Free Markets

Thank Capitalism For Higher Wages And Better Working Conditions, Not The Labor Movement

Contrary to popular belief, the labor movement is not responsible for a five day work week, eight hour work days, or a living wage. It wasn’t picket lines, sit ins, or protests that advanced working conditions in the United States. One of the first major steps forward was actually taken by a famous capitalist.

Those three things that the labor movement likes to take credit for were actually accomplished entirely without them. In 1922, sixteen years before the Fair Labor Standards Act was passed by Congress, Henry Ford instituted a radical idea: a five day work week. This was not because of any pressure from the labor movement. The idea was that with an extra day off workers would be expected to work harder when they were at the factory. It worked. Productivity increased and both Ford and his workers benefited from the change.

In 1926, Henry Ford came up with another revolutionary proposal. He cut the workday at his factories from nine to eight hours, and doubled the pay of his employees. It was a truly crazy idea according to his competitors who thought that it would drive him out of business. But, like Ford’s previous idea, it worked.

Again, this wasn’t done because anyone had been protesting, it was done in an attempt to attract the best workers and boost their productivity. The best workers, who felt they were worth more, left other factories and came to work for Ford. It improved morale and gave employees a sense of company loyalty.

Capitalism spread Ford’s practices

After Ford lead the way with a five day work week, eight hour days, and high wages, other factories were compelled by market forces to adopt similar rules. Free market capitalism means companies have to compete with each other for workers. If they don’t, their employees could always leave to find a job with another company that had adopted higher standards.

It was competition in the marketplace that spread these ideas, not the labor movement or government mandates. Unions and government regulators were late to the game, and only adopted what Ford had already put into place.

Unfortunately, the labor movement got all of the credit because they teamed up with the government to mandate that companies follow these practices. FDR passed the Fair Labor Standards Act sixteen years after Henry Ford started and popularized these labor reforms. Even though companies around the country had already started to follow Ford’s standards, politicians made sure that they were the ones that were written into the history books.

That effort to rewrite history was helped greatly when the government mandated Labor Day be a national holiday. Although, it would be more appropriate and historically accurate if it were called Capitalism Day instead.

Free markets and industrialization are what brought millions of people out of the trap of subsistence agriculture and into factories. Capitalists’ pursuit of productivity gains are what got those factory workers a five day work week, eight hour days, and high wages. Capitalism is responsible for those things, not the labor movement, not government.

(Image via screenshot of the Henry Ford Experience by PBS.)

Wilson most recently served as the Director of Social Media on the presidential campaign of Gary Johnson and Bill Weld.
He started in politics by founding the political advocacy organization A Libertarian Future after the 2012 presidential election. Its Facebook page now reaches tens of millions of people a month, and the website received more than 10 million pageviews in three years.
Wilson has also launched a successful digital marketing firm with a range of domestic and international clients. After living in Europe intermittently throughout college, he currently resides in California – strictly for the climate.

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