Thursday, May 31, 2018

Labor Laws


Labor is a commodity and the price of labor is somewhat controlled by the number of workers entering the workforce and further controlled by the number of workers willing to stay on the job. The cost of labor is based on the economic value of worker’s skills. Labor laws that interfere with this free market model are acts of economic sabotage in violation of the laws of economics.

During the Industrial Revolution in the US from 1850 to 1900, immigrants came from Europe in large numbers. The US was in the process of settling its land mass. There were also more workers coming from farms to cities. The result was a glut of workers companies could hire to work long hours at low wages. The supply of labor was higher than the demand for workers.

Commerce continued on waterways and railroads were being built in the 1820s. The transcontinental railroad was completed in 1869. The steam engine was powering factories and removing water from mines. Applied science took a leap and was resulting in innovation and invention in physics and chemistry and patents were being filed.

Machinery and materials were in a constant state of development. The race was on in capital formation, infrastructure formation, energy and steel production and factory automation.

The owners of all large companies were immersed in solving technical and operational problems and failed to treat employees with respect. The art of people management was at a low point. Large organizations became autocratic and ruled by force.

Work in factories, mines and construction sites was hard and dangerous and workers were generally unskilled. Those who were able learned crafts left the factories, mines and construction sites, but many remained.  Those employees who remained were ripe to become jealous, disenchanted and angry.

By the 1880s some of these employees were formed into labor unions inspired by Karl Marx and the “political struggle” began. 

They quietly organized, chose leaders and planned their tactics based on what they saw as their “rights”. The first “strikes” were triggered by workplace accidents resulting in employee fatalities. Employers fired the “strikers” and replaced them with new employees. Strikers rioted and Employers called in the Pinkerton Security force to fight the rioters. Property was destroyed and strikers were killed and wounded and riots were covered by the press and the “plight of the worker” was spotlighted to become the dominant theme.

Despite the fact that the inventors and owners of these companies accomplished miracles from 1850 to 1900, the owners and bankers responsible for these innovations were cast as villains ripe for punishment. They were branded as “Robber Barons”. Newspapers also engineered public opinion against “the rich”.

Politicians became interested in “solving” this dilemma. What followed were labor laws that allowed employees the “right” to form labor unions and a government bureaucracy to offer “mediation” of disputes. Politicians noticed a parade was happening and they placed themselves in front of it.

The Sherman Anti-Trust Act was passed in 1890 to attack mergers, while at the same time JP Morgan had arranged a merger of the separate railroads so they could pay off the debt assumed to construct their railroads. If he hadn’t done this, the loans would have defaulted sending the railroads into bankruptcy bringing commerce to a halt. But politicians were more interested in using the “plight of the poor” to expand the government. They chose to ignore their pledge to protect “property rights” for owners to pander to “the poor”. They also advanced Marxism in the US.

By 1913, government was ready to convert the US from a free market economy to a managed economy and they passed the unconstitutional Federal Reserve Act and the US Income Tax. The Federal Reserve would assure massive inflation from money printing and the Income Tax and Inheritance Tax would serve to further punish “the rich”.

US labor laws were written by the labor unions and resulted in union domination in major industries. The cost of labor in the US by the 1980s was unsustainable with union factory workers being paid $80,000 a year.

Foreign countries offered much lower labor costs, lower facility costs and little or no unnecessary environmental costs. In 1993 the US Congress passed NAFTA and US manufacturing left to set up plants in foreign countries. US Private sector union membership plummeted and public sector union membership soared. Now most union members work in government and utility jobs.

Immigration to the US doubled in 1989 and continued to double. We have added 60 million immigrants over the past few decades.  US immigration laws have been liberalized since the 1960s to include all classes of workers. Most immigrants in the US are in the minimum wage jobs that were previously given to students.


Illegal immigration in the US has always existed in Border States for seasonal agricultural workers and domestic help. Migration from Mexico and other South and Central American countries increased with the need for cheap labor in the US. Illegal immigration surged in the 1980s with the construction boom.

The US illegal immigrant population has increased from 0.54 million in 1960 to 11 million in 2017.

I am amazed that the US government doubled immigration in the 1990s and then offshored US manufacturing in 1993. Congress also left the US Corporate Tax Rate at 35% and added unnecessary regulations. These suicidal acts of sabotage caused the best parts of the US economy to be offshored to other countries.

Norb Leahy, Dunwoody GA Tea Party Leader


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