Middle Class and Small Businesses

Small businesses used to be the backbone of the US and the bedrock of the middle class; their reach has been decimated in the crossfire between corporations and labor unions.

In 1978, my 40-year old father, a trained engineer, left everything behind in the Middle East and fled with his family to Glendale.  Because his engineering degree was not recognized in this country, he leased a fried chicken stand in a run-down part of the San Fernando Valley as a means of supporting his family.  He learned the trade and trained a handful of employees to help run the store until he could get a general contractor’s license and bid on construction projects.  He worked both businesses until his retirement 30 years later, and he gave our family a solid footing in the middle class with ambitions (and expectations) for his children to achieve more.

When we set aside government employees (a staggering 15% of the workforce!), small businesses (“mom and pop shops” and medium-sized companies with fewer than 500 employees) employ more people than corporations (44% vs 41% of the workforce).  This is an underestimate because these figures do not count sole proprietor businesses with no employees (e.g. handymen, gardeners, house cleaners, hair stylists, massage therapists, etc).

30 years ago, this difference was more stark: small business employed 48% of the workforce while corporations employed 35%.  The reach of small business has been shrinking for the last 30 years, and this is why the middle class has been shrinking as well.

The Coronavirus pandemic accelerated this change.  Who suffered from the widespread government-mandated shutdowns? Mom-and-pop brick-and-mortar shops were forced to closed while Amazon.com, Target.com, and Walmart.com eagerly took over their market share.  When the Washington Post (owned by Jeff Bezos) constantly reported on Coronavirus crises that persuaded citizens and elected representatives to continue a shutdown, Amazon.com (also owned by Jeff Bezos) profited handsomely.

Today, nearly 60% of the workforce does not work for corporations.

Today, 85% of California workers and nearly 90% of the national workforce are not part of a labor union.¹

So why do corporations and labor union lobbyists exercise outsized influence in Sacramento and Washington???

If any progress is to be made, the influence of corporate and union lobbyists must be minimized. The enactment of a two-term (12-year) limit for senators and a three-term (6-year) limit for representatives would once again give us (the small business owners, independent contractors, and hard-working employees of the middle class) a seat at the table and a fair shake at building our fortunes.

1. https://www.bls.gov/regions/west/news-release/unionmembership_california.htm#:~:text=In%202022%2C%20union%20members%20accounted,of%20Labor%20Statistics%20reported%20today.