Wal-Mart Court Decision Could Threaten Entrepreneurship

The Supreme Court is considering the case of a Wal-Mart that closed its doors in Jonquiere after the employees formed a union. Workers are outraged that Wal-Mart would choose such a draconian response when they were just exercising their legal rights.

There is an important principle involved here, but it isn’t one the unions think it is.

It is the principle that a person who puts his  money into a business should have the right to run it the way that makes financial sense to him and him alone (or, if he has acquired shareholders, in the way that makes sense to the board and share owners). It doesn’t matter if the entrepreneur is wealthy, or has built a huge and prosperous corporation. The principle is fundamental – it is his investment, and his decision how to manage that investment.

Lots of things can change after a business opens. Corporate or payroll taxes could escalate. Municipal property taxes could skyrocket. Transportation or other input costs could go up. Or labour costs could rise due to unionization.

Any one  of these changing conditions could reduce the profitability of the enterprise. Or maybe not. But it doesn’t matter. It is the investor’s right to decide. Period.

Employees absolutely have the right to unionize if they so choose (although another important question concerns the rights of those employees who would prefer not to unionize. They have few rights and get lots of pressure. In Quebec, the employees don’t even have to vote. If 50% plus one of the employees sign a card, voila, you have a union! Management might not even know it is happening – there is no requirement to tell them either.)

But if they choose to unionize, they take the risk that their decision may cause the entrepreneur – the person who creates the job and issues the paycheques – to decide it no longer makes sense to run the business.

By the way, that entrepreneur should also have the right to decide who works for him. If someone is underperforming, or actively resists the company culture (as there is evidence some of the Wal-Mart employees chose to do), he should have the right to replace that person with an employee who works hard and supports the corporate ethos. To repeat, the entrepreneur is creating the job and issuing the paycheques. This is not community service or social welfare.

Despite saying publicly that the store was struggling financially, there is evidence that Sam Walton closed the Jonquiere store rather than deal with a union. OK, no real argument here. But so what?

Some people don’t like that. So, go open your own store and hire as many unionized workers as you want.

There are reasons to have laws to ensure that employers treat employees with a certain minimum level of respect and compensation. We have minimum wages. Maximum work hours. Regulations about safety and comfort in working conditions. But one law we must never, never have is a law that forces an entrepreneur to keep a business open even when he no longer wants to, no matter what his reasons are.

Believe it or not, the question being considered by the Supreme Court is whether or not the permanent closure of a store is “good and sufficient reason” for terminating its employees. Two lower courts have already decided that a store cannot be forced to stay open against its will. Let us hope the Supreme Court agrees, and resists the temptation to force entrepreneurs to get government permission if they desire to close their business, for any reason.


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