The concept of Labor Day was first formally promoted by the Central Labor Union and the Knights of Labor, who organized the first parade in New York City. In 1882, Matthew Maguire, a machinist, proposed the holiday while serving as secretary of the CLU (Central Labor Union) of New York. The idea was also proposed by Peter J. McGuire of the American Federation of Labor in May 1882, after he had attended the annual labour festival held in Toronto, Ontario in Canada.
On May 4, 1886, the Haymarket Massacre took place at Haymarket Squeare in Chicago, in which what was intended as a peaceful protest of the death of several workers by police, turned ugly after someone in the crowd threw a dynamite bomb at police attempting to break up the protest. As the result of the blast and the ensuing gunfire, seven police officers and four workers were killed and many others were wounded.
President Grover Cleveland was concerned that commemorating Labor Day on May 1 would become an opportunity for renewed bad feelings over the Haymarket Massacre. Labor Day was created as a holiday which individual states could declare, but it was not yet a national holiday.
Cleveland was defeated for re-election in 1888, but returned to the White House following his victory in the election of 1892. In 1894, Cleveland was afraid of further labor violence following the deaths of a number of workers who were killed by the U.S. military and U.S. Marshals during the Pullman Strike. Cleveland had called in the military in order to keep the trains running during the strike. Over the course of the strike about 30 people were killed.
Congress unanimously voted to approve rush legislation that made Labor Day a national holiday. President Grover Cleveland signed it into law on June 28, 1894, just six days after the end of the strike. The September date originally chosen by the Central Labor Union of New York and observed by many of the nation's trade unions for the past several years was selected rather than the more widespread International Workers' Day because Cleveland was concerned that observance of the latter would be associated with the May 1st day that a number of Anarchist movements would rally on to commemorate the Haymarket Affair in International Workers' Day. All 50 states, the District of Columbia, and the territories have made it a statutory holiday.