Today as we celebrate labor day we should make a fair assessment of the true value of labor and also the proper relationship between labor, management, and the ownership of the productive resources.
The role of labor in the production of wealth should be acknowledged and respected. It is the laborer who trades his time, energy, and knowledge with the owner of resources to create wealth, and in return the laborer is rewarded with whatever compensation he can demand through his unique knowledge and skills. The more that a laborer knows, or the more specialized his skills, the more he will be able to demand.
This relationship between laborer, and owner, is not one-sided with the owner exploiting the laborer in order to get wealthy. Yes, there are always those few individuals who will treat people less than fair and honorably, not respecting the value of the laborer, but these individuals do not, and cannot, make up the majority of businesses and business owners. A business cannot long remain profitable if he does not have a workforce that is satisfied and productive. And a workforce will not long remain productive if they feel exploited or if they can find better employment elsewhere.
In a free society every individual has the ability to leave a bad employer, to leave employers that take advantage of their workers and not offer a fair trade of value, and find employment with a company who offers workers better conditions and compensation. Often those workers who cry the loudest about exploitation are those who are getting compensated what they are worth, but fail to understand what their true value is, for if they offered more value then they would be able to find better employment with their services being in demand.
The laborer can also seek to improve their skills and knowledge in order to make themselves more desirable and employable and thus increase their earning power. If a laborer has desirable skills and knowledge they can make greater demands, receive fairer compensation, and create better working conditions for themselves.
Just as the employer has the right to refuse employment, the laborer has the right to refuse to work. But like the employer who will not get paid if he offers no product or service of value, the laborer should expect not to receive compensation when no value is given in the form of their labor.
Both the employer and the laborer need each other. The employer provides employment opportunities by identifying a market need, engaging resources to satisfy that need, and assuming all risk in relation to changes in the market conditions or poor execution.
The laborer provides the labor, skills, and knowledge to put the resources together to create a marketable product or service. The laborer exchanges their time, ideas, and sweat equity in exchange for an agreed sum of money, which the laborer receives whether the owner realizes a profit or a loss.
In mutual exchange, the employer compensates the laborer for their time and knowledge before any profits have been realized. The employer, or owner of the productive resources, gives to the laborer a portion of his wealth before the owner receives compensation for it himself. The owner assumes all risk and loss of property in the event that profit is not realized. The laborer assumes no risk other than the loss of employment should the business fail, but will be compensated for all labor regardless.
On this labor day enjoy the time off from work to relax and enjoy the fruits of your labor, but also remember that your ability to provide for yourself and your family is part and product of someone else’s effort, time, and property. In order to live in a free society we need to remember that we all need each other. The only way we remain free and wealthy is to recognize the ways in which we benefit from a free exchange of labor and resources. Make sure you thank those who take risks and provide jobs the same as you do those who labor.