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Scott Powell / September 3, 2018

Labor Day Is a Holiday in Need of an Update

Among American holidays, Labor Day is probably the one most in need of an update. The idea of a “labor day holiday” was conceived in the 1880s by union labor leaders who sought recognition for the social and economic achievements of American workers. Finally in 1894, U.S. Congress voted to establish Labor Day as a national holiday to celebrate workers and their contributions to the strength, prosperity and well-being of the country.

Most don’t realize it, but attitudes toward labor are more progressive and respectful among Americans than they are in much of the rest of the world. European societies, for instance, generally view leisure as being more honorable than work. Throughout Latin America, people who are educated generally look down on those in the laboring class.

It was Alexis de Tocqueville, whose ever-relevant classic “Democracy in America” pointed out that Americans regard work “as positively honorable.” The suggestion that work is good for the soul and necessary to a fulfilling life is also found in the Bible, which makes more than 450 specific references to the value and importance of work — considerably more than its references to love, hope, joy, grace or peace.

Labor union membership peaked as a percentage of the entire American labor force at 26% in 1953. Today only about 11.2% of the total labor force belongs to a labor union. But what is most striking in the face of general decline in private sector union membership has been the growth of union membership among government employees. Some 36% of the public sector is unionized, while approximately 6.6% of business employees now belong to unions.

The vast majority of Americans just don’t see a need for unions. What is distinct about the U.S. economy is the strong and widespread entrepreneurial tradition, wherein there is frequent crossover from being a laborer to becoming a business owner who creates jobs that employ other people. Many wage earners decide at some point to take the risk of starting a new business that — if successful — generally provides upward mobility for the owner and employment opportunities for new wage earners.

Labor Day is perhaps what might be called an unfinished holiday in need of broader perspective. It’s certainly important to commemorate those who labor. But we should also celebrate the people who create new jobs by taking risk in developing new products, services and market opportunities. It is these visionary entrepreneurs who have been the primary drivers of progress and wealth creation that took the country from colonial poverty to world economic superpower in a little more than 200 years — making the United States the envy of the world.

Four of the five largest employers in the United States — Walmart, Amazon, Yum Brands and Home Depot — were founded within the last 50 years while unionized labor was declining. Each of these companies was founded by visionary entrepreneurs who transformed different sectors of the consumer products retailing industry — to deliver a wider variety of products with greater efficiency and at lower prices.

As the U.S. economy has evolved from a manufacturing to a service and information economy, it should come as no surprise that the four largest companies in terms of market capitalization — Apple, Amazon, Google, Microsoft — are all in the business of information technology. Each has greatly increased efficiencies for individuals and businesses, while also catalyzing a multiplier effect spawning the formation of a vast number of new companies and new jobs.

If the patterns of past economic history prevail, the development and application of automation and artificial intelligence should not be feared as they are likely to create as many new jobs as those made obsolete. For all of us, the challenge is to embrace change, recognize opportunity, and stay on game with training and incorporating technologies of a continuously changing economy.

So as we celebrate on the first Monday in September that last beach party or barbecue to commemorate those who labor, let us also remember and celebrate the entrepreneurs who drive renewal and progress — creating the new labor and employment opportunities of tomorrow.

Scott Powell is senior fellow at the Discovery Institute in Seattle and managing partner at RemingtonRand LLC.

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