Tension Between Employers and Employees

Ultimately, the study of the past is helpful in understanding the present because it reveals certain foundational themes and patterns present over time. In the history of employment relations, one of the basic themes we see is that the interests of employers and employees were often in conflict and that the resultant confrontations were heated and sometimes violent. A brief discussion of the economic system within which employers and employees interacted then, and continue to interact today, will provide some insight into the root of this conflict and into why it continues today in the context of a more structured, more civilized relationship.

  

Employers Want to "Keep Costs Low"

From its very beginning, the United States has operated under a "capitalist" economic system in which markets determine the price of goods and services. Even in the emerging capitalism of the 1700s and 1800s, the goal of employers was to make as much money as possible or, in terms economists would use, to maximize profits. The general business model for maximizing profits then (and now) was to sell your product for as much as the market would bear, while keeping your costs of production as low as possible. And since labor comprises a significant part of an employer's costs, keeping these costs down was critical to a business's success.

 

Employees Want "Higher Wages/Salaries"

Employees, however, also operated under the same economic system as employers. When entering the "labor market" to sell their services, their goal was to maximize what they received for their efforts. This was in direct conflict with the goal of employers to keep labor costs as low as possible. Thus, conflict was inevitable as employees tried to push the price of their labor up while employers tried to push down those same costs. The issues around which this inherent conflict centers were so central, so important to the parties involved that disputes over them sometimes escalated into violence.

 

Core Tension Continues Today

It is important to recognize that there is still inherent conflict between employers and employees over wages and benefits, as well as other terms and conditions of employment that fundamentally shape the nature of the contemporary relationship between labor and management. In 1935, however, a systematic process for channeling and resolving the inevitable conflict between employees and employers was established through a historic piece of legislation called the National Labor Relations Act (NLRA). We will discuss the NLRA in more detail in future lessons. While conflict still exists between the parties, the conflict is now worked out in a different manner, and physical violence no longer plays a role in the process.