Children were employed in factories during this time because they were cheaper and because it was easier for them to do some of the work. Some of the work they did required squeezing into small spaces. Other kinds of work they did would have been too simple to be worth paying adult wages for. So instead the factory owners hired kids and paid less.
Yellow dog contracts were meant to prevent unions from organizing. In these contracts, workers had to agree not to join any union if they wanted to keep working at a particular factory.
The Yellow-Dog Contracts were established to help to prevent the employees of a company from joining a union. They were set-up and used in the 1870's when unions were trying to organize in factories and plants. The contracts became such a labor dispute that they were eventually outlawed in 15 states. The Erdman Act was passed by Congress in 1898 which prevented the railroad from having its employees sign any Yellow-dog contracts.
The Industrial Revolution in America brought with it a plethora of jobs in the factories. Groups of families moved into the urban communities to find employment. Incomes were meager and whole family systems worked together to meet daily living expenses. This included children as young as five or six. The hiring of children was a good practice for owners looking for cheap and disposable labor. The children would work for less salary than the adults and still at times had to work 19 hour days. Many of them went without breaks, had mild to severe injuries, and were terribly mistreated physically and verbally by their employers as well as the adults they worked with. There were no laws that protected the children. For families that had been farmers and made a living off the land, moving into the city meant that daily farming responsibilities were just transferred into factory work. Children were not considered to be an asset to a family unless they were able to work and add to the family income.