Will the Real Voice of Small Business Please Stand Up?

Small businesses and local chambers are distancing themselves from the U.S. Chamber of Commerce’s politics.
Local Business, Photo by Terence Faircloth

By the time the polls close, the U. S. Chamber of Commerce will have spent an estimated $75 million on television ads and other "voter education" efforts aimed at defeating Democrats and giving Republicans control of the House and Senate. It's a record-setting expenditure: more than double what the Chamber spent in 2008 and more than any non-candidate has ever spent on an election.

The Chamber, which describes itself as "the voice of business," insists that its political activities serve the interests of American business in the broadest sense. The group claims to represent 3 million businesses and says that 96 percent of these are small, defined as having fewer than 100 employees. That's an impressive figure—one that the Chamber invariably touts in press releases and testimony, and relies on to lend considerable weight and legitimacy to its lobbying on Capitol Hill.

But it is a spurious claim. The Chamber arrives at this 3-million figure by counting all of the businesses that are members of state and local chambers. These local groups, however, are independent organizations. Many pay a few hundreds dollars a year to affiliate with the U. S. Chamber in order to take advantage of discounts and other programs. But they have no say over the national group's political activities, its lobbying or endorsements—and many, we are now learning, in fact disagree with its views.

The U. S. Chamber's actual membership is only about 300,000 businesses. And while small businesses are a prominent part of its public image, the Chamber's boardroom is dominated by large corporations. Its 125-member board includes representatives of just two local chambers and only a handful of small businesses. The rest comprise a veritable who's who of the country's most powerful corporations: Pfizer, Alcoa, JP Morgan Chase, and so on.

As skewed as its board is, the Chamber's budget is even more so. In 2008, one-third of the $147 million the group raised came from just 19 companies. (Exactly which companies is unknown. While U. S. law requires the Chamber to list amounts given on its annual tax return, it is not obligated to disclose their names.)

An independent poll by American Express found that small business owners more or less mirror the population: 32 percent are registered as Democrats, 33 percent as Republicans, and the rest independent.

The U. S. Chamber is not the "voice of business." It is the voice of a few giant corporations, which use the Chamber to push their political agenda, all the while cloaking their self-interest behind an image of millions of small businesses.

The Chamber's real allegiance is obvious in its lobbying. Among its top priorities this year, the Chamber spent millions lobbying to weaken the health care bill and has now filed suit to block the law, even though 4 million small businesses stand to gain a sizable tax credit to offset the cost of providing health insurance to their employees. The Chamber's other top issue was the financial reform bill. There it did the bidding of big banks, whose recklessness has sunk countless small businesses and which, even now, continue to strangle the supply of credit on which entrepreneurs depend.

Over 90 percent of the television ads the Chamber ran during this election season attacked Democratic candidates and praised Republicans. The Chamber insists that its support for the GOP simply reflects the views of small business owners, who are naturally conservative and share with their larger rivals a hostility toward government.

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But an independent poll by American Express found that small business owners more or less mirror the population: 32 percent are registered as Democrats, 33 percent as Republicans, and the rest independent. I doubt that most see eliminating government as being in their self-interest. After all, government is essential to constraining the predatory power of bigness to ensure real competition.

Fortunately, the U. S. Chamber's long-held monopoly on speaking for American business may at long last be coming to an end. A growing number of small business owners are beginning to revolt, pulling back the curtain to reveal that the Chamber, like the Wizard of Oz, is not what it purports to be.

Two months ago, in a commentary for Business Week, I noted that a few local chambers in cities like San Antonio and New York were distancing themselves from the national Chamber. In the weeks since, that trickle of defections has grown into a stampede as local chambers in New Hampshire, Pennsylvania, Connecticut and other states have disavowed the political attack ads that the U. S. Chamber has been broadcasting in their communities and publicly declared their independence from the group.

Meanwhile, newer chambers, like the South Carolina Small Business Chamber of Commerce, which has 8,000 members, have not only declined to affiliate with the national group but have been among its most vocal critics. "They get the majority of their funding from big businesses. That's who drives their decisions," explains Executive Director Frank Knapp, noting that, unlike the U. S. Chamber, his group supported the health care bill and financial reform, and favors legislation to curb global warming.

Perhaps most encouraging of all has been the explosive growth of Independent Business Alliances and Local First groups, which are now active in over 130 cities and count more than 35,000 locally owned, independent businesses as members. These organizations are working to rebuild local economic systems in food, energy, retail and other sectors, and to make "locally owned" and "locally produced" something people seek out when they make purchasing decisions.

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As they mature, they are also becoming increasingly outspoken on public policy issues, sometimes even going head-to-head with the Chamber. "They are on the other side of the room every time we testify," explained Vicki Pozzebon, executive director of the Santa Fe Independent Business & Community Alliance, which is fighting to close a state tax loophole that benefits big corporations.

"The Chamber never takes the small business perspective. They are on a totally different track on almost all of issues that we care about," says Betsy Burton, owner of an independent bookstore in Salt Lake City and co-founder of Local First Utah, which has grown to a membership of over 3,000 local businesses and is working to change the direction of local and state economic development policy.

None of these upstarts have anything like the resources of the U. S. Chamber, but like scrappy startups in any industry they're growing fast by fulfilling an unmet need: providing a real voice for small business.


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