Many of us have wondered why we celebrate Labor Day. Labor Day is more than just the end of summer activities. Labor unions were the first to celebrate the beginning of the Labor Day tradition in the US. A union leader by the name of Peter McGuire originated the idea of setting aside a day for workers to gather in unity. On September 5, 1882, the inaugural Labor Day parade with all its finery was held in New York City, and a decision was made by the labor unions to designate a date between Independence Day and the Thanksgiving holiday. The first Monday in September was chosen for future celebrations. As the idea circulated in the United States, some states declared this day a holiday even before the first Monday in September was designated a national holiday.
President Grover Cleveland signed the bill to honor Labor Day. The date was chosen to be that of the first Monday in the month of September. What makes this memorable is that Cleveland was not a support of the unions. In fact, at the time he signed the bill, he was attempting to repair some damage to his political career that he had previously suffered when he sent troops to stop a strike that was sponsored by the Railway Workers Union that caused 34 workers to lose their lives. If someone were to ask you the question, “What is Labor Day?” could you really answer it? I doubt many of us really know anything about the holiday other than the fact that it is the first Monday in September and is the official end of summer. It used to signal the beginning of the new school year, but with more schools returning to classes in middle or late August that is no longer the case, though the beaches and other summer activities continue throughout Labor Day weekend.
In 1887, the first states declared it a state holiday: Oregon, Colorado, New York, Massachusetts, and New Jersey. In 1894, Congress passed a law that designated Labor Day as an official national holiday. Currently Labor Day is celebrated in the United States, Canada, and other industrialized countries. Though in the U.S. it is a general holiday, which also designates the end of the summer season; in European countries its roots to the working class remains clear. In Europe, China, and other countries in the rest of the world, it is May Day, the first day of May, that they hold celebrations similar to the North American celebration for Labor Day.
In the 1950’s approximately 40 percent of workers belonged to labor unions in the United States. Currently that figure is approximately 14 percent. As a result, Labor Day is celebrated more as the unofficial way to end the summer than as a labor union holiday. Just about all schools as well as businesses (including the US Government) close on Labor Day to allow people to have one more barbeque before it begins to turn cold. A day to reflect on the accomplishments of working people: That’s been the proud tradition since the first, unofficial, Labor Day back in 1882.
But, one of labor’s greatest accomplishments has gone largely unrecognized. Since the end of World War II, working people have bought up a huge chunk of big business. They now own a piece of just about everything in business, from multinational corporations to small companies that build mini-malls in their neighbourhoods. It may be the greatest economic transformation since the Industrial Revolution; management guru Peter Drucker calls it “The Pension Fund Revolution.”
To get a sense of the transformation, consider this: At the end of 2001, America’s 242 billionaires had assets totalling about $800 billion. That’s a sizable amount, certainly, but working people had assets of $11.8 trillion in pension and mutual funds. That’s almost 15 times as much as the billionaires. Most working people contribute only modest amounts to their retirement plans, but there are simply so many of us that our collective nest egg grew very quickly. If you’re still not sure, try this on your calculator: Multiply a contribution of $1,000 per year by one million working people. Answer: $1 billion dollars per year. Now note there are hundreds of millions of working people here and in other countries. And we’re contributing new money every year.
Even a relatively small number of working people can build a big fund. For example, the New York State Common Retirement Fund, with 944,000 members in or retired from state public services, had assets of $112 billion at the end of March last year. According to the Fund’s annual report for 2002, about $76.6 billion of that total was invested in companies. The remainder, about $35 billion, was in bonds, mortgages, and other types of loans. Look at the private sector and unions, too. To cite just a couple of examples, Pensions & Investments magazine estimated that General Motor’s pension fund had assets of $82.5 billion and the pension fund of the Western Conference Teamsters had assets of $22.6 billion, at September 30, 2001.
This ownership of big business by working people is the result of contributions to pension funds, mutual funds, and life insurance policies with a savings component. What does all this mean? Well, for starters, perhaps an end of complaints about the profits of corporations. After all, most of those profits go toward the retirement incomes of working people. More complicated, though, is the relationship between working people who own a big company and other working people employed by it. How to share corporate profits — through continuing employment and higher wages or through higher returns to shareholders — remains a difficult issue. Especially for those working people who lose their jobs.
On the other side of the coin, working people have bought enough stocks and shares to become the bosses of the bosses. Some pension funds have begun making that clear; CalPERS, the California Public Employees’ Retirement System, has led the way in telling Chief Executive Officers (CEOs) and boards of directors that they’d better manage effectively. And, CEOs and directors listen; after all CalPERS runs the country’s biggest pension fund, with assets of more than $130 billion. One other thing: if you’re a working person, you’re a consumer, as well as an owner and employee. When you go shopping, there’s a chance you’ll buy from a business owned by yourself, your friends, or your neighbours. What’s more, the clerks who take your credit card with smiles may work for you. Or, maybe the clerks own the company for which you work. Smile at them, too, just to be on the safe side!