While Americans celebrate better working conditions for employees, such as the end of child labor and work off on weekends, a lot of the history behind Labor Day is distorted. Furthermore, the holiday doesn’t do anything to honor and appreciate entrepreneurs and employers(of all business sizes, ranging from start-ups to blue-chip Fortune 500s) – the very people who incur the massive risks and opportunity costs that enable people to even have jobs, and therefore, primary income sources, in the first place.
Let’s start with the historical distortions regarding Labor Day. Labor Day was created in the late 19th century as a result of public anger with unsafe working conditions, mainly in industrial factories that had long work shifts, sometimes over 12 hours per day, and child labor. This was during the latter half of the 19th century. While this author, nor probably anyone else, is advocating for the return of child labor, it must be very certainly understood that child labor was necessary in order to keep families from further poverty and starvation. People were much poorer in those times. Sanitation wasn’t advanced, or hardly even a thing. Furthermore, food supplies and distribution were much lower and less developed, unlike the modern-day counterparts of numerous grocery stores with deep supplies(for now) in nearly every town in the country – although back then, people’s liberty to shop without being molested into wearing an uncomfortable mask of questionable effectiveness against spreading disease was far better respected, despite having far less wealth. What must also be taken into consideration, especially regarding the “unsafe working conditions”, is that the working conditions of those times were an improvement to the economy and jobs that people had prior to the Industrial Revolution, which marked the prevalence of factories and working conditions that angered people to clamor for Labor Day. Prior to the Industrial Revolution, the U.S. was primarily an agrarian economy, people were poorer and had less access to food, and thereby also had lower life expectancies; plus, the population size was smaller.
As David Kelly writes in chapter 3 of A Life of One’s Own: Individual Rights & The Welfare State, many contemporary observers, such as Frederich Engels, claim that the agrarian economy preceding the industrial revolution had a higher standard of living. However, as Kelly explains, claims like the one made by Engels don’t square up with the facts. Before the industrial revolution, the number of people who could survive was strictly limited to the agricultural capacity of available farmland. As Kelley explains, in England, which also experienced a similar Industrial Revolution as the U.S., “the population, which had increased slowly to about 6 million in 1750, exploded to 18 million by 1850. Many of those people made their living in the new factories. They worked soul-numbing hours and lived in squalid, crowded tenements. Their lot was hardly enviable, when judged by the standards of today.” (Kelley 33) However, by the standards of the decades prior to the industrial revolution, the lot of workers was quite enviable, in terms of higher wages and greater supplies of resources as evidenced by the remarkable population growth from the 18th to 19th century. As Nobel peace prize winning economist F.A. Hayek noted, “The proletariat(the working class) which capitalism can be said to have created(good point, how do you have workers without capital investments into enterprises that employ people?) was thus not a proportion of the population which would have existed without it…….; it was an additional population which was enabled to grow. up by the new opportunities for employment which capitalism provided”. As Kelley continues to explain, “During that period, moreover, standards of living did rise. Working people were able to enjoy cotton clothing, sugar, tea, and other amenities made possible by growing production and trade. Over the course of the century from 1750 to 1850, while the population tripled, the standard of living of that vastly greater population had at least doubled” (Kelley 33). It is because of capitalism and the laissez-faire free-enterprise system, where economic liberty is protected, that technological advances were possible in order to facilitate the transition from an agricultural to an industrial economy, and then from an industrial to a more digital one. Economic liberty is defined as the non-interference by the state on the business operations and affairs of employers and employees, so long as nobody’s rights are harmed. Economic liberty also entails the protection of private property of employers and business owners, as well as the protection of employers’ free-will to hire and fire as the employer pleases, and for an employee to accept or reject employment offers as well as to quit from one’s job unmolested by the state.
The free-will of employees is critical. First of all, it must be well understood that jobs are not rights. Nobody can legitimately coerce another to employ him/her, just like nobody can coerce another to work for him/her; BOTH the latter AND the former are forms of slavery. Therefore, labor unions that were advocating for the government to force employers to offer better working conditions had no such rights to coerce employers, and still don’t today. If the conditions were that bad, nobody was stopping those employees from leaving and finding better working conditions, and perhaps regressing to agrarian work, if indeed that was more desirable as guys like Frederich Engels were saying. Of course, the fact that those factory employees didn’t return to pre-industrial labor proves that industrial and factory work, despite the list of things they left to be desired, were the best jobs and economic opportunities at the time.
Furthermore, if it was really possible, or even really known how, in the circumstances of those times to create workplaces with higher wages and quality working conditions, nobody was stopping the workers from figuring out how to create those conditions they desired, rather than calling upon the coercive power of the state to force others to do so. This knowledge only came about a century later, again thanks to the relatively laissez-faire economic environment and capitalism that enabled that steady and gradual socio-economic advancement. If those factory employees during the late 19th century weren’t able to create jobs and companies with higher wages, better working conditions, and all the other demands they had, then how could they expect others to do so? As Tom Woods comments on this podcast, the picket line strikes by the U.S. labor unions, the ones advocating for Labor Day, were more than peaceful protests regarding labor disputes. The picket lines were forms of intimidating prospective workers from working in factories and other places of work with deplorable working conditions. Therefore, those picket strikes were actually harmful to everyone – both workers as well as employers. As Woods also explains, you are free to speak your mind about your reticence to work at any place that has conditions and wages you find unacceptable. However, you do not have a right to forcibly prevent others from seeking and accepting such work at those places that you find too disgusting to accept employment yourself.
Let’s break down the concept of forcing better working conditions using air conditioning(AC) as an example. Back in the 1970s, air conditioning was still an expensive amenity that only the very wealthy few could afford. Therefore, the vast majority of employers and workplaces simply couldn’t afford to install AC. Therefore, if labor unions were to demand employers to install AC for the purpose of forcing safer working conditions, many of those employers would not be able to afford the cost of AC, and would have to layoff current workers and/or avoid hiring new workers. Even if the forced AC installation improved the working conditions, it made it much harder for workers to actually reap the benefits of those better working conditions, plus it also impoverished those workers through layoffs or fewer(or perhaps zero) new hires, thanks to the enormous extra expenses imposed by the labor unions, all at the cost of liberty. The solution would be to remove regulations that add costs and restrictions, like taxes and regulatory codes that are several pages long and therefore very time-consuming and expensive to comply with, to entrepreneurs and employers. Removing such regulations and eliminating such taxes would enable competition to prevail among employers to provide better working conditions.
For example, let’s say Factory A pays $50/hour but has no AC, and so workers, despite getting paid well, have to endure tough, hot, and sweaty conditions. Now, let’s say Factory B only pays $20/hour but offers AC at its workplace. Because of competition among employers, which a laissez-faire system and capitalism maximize, workers now have access to better working conditions, even if at a trade-off in wages. Over time, as new businesses and workplaces enter the market to offer better conditions, each of those employers would then also have to offer higher wages too in order to attract and retain the most desirable employees. Of course, some workers would prefer the higher wage, even in lower quality working environments; this was the case for factory workers avoiding lower-paying agricultural alternatives. But that’s totally okay. Thanks to capitalism, workers have the most choices. Plus, working conditions improve over time this way, which is far better than trying to use government to produce such improvements. This is especially true because the government is full of people that don’t have a clue about how to run or create a profitable business, or even one that is sustainable enough to provide satisfactory and/or ideal working conditions. So, if politicians themselves can’t produce enjoyable working conditions and/or high wage jobs, how then are they qualified or wise enough to forcibly regulate others to do so? Certainly no authority in the U.S. Constitution is granted for U.S. politicians to do any such things.
Even in today’s times, certain jobs with undesirable working conditions, such as coal mines and the jobs featured on Mike Rowe’s Dirty Jobs program, have to pay higher in order to attract workers. If a worker can make $7/hour working at McDonalds in decent working conditions, in order to take the jobs at coal mines and Dirty Jobs positions, those wages have to be higher, much higher, to compensate for the lower quality work environments. This same concept applied to factory work that was at the heart of the anger of workers to push for the things that ended up making Labor Day a federal holiday.
But what about the work off on weekends and shorter work hours that often gets credited to the efforts of the labor unions of the 19th century? That too is wrong. As capital investments were made by entrepreneurs in technologies that could provide the same, if not greater, productivity with fewer labor hours, people could afford to not work on weekends, or as many hours on the weekday. Think about all the inventions in agricultural machinery, such as tractors, irrigation systems, and so forth. Before all those inventions, people had to toil over 10 hours per day in the fields every single day including weekends(which wasn’t even a concept at that time), often times in conditions far more brutal than factories, in order to produce enough food to survive and feed their children. But thanks to the capital investments, the assets promoted by the philosophy of capitalism(notice the common root “capital”), in machinery, people didn’t have to spend as many hours working on the farms, and could eat the same amount, and then eventually more. The same thing applies to factory work. Rather than requiring people to work over 10 hours in undesirable working conditions, machines have been built that have obviated long human labor hours in those tough working conditions, without sacrificing the production of industrial goods that has boosted civilization’s standard of living.
Now let’s turn to the issue of child labor back then. First of all, the U.S, was not behind the rest of the world in abolishing it. In fact, the U.S. was one of the first countries to actually abolish child labor and provide work off on the weekends. Furthermore, as the Industrial Revolution and laissez-faire brought about much greater wealth to parents, they become able to cover all family expenses without child labor, at which point parents could afford to send children to schools instead of factories, although of course schools nowadays are neither too healthy or productive for children – a topic on which a whole other post can be made. Probably the most important thing to realize for every American is, child labor does still exist, even if no longer domestically. The vast majority of consumer, and even industrial, goods are made in countries like China, Vietnam, Honduras, El Salvador, and even North Korea where child labor is not outlawed and the labor of many children goes into the production of the majority of goods purchased and enjoyed by the majority of Americans, both residential and industrial. Many of the children working in factories abroad and other foreign workplaces are slaves, which was never the case at any point in time in America’s history of factory labor. It also cannot be said that child labor at any point in U.S. History, aside from plantation slave labor of black children preceding the U.S. Civil War, was any more brutal than the child-labor in other countries, which are a mixture of destitute third-world and/or hardcore brutal communist regimes, practiced to this very day.
This final section of this post will emphasize why Labor Day should also appreciate and celebrate entrepreneurs and employers at least as much as employees. Entrepreneurs and employers take the massive risks and opportunity costs to invest capital in order to create enterprises. These enterprises in turn are how jobs are created. These newly created jobs enable workers to earn incomes and thereby raise the standard of living for themselves and their families. Without entrepreneurs and employers, employees would have to create jobs on their own. Most people aren’t capable, rich, well-connected, and/or courageous enough to start an enterprise and be self-employed, even if there weren’t all the numerous costly and onerous regulations and taxes that mandate compliance. Plus, most people make more money working for others rather than working for themselves – this is why most people choose to be employees rather than entrepreneurs. Entrepreneurs are constantly under stress to pay back investors at high return rates, take very little to no pay for several years until a business can POTENTIALLY become profitable, and also have to deal with a very litigious society, such as in the United States especially, that constantly puts them in danger of getting into unreasonably expensive, stressful, and unnecessary lawsuits. Of course, if a start-up venture does not become profitable, as is the case with about 90% of start-ups, then the entrepreneur gets absolutely nothing, except of course inappropriate social disgust, despite taking all the risks and massive opportunity costs. Without the risk-taking of entrepreneurs, employment would not be possible, nor would incomes, nor would the production and distribution of goods and services that everyone needs, wants, and depends on to live and boost civilization’s standard of living.
Therefore, let’s please make sure to give our due respect and appreciation for entrepreneurs and employers, in addition to employees, as we currently do by virtue of the Labor Day Holiday. Let’s also make sure to appreciate that despite all the flaws of 19th century industrial factory jobs and workplaces, they were a massive improvement compared to what preceded them, and should therefore also be celebrated, rather than chastised.
Hopefully politicians can also appreciate the points presented in this post and start eliminating taxes, regulations, and other unnecessary and burdensome obstacles to enable new entrepreneurs to enter the market in order to compete in offering higher wages and higher quality working conditions. Facilitating this extra market competition would give an incentive for existing businesses and employers to strongly consider offering higher wages and/or better working conditions too, in order to attract and retain quality employees. Hopefully too, the people start appreciating the concepts presented in this post sufficiently to urge their elected officials to remove all unnecessary and burdensome taxes and regulations that are unjustly imposed on entrepreneurs and other current employers.
Sources
- A Life of One’s Own: Individual Rights and the Welfare State. David Kelley