David R. Henderson  

Honor Laborers

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Most Americans think of Labor Day as part of a long weekend and the unofficial end of summer. It was originally meant, though, to recognize the contributions of labor unions. I recommend a third alternative: use Labor Day to honor laborers.

To honor laborers, you would have to respect their right to make choices for themselves. But because so many people, especially people in government, don't respect that right, laborers face two main obstacles: (1) government regulation that gives labor unions monopoly power over their labor, and (2) other government regulations that restrict the kinds of deals that laborers can make with those who buy their services. Honoring labor would mean getting rid of those two obstacles.

This is the intro to my Labor Day Econlib Feature Article, "Honor Laborers."

I thank Don Boudreaux for two helpful comments on an earlier draft.

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CATEGORIES: Labor Market , Regulation

COMMENTS (4 to date)
Maniel writes:

Prof. Henderson,
Government support of labor unions, private or public, is at best, crony capitalism. Without that support, unionization would die a natural death in the cleansing daylight of competition.
It is easy to see the damage a union can do to a single company. By separating employer and employee, a union erects communications barriers, lowers worker flexibility, limits management options, and generally raises the cost of doing business. If you were the coach of a team where the players unionized and entered into an adversary relationship with you, it’s unlikely that your team would be very competitive. In business, union membership and a culture of “us vs them” often close the door to employee growth and promotion to management. A union divides a business into two parts which are not designed to work together. Open competition exposes the weaknesses of such arbitrary and adversary relationships – this leads to a decline in union membership when, as you suggest, workers are free to opt out.
Of course, unionization is often a reaction to poor management – but that’s another topic.

David R. Henderson writes:

All well put.
Especially this:
If you were the coach of a team where the players unionized and entered into an adversary relationship with you, it’s unlikely that your team would be very competitive.

J K Brown writes:

Yes, Labor Day is an unfortunate celebration of the loss of personal liberty for laborers. Labor unions had the impact to reduce men to the status of "wards of the State" as women were considered to be just a century ago.

For instance, it is a primary principle that an English free man of full age, under no disability, may control his person and his personal activities. He can work six, or four, or eight, or ten, or twelve, or twenty-four, or no hours a day if he choose, and any attempt to control him is impossible under the simplest principle of Anglo-Saxon liberty.

Yet there is possibly a majority of the members of the labor unions who would wish to control him in this particular today; and will take for an example that under the police power the state has been permitted to control him in matters affecting the public health or safety, as, for instance, in the running of railway trains, or, in Utah, in labor in the mines. But freedom of contract in this connection results generally from personal liberty itself; although it results also from the right to property; that is to say, a man's wages (or his trade, for matter of that) is his property, and the right of property is of no practical use if you cannot have the right to make contracts concerning it.

The only matter more important doubtless in the laborer's eye than the length of time he shall work is the amount of wages he shall receive. Now we may say at the start that in the English-speaking world there has been practically no attempt to regulate the amount of wages. We found such legislation in medieval England, and we also found that it was abandoned with general consent. But of late years in these socialistic days (using again socialistic in its proper sense of that which controls personal liberty for the interest of the community or state) it is surprisingly showing its head once more.


You can have regulation of the hours of labor of a woman of full age in general employments, by court decision, in three States (Massachusetts, Oregon, and Illinois), … but the Oregon case, decided both by the State Supreme Court and by the Federal Court in so far as the Fourteenth Amendment was concerned, after most careful and thorough discussion and reasoning, reasserted the principle that a woman is the ward of the state, and therefore does not have the full liberty of contract allowed to a man. Whether this decision will or will not be pleasing to the leaders of feminist thought is a matter of considerable interest.
Muller v. Oregon. 208 U. S. 412.

--Popular Law-making: A Study of the Origin, History, and Present Tendencies of Law-making by Statute, Frederic Jesup Stimson (1910)

Benjamin Cole writes:

I agree with post. On a topic that has been beat to death, while wearing blinders.


Why are government controls on labor constantly posited as evil at the megaphoned-podium, but government controls on property or street-vending relegated to the small-print footnotes on the back of the program?

And if we eliminate the minimum wage, is it not incumbent on our society to also eliminate laws against push-cart and truck-vending? Why are food-trucks okay, but not selling other consumer goods or services from trucks?

Sure, a laborer can go into business for himself. If we wants to retail goods or services, perhaps even of his own making, all he has to do is…rent the limited space in which it is legal to sell goods and services. Oh, btw, such space is artificially regulated and scarce. And must meet certain building codes.

So…after renting space from the limited supply available, and meeting other government regulations on carrying insurance, then he might be allowed to sell goods. If holding a retail license, etc.

And, of course, the laborer is usually further constrained by artificial limits on housing production, which push him away from markets geographically speaking, and raise his cost of living.

Those who decry the minimum wage or labor regulations would fashion a more-compelling arguments if they first acknowledged the real world in which the vast majority of employees and would-be micro-entrepreneurs operate. In other words, place arguments in a real-world context, not a theoretical vacuum.

First, eliminate all property zoning, push-cart and truck-vending regulations, and ease up barriers to entry to every business possible.

Then a bash on minimum wage laws would be welcome.

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