Labor Day-1

Labor Day has become a last hoorah before the end of summer. Very little in the current celebration harkens back to the rocky origins – or the current uncertainty – surrounding labor in America today.

The holiday was conceived in 1887 to honor the American labor movement, including organized labor and the contributions workers have made to the growth and economic strength of the nation.

Industry at the time was undergoing tremendous change. The largely agricultural underpinning of the country was changing as manufacturing jobs became available and coveted. Factories were making improvements by harnessing steam power, allowing the inexpensive and affordable mass-production of goods. As a result, industries became enormously powerful, but often through the abuse of the very people who made the profit possible.

Factory owners thought nothing of paying their workers in script, requiring them to live in company housing and purchase necessities from company stores, sometimes keeping them in quasi-feudal conditions.

During economic boom times, this strategy, though distasteful by modern standards, was tolerated. But when economic depressions hit, worker situations deteriorated.

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The economic downturn of the 1890s was just such an event. Many factory workers had no recourse and no voice in their employment. It proved to be the ideal breeding ground for the ideas of a man named Karl Marx, who wrote about class struggles and the community redistribution of wealth.

Workers went on strike, and rioting and boycotts spread among disaffected workers. Alarmed at the growing violence, President Grover Cleveland attempted to improve his re-election chances by declaring a “Labor Day” holiday to appease the workers.

Cleveland deliberately chose the first Monday in September to distinguish the holiday from two unfortunate events that fell on May 1: the Communist “International Workers Day,” and the anniversary of the Chicago Haymarket Riot of 1886, during which rioters blew up a pipe bomb that killed seven policemen and injured 60 others.

Cleveland lost the election, but Labor Day continued as a national holiday and highlighted the situation of working Americans.

This was the era of the rise of unions, which advocated for minimum wages, safer working conditions and additional benefits for workers, as well as an eight-hour work day and 40-hour work week.

The success and productivity of America’s factories became the focus of international admiration, so much so that America assisted Japan and Germany with building factories based upon similar models after World War II.

No one could foresee the unintended consequences of that assistance.

As it turned out, foreign factories were able to produce goods less expensively than American factories, due in part to union influences in America. Spring-boarding off the success of decent working conditions and pay for workers, unions became more and more demanding. American factories faced increased taxes, burdensome regulations, higher payroll costs and environmental restrictions – all obstacles that foreign factories faced rarely or not at all.

There was also the disagreeable reality of “crony capitalism” – defined by historian Bill Federer as when “politicians give subsidies and contracts and relax regulations on companies supporting their re-elections and agendas, but companies not supporting them are left at a financial disadvantage and have to go out of business or out of the country.”

As factories faced increasingly hostile circumstances from both the government and their own workers, outsourcing to foreign factories became a more and more attractive option. In turn, foreign companies – facing an enormous and profitable American market – lobbied to keep tariffs low.

Over the decades, union membership has been dropping, from a high of 50 percent to less than 12 percent today. As a result, Federer notes “many unions have focused their efforts on increasing membership by recruiting from other occupations, such as government, education, medical professionals, service industry, and retail” rather than addressing the need to make it more economically advantageous to bring jobs back to America.

Aided by the so-called “social justice warriors,” the future of American manufacturing jobs remains grim.

Now headlines tell a bleak story about the state of labor in America today:

In light of this short history, where does Labor Day stand today? What is the future of labor, which was once the backbone of American prosperity?

“The labor movement in the United States has shifted fundamentally from focusing on workers’ issues to special interest issues,” Jon Riches, director of national litigation and general counsel with the Goldwater Institute, told WND. “This change is a direct result of the decline in private-sector unions, where many workers concluded that unionization was detrimental to their interests, with the corresponding increase in public-sector unions, where employees are often forced to fund union activities that they may actually oppose.”

Mark Thornton, senior fellow with Mises Institute, agrees.

“I would say that the labor movement is dying,” he told WND. “Union workers have greatly diminished in the productive sectors, but significantly increased in the government sectors. Global competition is a big reason for this, because you just cannot pay above market and above productivity levels and make money. Jobs have gone to right-to-work states and to other nations. Unions have killed jobs, and even a state like Michigan has become a right-to-work state. I would predict that more Northeastern and Midwestern states will flip from union to right-to-work in the coming years.”

Labor Day Parade in New York's Union Square, 1882

Labor Day Parade in New York’s Union Square, 1882

Thornton added, “Public labor unions are a huge drain on the taxpayer, and that burden has never been heavier than it is today. We have far too many public employees, and that is especially so with highly paid education ‘administrators.’ They all make far more than their private-sector counterparts. Their work burden is lower. Their job security is significantly higher, and their benefits and retirements far surpass their private sector counterparts. I have been on both sides several times, and I would describe the public sector as ‘cush’ and the private sector as ‘push.'”

Federer contends that the political agendas of higher corporate taxes, higher wages and burdensome regulations produce an anti-business climate. Some have postulated this is a strategy to intentionally raise unemployment so more people will sign up for welfare benefits and thus be more inclined to vote for candidates promising to continue those benefits.

Riches noted, “The growth of public-sector unions and collective bargaining has transferred a significant amount of government decision-making authority from elected officials to union bosses. Because public employment contracts are binding on the government entity that signs them, major policies contained in them have the force of law. At the same time, public-sector unions are very politically active. As a result, they have, in a sense, the ability to elect their own bosses. The consequence of this relationship between elected officials and the public unions that support them is significant influence by the unions over government policy.”

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The nature of labor itself has changed as well.

“In post-World War II America, you got a job and stayed with the company for life,” Thornton said. “You retired with a pension and Social Security, and then you died shortly thereafter. Today, the workplace is much more fluid. People move around the job market, around the country and around the world.

“People continue to learn and earn more, and this continues to be the case even though we are in the era of the Federal Reserve’s world of boom and bust. Tremendous burden of government budgets, taxes and debt has kept the American worker from getting ahead, and in many cases resulted in a reduced standard of living or trapped them on government assistance programs.”

Unchecked illegal immigration has brought the issue of labor to the national forefront. Thornton notes that illegal immigration does have benefits for the American worker, but it also has costs.

“The primary benefit of illegal immigration is that such immigrants tend to take jobs and reduce the cost of products,” he said. ‘The primary areas are agriculture, home construction, landscaping installation and maintenance, and in hospitality areas such as hotel maids and kitchen help. This means our homes/residences/hotels are less expensive and less expensive to maintain, food and restaurant food is cheaper than it otherwise would be and we have many more choices.”

He notes that labor moves to meet demands, “whether we try to stop it or not. Plus illegals tend to take jobs that Americans would not like, or at wages that they would refuse. Frankly, today’s American worker simply could not work as hard as these immigrants.”

When manufacturing jobs go overseas, Thornton argues it has multiple benefits for American workers.

“First, as companies move manufacturing jobs overseas, they don’t necessarily move the entire company overseas. Some of the best-paying jobs stay in the U.S., or move with the manufacturing overseas, i.e. Americans relocate with their jobs. This allows companies to remain competitive. In other words, if we prevented the jobs from leaving, then either the company would go bankrupt or move the entire operation overseas.

“Second, when manufacturing is moved overseas because of a reduction in protectionism and tariffs, the new jobs that emerge locally tend to be better jobs, as you would expect from economic theory. Where I live, the economy took a big hit from NAFTA. Most manufacturing jobs in the textile industry were exported, but the jobs that came to the region were higher paying and more desirable, like in healthcare, finance, automobiles, chemical and electronics.

“Third, American workers benefit from the export of jobs by the reduction in the prices of all the goods we buy. If you adjust for the government depreciation of the U.S. dollar, everything we buy today is relatively less expensive, including TVs, phones, cars, appliances, clothing – everything that is subject to international trade. The only exceptions are things like housing, and things where the government is heavily involved like education and health care, which are relatively much more expensive. That could change in the future.”

Labor Day remains a recognition of the changing face of America’s workforce.

In a twist of irony, many have noted that government workers have the day off, but many employed in the private sector – notably retail – don’t only work on Labor Day, they work longer hours in general.

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