How many times have you been in an economic discussion with someone, discussing the benefits of competition, the power of markets, and the overall benefits of capitalism when someone blurts out that in any competitive system, unions and regulations are necessary, for without them, without their interference, we wouldn’t have a middle class, we wouldn’t have a five day work week or eight hour work days? I hear this all the time, I see it on bumper stickers, and it is so often repeated that I thought I’d blog on it and give the readers of my blog an edge on what really happened, and how to respond if they encounter the same topic.
So, who gave us the 5 day, 8 hours per day, work week? Was it really the unions, was it really higher regulations? No, the historical answer is that it was Heny Ford who gave us the 5 day, 8 hours per day, work week. Ford was tired of continuously losing good employees, he was trying to increase employee retention and at the same time increase profits, so he basically doubled wages and implemented a 5-day work week, and in the process effectively invented the modern weekend. It is Henry Ford who is widely credited with contributing to the creation of a middle class in the United States.
In addition, if you look at why Henry Ford did this, you will see that his reasons had nothing to do with charity, and everything to do with increasing profits and dealing with the forces of competition.
What makes those who believe it was unions look even more ridiculous is the fact that Henry Ford despised unions. The tensions were so strong, that Ford hired a former Navy boxer to help him stop the unions from unionizing Ford Motor Company.
Many of those who hold the view that it was unions – or regulations – who gave us the middle class, often hold outdated fears against ‘unfettered markets’, still repeating the now fully debunked Karl Marx view that capitalism, through competition, will bring exploitation of workers, will be a ‘race to the bottom’, and will eventually, atleast according to Marx, result in class warfare blah blah blah blah. However, if you come back to the real world, you will see that competition does the exact opposite, it increases the standard of living, it increases working standards, it increases pay, and it is overall the working person’s best weapon, not its enemy. This is why unions and the minimum wage have the opposite result, since by reducing competition they don’t make the working person’s standard of living better; on net balance, they make it worse.
So in conclusion, it wasn’t because of unions or regulations that we have a middle class, it was in spite of them that we do, and the next time you hear otherwise, correct them immediately, the working class will thank you.