Labor Day is upon us, a time when we are supposed to honor the hard work, dedication, and sacrifice of labor unions around the world. This is also a time when you inevitably come across memes, tweets, Facebook posts, and bumper stickers that will tell you we should thank unions for weekends, eight-hour shifts, and retirement, because without them we’d be toiling in the fields for 16 hours a day all year long until our deaths, much like Boxer from Animal Farm.
Unfortunately, far too many people believe this work of fiction, often titled, The Union Movement: The People Who Brought You the Weekend. It’s a ubiquitous bestseller.
It can be difficult to fault the average person for thinking that unions have fought to make it membership mandatory just to give us overtime pay, two days off every week, and a myriad of other pro-labor benefits. Let’s face it: For 13 years, we were entrenched in government indoctrination centers, places where unions ran wild and molded the minds of future generations that would regurgitate this myth to their generational successors.
But if it were not for unions, then who do we thank for the weekend, the 9-5 shift, and paid leave?
That’s easy: Market forces.
Thank Markets, Not Unions
Contrary to union propaganda, sick leave, lunchbreaks, and vacations are all capitalist inventions.
Because private capital investment enabled the increase in the marginal productivity of labor – a measurement of the physical increase in output of a company or economy – less labor was needed to produce the same output.
With a growing talent pool and a booming economy, there was more competition for labor. To attract the best workers, employers had to compete with each other, usually by offering employees better pay, shorter hours, and many other benefits. If your company failed to extend the same perks to your workforce, then market forces would intervene, leaving you short-staffed and uncompetitive.
Employee safety was another capitalist invention. It can be expensive to have a workplace accident: You may need to provide a danger wage premium, spend money to retrain new employees, or shut down part of the day to take care of the injured worker. How did businesses avoid these mishaps? Companies instituted lunch breaks, made workplace investments, or hired skilled workers.
Heck, despite child labor being at the forefront of Charles Dickens’s view of a market economy, capitalism helped dismantle the practice. It is important to point out that many children went to work to ensure the survival of their family – this remains prevalent in third-world countries. However, thanks to immense capital accumulation, child labor was all but eradicated and families could afford to send their kids to school. Also, union-supported legislation to eliminate child labor came after the numbers already showed a downward trend; plus, unions opposed child labor only because it competed with their workers.
Why did all this happen? It certainly wasn’t because capitalists were benevolent and munificent beings who wanted to help Tiny Tim or Oliver Twist out of the goodness of their hearts. It is because capitalists have one objective in mind: Profits.
To record a profit, businesses need to perform a few tasks: Offer the consumer a product or a service they demand at a competitive price, keep production costs low, hire a talented labor force, and retain workers to maintain productivity levels. This formula, not unions, afforded today’s generation of laborers stupendous working conditions.
Better Living Standards
Most critics of unions will contend that unions once served a purpose. Don’t tell that to the late great Henry Hazlitt, who wrote in 1971:
“The net overall effect of unions and of union policy has been to exclude non-union members, to drive them into less attractive and lower-paid jobs, to distort the structure and balance of production, to increase inflation, to reduce productivity, to discourage new investment, to retard capital formation, and hence to reduce the total production for all of us and the total real wages of the whole body of workers below what it would otherwise have been. It is altogether probable that even the highest real wages now received by members of strong unions are lower than such wages would have been if the unions and their historic policies had never existed.”
The pro-union crowd often looks back and points to a moment in time when things were better for workers, typically during the era of Henry Ford, the man who voluntarily offered 40-hour work weeks and a so-called living wage without union coercion.
But, objectively speaking, there is no better time in history than the present.
Today will always be an improvement on yesterday – well, except for music, motion pictures, and literature, but that’s another conversation for a different day.
Living standards and working conditions have never been better than they are right now. We have more leisure time than ever before, wage rates are at record highs, international trade has enhanced our purchasing power, and global poverty levels are at all-time lows. Unions like to take credit for these advancements, but it is entrepreneurship, private capital investment, and voluntary associations that have improved our standard of living.
On Labor Day, you should certainly enjoy your paid day off – you’ve earned it. But don’t be fooled into believing that the unions are the sole cause of your weekends and better compensation. Next year, instead of Labor Day, let’s have something called Capital Day, a time to pay tribute to the free-enterprise system and how this marvel has contributed to 200-plus years of human progress.
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