A Revolution in the American Labor Force

On this day in economic and business history...

One of the last major industries in the United States finally made the shift to an eight-hour day on Aug. 13, 1923. US Steel (NYSE: X  ) , the world's largest steelmaker, led the charge, and its employees couldn't have been happier, according to a contemporary report from the Chicago Daily Tribune:

It was a day of cheer yesterday for thousands of men in the far flung rolling mills of the United States Steel corporation, for the twelve hour day began to pass into history.

The roaring of the mighty blast furnaces was music to these toil weary men. Eight hours and hundreds were "off the job," exulting like kids on their first day out of school. The twelve hour day is dead; long live the eight hour day! That was their sentiment and they had only grins for the obsequies of the former. ... [At] every place where there are subsidiaries of the great steel corporation, a start was made on the beginning of the end of the twelve-hour day.

The shift to eight-hour workdays in the manufacturing industries had begun nine years earlier with Ford's (NYSE: F  ) legendary shift to a $5, eight-hour day (for six days a week). The success of Ford's initiative gradually convinced many industrialists across the nation that a broad base of well-paid, well-rested workers was preferable to the constant toil of weary men, who were more liable to suffer dangerous or deadly accidents on the job. The move was also spurred on by the memory of former President Warren G. Harding, who had died of a presumed heart failure less than two weeks earlier and who had thrown his support behind more tolerable labor standards during his brief tenure.

Many smaller steelmakers jumped on the eight-hour bandwagon, either out of fear that they would lose better workmen to US Steel or out of genuine concern for the health of their workforce. It was estimated that US Steel's vast mills would need to hire thousands of new workmen to maintain production while employing workers for shorter days. Its massive Gary, Ind., plant -- which remains the largest integrated mill in North America and which was responsible for the creation of Gary itself -- would need at least 2,000 new workers, and the transition process would not be completed for several months.

Ford continued to push for higher workplace labor standards during this period as well. Three years later, the automaker switched its entire manufacturing workforce to a 40-hour workweek of five eight-hour days. It should come as no surprise that the Roaring '20s, which produced the greatest sustained bull market in the history of the Dow Jones Industrial Average (DJINDICES: ^DJI  ) (gains reached nearly 500% compared to a 400% rise during the dot-com era) also experienced incredible productivity growth in the manufacturing industries. This wasn't exclusively the result of better labor conditions, but the impact of that change can't be ignored.

From 1919 through 1929, total-factor productivity in manufacturing rose 76% -- more than three times the 22% increase experienced by the economy as a whole. Output per man-hour in the manufacturing sector, which had been rising at an annualized rate of 1.5% through the early years of the 20th century, leapt to an annualized growth rate of 5.1% for the entirety of the Roaring '20s.

Never rust
The steel industry entered a different phase of its modernization exactly one decade before transitioning to the eight-hour workweek: On Aug. 13, 1913, English metallurgist Harry Brearley forged the first weather- and acidity-resistant steel alloy, popularly known as "stainless steel." Although Brearley was the first to forge this alloy, he was only the final link in a decades-long chain of metallurgical developments. As early as the 1870s, English and French researchers began to put together the compositional requirements for properly stainless steel, and this "recipe" would go through many revisions over the next few decades. Brearley's forging was not even the final word in stainless-steel development, but it marked the first time that the term was applied to a corrosion-resistant alloy.

After nearly a century in production, stainless steel has become a vital part of the global metals industry. In its 99th year as a workable product, stainless steel was produced in quantities totaling more than 35 million metric tons.

With the U.S. relying on the rest of the world for such a large percentage of our goods, many investors are ready for the end of the "made in China" era. Well, it may be here. Read all about the biggest industry disrupters since the personal computer in 3 Stocks to Own for the New Industrial Revolution. Just click here to learn more.


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  • Report this Comment On August 13, 2013, at 6:01 PM, jnk7711 wrote:

    Fantastic history lesson and a good reminder that human capital matters to organizations and the bottom line

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