Labor Day: We sometimes forget that companies are a convenient illusion. People do the work.

     Here in the United States, we have a holiday called Labor Day. It is close in purpose to the International Workers’ Day. Supported initially by the various States, it became a Federal Holiday in the United States in 1894.

     In spite of some (to me) irrational decisions by the Supreme Court of the United States, companies are NOT people. They are convenient definitions which encompass all the employees and their resources who join their efforts for a common cause (usually commercial).

     Companies use resources to make a product which then brings in money and the income is distributed. The income is distributed to what is called salaries & bonuses, material structures (tools, buildings, utilities, etc), working capital, and (the remainder) profits. All of the amounts, within the capitalist economic structure, are determined by the people who control/”own” the material structures and working capital (called the capital, as a whole).

     These controllers of the capital of a company can be divided among the owner(s), investors/shareholders, and employees. Depending on the legal structure within which the company is organized, specific restrictions may be placed upon the distribution. An “employee-owned” company places the control within the “hands” of the employees who determine salaries & bonuses, what equipment/buildings/land to buy, rent, or lease, and how the remaining amount (profits) are to be distributed. On the other end of such arrangements, a sole ownership private (no public issuance of stocks) company places all of the control within the hands of the owner(s). Investors may have input into decisions according to various agreed-upon contractural requirements. In a “public corporation”, stockholders act as investors and express their input into the decisions through a “corporate board”. And so forth.

     Both capital (material structures and working capital) and employees are needed to make the company function. Neither can be effective without the other. However, the “company” does not truly do anything.

• The company does not produce products.
  The employees produce products making use of the capital

• The company does not create profits.
  The employees create the profits making use of the capital

• Companies do not make decisions.
  The controllers of the capital make the decisions

     And here we come to the crux of Labor Day. (Little of this applies to employee-owned companies.) If more people need work than there are positions within the corporate structure then the controllers of the capital can make the salaries & benefits of employees as small as possible. This can continue until the salary & benefits are so small that no one wants to work for the company. Uncontrolled capitalism places no limits, or restrictions, on the decisions of those controlling the capital. In many ways, it is only a little different from feudalism where the employees/workers are included as part of the property owned by the controllers of the capital.

     As the qualifications, that the employees must meet to be useful, increase the pool of potential employees shrink. If that pool is greater than the number of positions then the controllers of the capital continue to have the same power to control the salaries & benefits of those employees — but the lower limit may have to be higher as the general pool is smaller. If the number of positions is greater than the number of qualified potential employees then the employees determine the minimum salary & benefits they will accept (or they will go to a different company).

     Unions provide an aggregation of influence for potential, and actual, employees. Grouping together, they can determine whether or not products (and profits) can be created. They negotiate with the controllers of capital for conditions for the employees. These conditions may include salaries, tenure, benefits, working conditions, and other items specific to the type of work. The primary method of “leverage” that they can employ is that of the strike — where the employees refuse to continue to work unless guaranteed certain conditions — often concerning wages, working conditions, or benefits.

     Governmental, or legislative, support is needed to make sure that other, non-union, people cannot “volunteer” to become employees without being in the union. “Right to work” laws try to eliminate collective bargaining by requiring that non-union people be allowed to seek work without joining the union. Early unionizing efforts were strongly opposed by existing oligarchs (people who have accumulated both capital and political power) who, in turn, had out-of-proportion influence upon legislators. Much of the conflict ended up violent until laws started moving towards granting protection to the non-capital-possessors (or “labor”).

     Labor Day is directed towards honoring the vast number of workers in the United States, without whom there would be no products, services, or profits. It is directed towards the unions which allow collective aggregation of efforts to maintain influence over the power of the controllers of capital. Although both employees and controllers of capital are required for the system to work, unions and/or legislative support is too often needed to keep that awareness present. A worker who does not make enough to live is unable to live long enough to produce. A well-treated employee provides longer and better service, products, and profits. Short-term views on profits cripple long-term viability.

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