims made by leftists on
> behalf of certain kinds of small business, which are more qualitative than
> quantitative claims. what i do hear folks on the left saying with some
> frequency -- and i agree -- is that living (and working) in a commercial
> environment solely composed of big chain stores sucks. the growth of the
> malls and the blighting of the commercial streets doesn't just affect
> peoples' incomes, it affects the landscape, and it changes the sort of
> experiences we have on a daily basis. what happens when more and more of our
> lives takes place in the private space of malls, and less and less in the
> public space of mixed commercial/residential streets? this is the way things
> are going, and it doesn't bode well for any projects of social transformation
> -- political movements gather in streets, but they don't gather in malls, or
> when they do they get thrown out with no legal fuss...
>
> > A study by the U.S.
> > Bureau of Labor Statistics (BLS) for 1995 showed little variation in
> > pay for professionals and managers by establishment size, with small
> > operations (those with fewer than 500 workers) paying 1% below the
> > national average, and larger ones (1,000 workers or more) paying 2 to
> > 3% above average.
> >
> > At finer levels of occupational classification, the differences were
> > occasionally a bit wider, but not profoundly so. Differentials widen,
> > though, as you move down the status hierarchy. Data entry clerks in
> > small establishments earned 7% below the national average, while
> > those in large firms earned 20% above. Gaps for janitors were wider,
> > and those for labourers were wider still.
>
> and yet clearly some "big" employers provide crappy pay, e.g. wal-mart,
> which is the beast that leftist supporters of "small business" typically have
> in mind. i think left-wing types are generally thinking about the threat
> posed by big-box stores like wal-mart to the retail environments of cities,
> to family-owned storefronts, that sort of thing, rather than some heroic
> image of the individualistic entrepeneur riding out on his horse to enlarge
> the GNP. it's demoralizing to watch a little mom & pop gardening/hardware
> store get plowed over to build an 80-acre strip mall anchored by a "sam's
> club." even people with few radical or even liberal instincts get angry when
> they watch that happen. suburbanites have been known to turn that anger into
> organization and action when they hear that (yet again) their local
> government has dished out subsidies to the big-box developers to help them
> wipe out whatever's left of the local small business storefronts. in some
> cases, they have been led to make critiques of the ideology and goals of
> "economic development" as practiced by said local government units, and even
> to propose institutional changes in the way decisions about development get
> made...
>
> > As with pay, so with benefits. As of the mid-1990s, just 62% of
> > full-time workers in small independent establishments (what the U.S.
> > BLS calls plants and offices with fewer than 100 employees not owned
> > by a larger entity) were covered by health insurance, compared with
> > 77% of those working in larger operations; 42% of those in the small
> > shops had a retirement plan of any kind, compared with 80% of those
> > in larger ones. And as with pay and benefits, so with worker safety.
>
> here you raise another important point, but rest in the assumption that
> employers are and ought to be responsible for workers' health insurance -- an
> assumption which naturally favors "big" employers, who are more able to bear
> that burden, at least given the way that health insurance is now delivered,
> which is another thing i'd like to take issue with. if health care was
> nationalized, of course, this point would be moot. short of that, it should
> be asked -- are there ways to make health insurance available to small
> business employees at low cost? could communities independently implement
> some sort of fair and appropriate means of getting small business workers
> access to health care, preferably with as little bureaucratic nonsense as
> possible?
>
> > Why does size matter? Here the answers are a bit harder to come by,
> > though there's no shortage of suggestions. It's nicer to work for
> > small firms -- fewer rules, less hierarchy -- so they can get away
> > with paying less (though large firms have lower quit rates than
> > smaller ones). Large firms are more vulnerable to unionization, so
> > they pay more to keep workers happy and organizers away (though the
> > fact that the size effect prevails even among union workers calls
> > this one into question).
>
> another possibility: are there other modes of organizing that would make
> it easier for unions to penetrate small businesses? e.g., where commercial
> streets still exist, how about unionizing the street as a whole, rather than
> by storefront? have a district-wide union capable of responding to grievances
> brought up by workers at the movie theater, the furniture store, the music
> shop, the bar, the video rental, the restaurant?
>
> > Small firms have less market power, so profit margins are thinner and
> > they're under greater pressure to keep down costs.
>
> sure -- but this assumes the level of competition that small businesses
> actually face. systems like SHARE and CELT are designed to alter that
> picture, to reduce the pressures of competition enough that the small
> businesses have more room to do things like innovate, give pay increases,
> allow unionization, etc....
>
> > It's harder to
> > supervise a large group of workers, so higher pay is an incentive for
> > them to behave without the boss keeping an eye on them every minute
> > of the workday (though the persistence of the size effect even for
> > workers paid piece rates, where the wage is a direct function of
> > productivity, calls this into question).
>
> this part seems questionable to me. big businesses have a much larger
> budget for surveillance than typical small businesses, don't they? i don't
> just mean cameras, i mean layers and layers of administrators, managers,
> supervisors... it depends on the place, but some small businesses let
> employees get away with murder, so to speak, precisely because they can't
> afford to pay for someone's eyes to be constantly trained on everyone's work.
>
> > What I find more surprising, and disturbing, is the tendency of some
> > folks on the left to embrace small business with some passion. This
> > is particularly true in the unfortunately named anti-globalization
> > movement -- as if internationalization itself were the problem rather
> > than the way it's carried out. Their anti-globalism is connected to a
> > desire to "relocalize" economies, and with them to reorient
> > production on a much smaller scale. These aims seem more motivated by
> > nostalgia -- and, in many cases, by a nostalgia for something that
> > never existed -- than any serious analysis.
>
> this statement is hard to sustain if you read -- for instance -- francis
> moore lappe and joseph collins on the hunger question. their study concludes
> in favor of "relocalizing" food production with a vengeance -- because the
> world hunger problem is not the result of any failure to practice "big"-style
> agricultural development (heavy capital investment, heavy machinery, heavy
> use of chemicals, large land parcels under single ownership, e.g.,
> agribusiness). on the contrary, "big" agriculture has led to the absurd
> situation in which massive food production outpaces actual food needs and yet
> people starve -- because they have no access to the food being produced.
> "relocalizing" the food economy means establishing local democratic control
> over food production (and distribution) resources -- in their words,
> reorganizing for "food self-reliance." see their website at www.foodfirst.org
> .
>
> > Larger firms are also far more productive than smaller ones.
> > Small-is-beautiful advocates rarely tell us how tiny enterprises
> > would produce locomotives, computers or telephones; maybe they'd
> > prefer to do away with these things and revive a hunter-gatherer
> > society. But if that's what they intend to do they should tell us.
>
> here you're lumping lots of issues together, so that it's hard to tell how
> to reply, but overall this bit doesn't make sense. to defend small
> businesses against bloated chain stores is hardly to take a luddite position.
> as for the sorts of large-scale technological structures you list off (train
> lines, computer networks, phone service), i'm not sure that anyone on the
> left or right is suggesting that small businesses take these over. my
> preference would be to reevaluate their use and socialize them -- but we
> can't speak of such a sweeping transformation in the limited context of this
> discussion about the fate of small businesses.
> what do you think?
>
> --jesse.