What is labor day? And why is it a national holiday?

Labor Day is our national holiday to celebrate the contribution that regular working people make to our country and our economy. It is also a holiday that celebrates the way We, the People democracy can deliver prosperity to many, instead of great wealth to just a few — when it works. Strong unions help make it work.

Systems That Enforce “More Stuff For A Few”

History teaches of conflict between systems set up when a few people gain power and use that power to get more stuff for themselves at the expense of the rest, and the broad masses of regular people organizing themselves to overcome those power structures that get set up to enforce these “more stuff for a few” systems.

Power structures enforcing “more stuff for a few” often come with elaborate justifications to keep people from rising up and taking back power for the people. Royalty is a system where “God said my family should be in charge, so shut up and keep quiet.” The Nazis said they should be in charge because they were the übermensch, so shut up and keep quiet. Russia had the nomenklatura, so shut up and keep quiet. Today we have “job creators,” who get most of the stuff because they already have most of the stuff, so shut up and keep quiet.

“We, the People”

This country was formed when We, the People fought that battle and won. We overthrew a system that funneled the stuff to a few at the top, and enshrined in our Constitution a declaration we want this country to forever be run for the benefit of all of us, not just a few of us.

We fought to build and maintain this democratic society so that We, the People could share the benefits.

Prosperity Is The Fruit Of Democracy

Democracy offers protections. It lets us demand good wages and safety and environmental protections. We, the People got a good share of the economic pie because those are the things people say they want when they have a say. Because Americans had a say we built up a country with good schools, good infrastructure, good courts, and we made rules that said workers had to be safe, get a minimum wage, overtime, weekends… we protected the environment, we set up Social Security and Medicare and unemployment benefits to help us through hard times. We took care of each other. This made us prosperous. A share of the prosperity for the 99% was the fruit of democracy.

Unions Enforce Democracy

But it was unions that made this possible. People on their own just do not have the ability to stand up against concentrated wealth and power, no matter how right their cause. Even with our Constitution, a few were still able to use wealth and power to grab more for themselves, keeping regular people from obtaining a fair share of the pie. So people organized themselves into labor unions, and as a united group said you give us a fair share or we stop working. This was effective in industries that depended on the labor to keep production moving.

Before unions came along to enforce democracy we didn’t get the share of the prosperity that democracy promised, after unions came along we did. Before unions we had 12 (or more)-hour workdays, seven days a week. Before unions we had low pay. Before unions we had no benefits. Before unions we certainly didn’t get vacations. Before unions we could be fired for no reason. Before unions a wealthy few were able use their wealth to pay off influence legislators and keep the rules bent in their favor. Unions organized and forced changes that brought a larger share of the pie to We, the People.

Unions enforce the concept of democracy. Yes, We, the People were supposed to be in charge. Yes, the economy was supposed to be for our benefit. Why else would We, the People allow corporations to exist in the first place? But it was unions that gave people the power to enforce that idea. People organized together and demanded that We, the People get a share of the pie, and the results grew the pie. Unions are the reason we have had a middle class at all.

The Corporate/Conservative Attack On Labor

But we let the protections slip, and allowed money to have too much influence over our political system — so of course those with money used that influence to bend the system their way. Then we allowed companies to cross borders to escape the protections democracy offers — to non-democratic countries like China where workers have few rights, where pay is low, environmental protections practically non-existent. Companies locating manufacturing in places like have huge cost advantages over companies located in democracies that respect and protect the rights of citizens. This movement of manufacturing away from the borders of democracy weakened our unions, and shifted the balance of power away from We, the People.

There has been a massive corporate/conservative attack on labor and democracy over the last 3-4 decades. Billions of dollars have gone into a propaganda machine that tells us that labor unions are bad, that “labor bosses” just want things for themselves, that “union thugs” force businesses out of business, etc.

The successful attack on labor has contributed directly to this economy of massive inequality where workers don’t share in the product of the productivity they generate.

Lawrence Mishel, at the Center for Economic and Policy Research, writes in Unions, inequality, and faltering middle-class wages,

Between 1973 and 2011, the median worker’s real hourly compensation (which includes wages and benefits) rose just 10.7 percent. Most of this growth occurred in the late 1990s wage boom, and once the boom subsided by 2002 and 2003, real wages and compen­sation stagnated for most workers–college graduates and high school graduates alike. This has made the last decade a “lost decade” for wage growth.

… A major factor driving these trends has been the ongoing erosion of unionization and the declining bargaining power of unions, along with the weakened ability of unions to set norms or labor standards that raise the wages of comparable nonunion workers.

… the forthcoming The State of Working America, 12th Edition presents a detailed analysis of the impact of unionization on wages and benefits and on wage inequality. Key findings include:

  • The union wage premium–the percentage-higher wage earned by those covered by a collective bargain­ing contract–is 13.6 percent over­all (17.3 percent for men and 9.1 percent for women).
  • Unionized workers are 28.2 percent more likely to be covered by employer-provided health insurance and 53.9 percent more likely to have employer-provided pensions.
  • From 1973 to 2011, the share of the workforce represented by unions declined from 26.7 percent to 13.1 percent.
  • The decline of unions has affected middle-wage men more than any other group and explains about three-fourths of the expanded wage gap between white- and blue-collar men and over a fifth of the expanded wage gap between high school- and college-edu­cated men from 1978 to 2011.
  • An expanded analysis that includes the direct and norm-setting impact of unions shows that deunionization can explain about a third of the entire growth of wage inequality among men and around a fifth of the growth among women from 1973 to 2007.

The Social Contract

Labor Day is about honoring the social contract.

Hedrick Smith writes in, When Capitalists Cared in the NY Times,

From 1948 to 1973, the productivity of all nonfarm workers nearly doubled, as did average hourly compensation. But things changed dramatically starting in the late 1970s. Although productivity increased by 80.1 percent from 1973 to 2011, average wages rose only 4.2 percent and hourly compensation (wages plus benefits) rose only 10 percent over that time, according to government data analyzed by the Economic Policy Institute.

At the same time, corporate profits were booming. In 2006, the year before the Great Recession began, corporate profits garnered the largest share of national income since 1942, while the share going to wages and salaries sank to the lowest level since 1929. In the recession’s aftermath, corporate profits have bounced back while middle-class incomes have stagnated.

[. . .] In Germany, still a manufacturing and export powerhouse, average hourly pay has risen five times faster since 1985 than in the United States. The secret of Germany’s success, says Klaus Kleinfeld, who ran the German electrical giant Siemens before taking over the American aluminum company Alcoa in 2008, is “the social contract: the willingness of business, labor and political leaders to put aside some of their differences and make agreements in the national interests.”

Unions enforce democracy. Our system is not perfect, it does not by itself sufficiently protect our We, the People system from the constant efforts of some people to gain power – so they can get all the stuff for themselves at the expense of everyone else. It is a fact of human nature proven by history that this happens. Without unions as an added kicker to help us enforce the promise of our We, the People constitution, those who have wealth and power are able to use that wealth and power to take control and grab all the stuff for themselves. We are seeing this happen again, right before our eyes.

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

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About the Author

Dave Johnson

Dave Johnson (Redwood City, CA) is a Fellow at Campaign for America's Future, writing about American manufacturing, trade and economic/industrial policy. He is also a Senior Fellow with Renew California. Dave has more than 20 years of technology industry experience including positions as CEO and VP of marketing. His earlier career included technical positions, including video game design at Atari and Imagic. And he was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.

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