The movement for a national Labor Day had been growing for some time. In September 1892, union workers in New York City took an unpaid day off and marched around Union Square in support of the holiday. But now, protests against President Cleveland's harsh methods [in putting down the American Railway Union's strike against the Pullman Company] made the appeasement of the nation's workers a top political priority. In the immediate wake of the strike, legislation was rushed unanimously through both houses of Congress, and the bill arrived on President Cleveland's desk just six days after his troops had broken the Pullman strike.
1894 was an election year. President Cleveland seized the chance at conciliation, and Labor Day was born. He was not reelected.
The News Hour with Jim Lehrer remembers the origins of Labor Day, with links, here, while Progressive Historians remembers on the Knights of Labor.
Image: The Pullman strike.