Membership of the Knights of Labor reached its highest point (about five hundred thousand) in 1886. Already it was feeling the oppositional influence of the American Federation of Labor, which had been organized in 1881. A little later the older organization began to decline in influence; at the present time its place in labor affairs is unimportant. The two organizations are unlike in several respects. The Federation favors the strike and boycott as weapons for fighting the battles of labor. Moreover, as its name suggests, it is a federation of trade unions, each governed by its own laws and managed by its own officers. Individual members of the trade unions and even the local organizations have little direct connection with the Federation. Besides the national organization there are state federations and city federations.

Practically all of the leading trade unions of this country belong to the Federation, the most notable exception being the railroad brotherhoods. Since its inception, the American Federation of Labor has been instrumental in improving conditions of labor and in raising wages.