I have been mulling over this question for some time now, and today I decided to crack one of my good old-fashioned encyclopedias on the topic of labor (or “labour”, as the Encyclopaedia Brittanica spells it). Surprisingly, it almost seems as if “employment” didn’t exist before the late 19th Century (and the notion of “labour” is equally astoundingly recent). Before the industrial revolution, people were simply not “employed”.
“Labour Law”: It is not always an easy matter to draw exactly the line which divides a dependent worker from an independent contractor or from a professional expert. The rules of English common law relating to an employer’s responsibility for the acts of or for injuries to a servant have laid it down that in order to be an employer a person must control the worker as regards the manner in which he does his work, as well as control the kind and amount of work to be done.
“Slavery”: Slavery is the social sanctioning of involuntary servitude imposed by one person or group upon another. Until the beginning of the 20th Century, chattel slavery, involving the legal right of property, or ownership, generally was distinguished from other forms of servitude. [...] Some of these these substitutes, such as indentured, or contract labour and serfdom, have played distinctive roles in the history of civilization, at different times and places and within different cultures, and these historic roles are dealt with in separate articles (see Contract Labour; Serfdom and Villeinage).
– Encyclopaedia Brittanica, 1973
Taking a much broader view, for the most of recorded history my ball-park estimate is that there have been, roughly speaking, by and large three main categories of work:
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Slave labor — Slaves are those who are told what to do, and in that sense they are “employed”
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Apprenticeship — Apprentices are those who are learning (“by doing”) how to master a craft, trade, profession, etc. and offer their services in exchange for the guidance and education offered by their supervisor.
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Master Craftsmanship — Masters are experts in their respective fields, and work “independently” (meaning that they trade their capabilities on the open market, according to the laws of supply and demand)
The industrial revolution changed several things:
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The primary focus of industrialisation was the exploitation of natural resources (e.g. coal, oil, etc.)
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Secondarily, the vast potential of energy used up by industrialisation was maximized by a parallel increase in the amount and complexity of machinery to produce goods and services which could be sold by the capital investors; Wages above those in traditional / agricultural industries could be paid because of the high demand for such products / services
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Eventually, mass production “crowded out” the Master Craftsman / Apprentice method of learning trades, and instead engineering schools flourished, such that the engineers who graduated from such schools were trained to build ever more efficient contraptions for which ever less skill was required to operate them; at the same time, agricultural workers became factory workers en masse.