Why is it important to develop your human capital?
On the first Monday in September, many of us attend picnics and other events associated with Labor Day. The roots of this holiday go back to 1882, when labor organizers in New York City held a parade to celebrate the role of workers in American life. The celebration became an annual event and soon spread to other cities. In 1894. Congress passed a law making Labor Day an official national holiday.
Labor Day owes its existence to the union movement, which began in the late 1800s. At the time, many U.S. workers suffered from harsh working conditions in factories and mines. They worked long hours for low pay. often in unhealthy or dangerous circumstances. If workers complained. they were likely to be fired. In response. workers formed unions to help protect their interests. These early unions were relatively small and lacked the power to negotiate with factory owners.
In the late 1800s, however, small unions began to join together to form larger labor federations. The first such federation was the Knights of Labor. Founded in 1869, it brought together both skilled and unskilled workers.
The Knights of Labor soon faced competitors . One was the American Federation of Labor. The AFL concentrated mainly on organizing skilled workers. Another was the Industrial Workers of the World. The IWW sought to unite all workers, both skilled and unskilled, under the motto “an injury to one is an injury to all.”
Speaking for their members with one voice, union leaders bargained with employers for better pay and working conditions. If negotiations failed, unions called on workers to strike. During a strike, workers refused to work until their demands were met.
Employers fiercely resisted the union movement. Some used their influence with government officials to block union organizing. Others required employees to sign yellow-dog contracts, which prohibited workers from joining unions. Employers responded to strikes by hiring strikebreakers to force the strikers back to work.
Despite setbacks, the union movement continued to grow. During the Great Depression of the 1930s, unions enjoyed their greatest success under the New Deal policies of President Franklin D. Roosevelt.
At the president’s urging, Congress passed the National Labor Relations Act in 1935. Also known as the Wagner Act, this law guaranteed workers “the right to self-organization, to form, join, or assist labor organizations, [and] to bargain collectively through representatives of their own choosing.” The law also permitted closed shops. A closed shop is a business that will only hire workers who are union members.
Gaining the right to “bargain collectively” was a breakthrough for unions. Collective bargaining is a process in which workers, represented by their union, negotiate with employers for better wages and working conditions.
The Wagner Act required employers to bargain in “good faith.” The Wagner Act ushered in a “golden age” of labor unionism. During this period, union membership increased and workers enjoyed rising pay and benefits. Encouraged by such success, several large unions came together in 1938 to form a new labor federation, the Congress of Industrial Organizations. The CIO would later merge with the AFL to create the AFL-CIO.
By the late 1940s, however, many in business and government felt that the Wagner Act had gone too far in empowering labor unions. In 1947, Congress passed the Taft-Hartley Act to rein in the unions. This law outlawed the closed shop and placed limits on the power of unions to organize and strike. It did, however, allow union shops. In a union shop, workers are required to join the union after being hired.
The Taft-Hartley Act also permitted states to pass right-to-work laws. These laws make it illegal to require workers to join a union as a condition of their employment. In effect, right-to -work laws ban the union shop. Currently there are some 20 right-to-work states. Most are located in the South and West.
Despite the restrictions of the Taft-Hartley Act. the number of union members continued to increase into the 1970s. Union membership peaked at more than 22 million in 1975. But by then. as the line graph in Figure 10.5 shows, union membership as a percentage of the total labor force had begun to decline. In 1970, one out of every four American workers belonged to a union. By 2012, that number was about one in nine.
The profile of union members has also changed since the 1970s. A generation or two ago, the typical union member was a factory worker. Today, as the circle graph in Figure 10.5 shows, that worker is more likely to be a government employee, such as a teacher or a police officer, than a factory worker.
Economists cite a number of reasons for the drop in union membership. One is the loss of manufacturing jobs and the rise of service industries. Historically, service workers have been difficult to organize. women, who make up an increasing share of the labor force, have been less inclined to join unions. In addition, the government now guarantees many of the rights unions once had to fight for, such as workplace safety and an eight-hour workday. Also, polls show that less than 10 percent of workers are dissatisfied with their jobs. The great majority also have a strong sense of loyalty to the companies for which they work.
In a bid to reverse the downward trend in un ion membership, seven major unions representing 6 million members broke away from the AFL-CIO in 2005. They then joined forces to create the Change to Win federation. This new labor federation is largely made up of service-sector unions that represent female, immigrant. and minority workers.
Despite the formation of Change to Win, union influence appears to be continuing its decline. States are increasingly turning to legislation to try to limit the power of unions. Legislators in Michigan, traditionally a state with a strong union presence, passed right-to-work laws in late 2012. This legislation, which could cripple union funding and other laws like it in other states, could prove to be yet another blow to the already declining labor movement.
To reach its goal of expanding union membership, Change to Win is concentrating on bread-and-butter unionism. This means focusing on the economic issues that affect workers’ daily lives. Change to Win summarizes these issues as “a paycheck that can support a family, affordable health care, a secure retirement and dignity on the job.”
By focusing on these bread-and-butter issues, unions perform a vital function for many American workers. They work to secure better pay and improved benefits for their members. They try to save workers’ jobs when companies engage in outsourcing and off-shoring. They provide information to workers about their rights as employees. Some unions provide training to help workers improve their job skills. By helping to build human capital in this way, unions not only provide benefits to their members, but also to the organizations that employ them.
This brings us back to the question we began with: Why is it important to develop your human capital? The answer is both simple and complex. Human capital is one of the most important factors that deter mine a worker’s value in the labor market. But human capital is not a simple set of skills. It also encompasses aptitudes, knowledge. experience. motivation, energy. and attitude. As you prepare to enter the labor market, remember that your human capital is your most valuable resource. The more you develop it now, the more success you will enjoy in the world of work.