Want to Honor Labor Day? Check Your Paystub
Labour Day #LabourDay
There’s a better way to honor Labor Day this year than shopping, hitting the beach, or BBQing. Take a few minutes to look at your paystub.
Most Americans don’t anymore. Paystubs or payslips used to come with the physical checks that Americans would get every two weeks or once a month. Now, a lot of Americans get their pay directly deposited into their bank accounts. They have to go looking for information on how much they earned and what was deducted for taxes, 401(k) contributions, and other employee benefits.
There are a lot of good reasons to check your paystub. First and foremost, there’s a problem with a wage theft in this country. Americans also need to make sure that they are getting the employee benefits (like health insurance) that they signed up for. Equally important, however, is that the many deductions on a paystub are a powerful reminder of how hard and long Americans have fought for shorter hours, livable wages, and better working conditions, all of which made life on and off the job a whole lot better.
The Federal Income Contributions Act (FICA) deduction, for instance, captures the meaning of Labor Day better than any picnic. When Americans get their first paychecks, many probably asked, like Rachel Green on Friends, “What’s FICA? Why’s he getting all my money?”
Congress passed FICA in 1935 so that employees and employers could pay for the much more well-known 1935 Social Security Act. This landmark legislation included a lot more than federal pensions, or what most Americans mean now when they say the words “Social Security.” Labor Secretary Frances Perkins addressed Americans on Feb. 25, 1935 over the radio to explain that the most important part of the bill before Congress was insurance against unemployment. She called it “the greatest of all hazards.” At the time, unemployment was 20%. More than 10 million Americans could “plunge into destitution and dependency” while they searched for a job.
Read More: This Labor Day, Workers Are Having a Moment. It’s Not the First Time
There would also be money for “old-age security” in President Franklin Delano Roosevelt Administration’s broad plan for economic security (which also included support for the blind, child welfare, and public health). But Roosevelt did not take credit for that legislation. Three years after passage, when that law had already helped millions, Roosevelt attributed its success to the American labor movement. “The underlying desire for personal and family security was nothing new,” he insisted in a radio address on August 15, 1938.
Friends, neighbors, and family members had always been a source of security, but people needed more support as the country industrialized. The first to turn to the federal government for help during the country’s tumultuous industrialization had been the rich, not the poor. As noted by Roosevelt, the wealthy profited the most from “protective laws designed, in the main, to give security to property owners, to industrialists, to merchants and to bankers.” That elite also fought workers organizing unions and demanding “protective labor legislation.” “While such laws raised the standard of life,” Roosevelt stressed, “they still gave no assurance to economic security.” So the federal government had to “help [individuals] lay the foundation stones” for better lives on and off the job.
“It is not good enough,” the president admitted in that speech. Citizens needed health care and sick leave. Millions also did not qualify for these protections because they picked crops, cleaned houses, or worked public sector jobs. “This must be set right,” Roosevelt said. “And it will be.”
Americans are, of course, still waiting. Congress had originally limited Social Security because business leaders had lobbied hard to keep its guarantees meager; they wanted Americans to continue to rely on them for basic needs, like pensions and health insurance plans. Conservatives in both parties had also demanded agricultural, domestic, and public employees be excluded, which effectively stopped the Roosevelt Administration from offering a New Deal to Black communities in the Jim Crow South, as well as to the many people of color laboring in the West. A few months after Roosevelt’s radio address demanding more, the midterm elections decimated liberal ranks in Congress.
Afterwards, expansion was slow and fitful. Congress haltingly increased the workers eligible for social security benefits after World War II. But 30 years passed before Congress amended the Social Security Act to include Medicare, which the FICA deduction also pays for. Only “a small amount each payday” will be deducted, President Lyndon B. Johnson promised in his 1965 remarks at the signing of the Medicare bill. “The employer will contribute a similar amount.” He vowed that medical costs would no longer be a burden on families. Of course, Americans young and old still struggle with medical debt, even if they have coverage from an employer (which is often deducted from their paychecks) or have bought a plan through the health insurance exchanges that the 2010 Affordable Care Act set up.
Having a paystub has mattered more since Obamacare’s passage on March 23, 2010. Unemployment compensation, Medicare coverage, social security payments, and other federal programs helped millions during both the Great Recession and the COVID-19 pandemic when a growing number of Americans worked as independent contractors, not employees. Those semantics kept payroll costs down and profits up for companies in many different sectors. The most notorious firms are in the app-based gig economy. Gig companies, like Uber and Doordash, do not offer drivers benefits, like health insurance. They also don’t deduct for or pay employment taxes, like FICA.
Gig workers, many of whom were considered essential during the pandemic, shoulder the real cost of convenient rides and fast deliveries. They pay taxes directly to state and federal governments. They even owe twice as much for FICA because they must cover what employees and employers are expected to contribute. It is no wonder that gig workers have also been on the frontlines of city and state efforts to regulate this new app-based economy—just like the citizens Roosevelt recognized as responsible for Social Security in 1935.
So take a look at your paystub on Labor Day. It is a memorial to the ordinary Americans who labored for something better—and a reminder that the struggle for basic workplace rights and recognition continues.
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