For many Americans, Labor Day represents the unofficial end of summer. It’s a day for last trips to the beach, and for firing up our grills to cook some burgers and hot dogs. The holiday represents a break between the craziness of summer and the beginning of fall, when we all take work seriously again. For whatever reason, we need a day off to make the switch.
But Labor Day wasn’t always just a day off at the end of summer. In the late 19th century, organized labor was gaining strength across the country. Unhappy with wages and working conditions, they staged protests and strikes that would often end in violence. As a way of easing tensions, local governments and a handful of states passed laws to recognize what unions were calling “labor day.” In 1894, President Grover Cleveland signed the law that made Labor Day a national holiday as a way to honor the American worker.
Over the years, our workforce landscape has changed, and with it, the meaning of Labor Day. Just more than 11 percent of workers are members of organized labor, roughly half the level of 20 years ago. Most of us are so detached from organized labor, and the origins of the national holiday, that we simply enjoy having the day off work.
Now, as our workforce changes, this is a three-day weekend that fewer of us are able to enjoy. Chances are that if someone got a new job in 2013 he won’t be celebrating a day off on Sept. 2. With part-time workers making up 77 percent of new hires in 2013, it’s just another Monday on the job.
These jobs typically don’t provide paid leave for holidays, like Labor Day. In fact, many retailers have sales promotions to draw in customers that may have the day off. Big-box retailers and department stores will be scheduling extra workers to meet anticipated demand.
This shift to more part-time work is indicative of greater changes to our labor force. It means workers have to accept lower levels of take-home pay than they’re accustomed to. So they’ll have less to contribute to payroll and income taxes. And they’ll have less money left over to grow the economy with their discretionary spending.
People drive our economy. Personal consumption expenditures account for nearly 70 percent of the nation’s gross domestic product, by far the biggest share of its components.
We follow predictable spending patterns, which are largely dictated by our age and stage of life. Even so, there are limits. We can only spend what we have and borrow as much as our income allows.
With more and more people having to settle for part-time work and lower pay, consumers will choose the necessities over the luxuries. They also will delay making the big life purchases of a home or a new car. These workers will have less money to save and invest in the stock market.
It may sound bleak, but it isn’t. By spotting the movements in the labor market, we can anticipate how it affects the broader economy. We can look out over the horizon to spot the risks and target the opportunities in the market. This puts us in a stronger position to maintain and grow your savings and investments. Enjoy your Labor Day and thanks for reading.
NICK MASSEY is a financial adviser and president of Householder Group Financial Advisors in Edmond. Massey can be reached at www.nickmassey.com. Securities offered through Securities Service Network Inc., member FINRA/SIPC.