Rebirth of Reason


Happy Labor Day: We're All Workers!
by Ed Hudgins

When Congress declared Labor Day a national holiday in 1894 it marked not only a celebration by workers but a division of Americans into groups often seen as opposed to one another.
The day grew out of a desire to get governments to force employers to offer certain terms of employment to workers. The first Labor Day parade took place in 1882 in New York and was organized by Peter McGuire who helped found the Federation of Organized Trades and Labor Unions. The "labor" involved were salaried and industrial workers and tradesmen. Not included were employers, owners, investors, managers, professionals and farmers; the latter for the most part owned their own means of production: their farms.
At that time in the economy it seemed to some that Karl Marx might be right, that there were distinct economic classes whose interests were opposed to each others and that politics rather than free markets would be the only equitable way for workers to get their "fair share" and not be exploited by others.
By the mid-1950s about 30 percent of the American workforce was unionized. Today it's more like 12 percent and the largest number are not employed in goods-producing private industries, for example, autos or steel, but are government employees. Yet real wages and purchasing power continue to rise. America is the world's job creation engine. Employment has risen from 99.5 million in 1982 to nearly 134 million today. Unemployment is under 5 percent, compared to over 10 percent for the past decade in the European Community.
Marx, of course, was wrong and the implications of Labor Day were wrong as well. There is not a separate class of individuals called "worker" who are opposed to other economic classes. To begin with, without entrepreneurs, investors, managers and, in general, capitalists, workers would have no factories in which to work or those factories would be as inefficient as those in the Soviet Union and the workers as poor as those under communism. Entrepreneurs, investors, managers and capitalists are all workers.
Further, as the great Austrian School economist Ludwig von Mises pointed out, economic roles are artificial. All so-called "workers" are also investors in the own human capital and managers of their own time. More important today, they are all entrepreneurs.
Both business and job turnover is higher in America than in any other industrialized countries. Few Americans simply get a job right out of high school and stay at it until retirement. Most of us change jobs many times. This is because in our dynamic economy the factors of productive -- including labor -- are being redistributed quickly by entrepreneurs from less productive to more productive uses. This is why the country is so productive and this is why workers can trade their labor for more goods and services than in other countries and have higher living standards. And this is why workers who know what's good for them will stop thinking of themselves only as "workers" and understand that they are also entrepreneurs who should take their lives and careers into their own hands.
So on this Labor Day we're all workers and entrepreneurs. So let's all relax from our labors for a few days and renew ourselves so we can get back to the job of building prosperous lives for ourselves which, incidentally, will help the prosperity of all!
Hudgins is executive director of The Atlas Society and its Objectivist Center, which celebrates human achievement.
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