Why were labor unions created?

The purpose of labor unions was to protect workers. Prior to labor unions employers had all the power to set wages, hours and conditions. There was such a large amount of workers available and the positions were mostly for unskilled workers that the employees were easily replaced. If a worker complained or raised concerns; the employer could easily fire them and have someone new by the next day. Some employers even went to so far as to blacklist employees who they labeled “trouble makers”. This would make it hard for that individual to find another job.
Employers had no reason to shorten hours, raise wages, keep a safe work place or even provide meal breaks before labor unions. Once workers began to unionize and join together it forced employers to change their ways. No employer wanted to have to fire and rehire an entire factory or coal mine. It became more cost effective for the owners to deal with some of the concerns of the workers in order to keep their factory or business running.

Labor unions were created to help workers who dealt with problems such as low pay, long working hours, and poor working conditions. It was very difficult for an individual worker to bring about change in a given industry. There were too many workers available and looking for work, so if a worker individually tried to make changes, that worker would likely be fired, easily replaced, and possibly blacklisted. However, if all the workers united in an industry or within a business, they would have a better chance to change the poor conditions they faced. It would be much more difficult for a business owner to replace dozens or hundreds of workers who had united than to replace an individual worker. As a result, unions developed to try to bring about changes that would positively impact the workers they represented.

Labor unions serve as a balance to the inevitable concentration of power that occurs in a free market economy. In a free market economy prices are driven down by competition to a rate that produces nominal profit. For this reason it is crucial that companies always be growing, innovating, or cutting back overhead to add some edge to their profits.
Because the cost of labor is a significant source of overhead cost, an easy way for a company to attempt to increase their profits is to either remove unnecessary labor, or lower wages. Depending on the pool of available labor for a job as well as the market competition employers may find that the labor they require is unskilled to the effect that there is practically an unlimited pool of potential laborers (e.g. fast food customer service). In the event labor is this plentiful an employer will be incentivized to lower workers wages to the lowest point that it can to achieve it's profit goals.
Labor unions serve as a means for laborers to collectively bargain with their potential employers. By organizing in a union laborers can set the price of their labor together so that employees are not tempted to undercut one another for employment. The union is also used to negotiate for things like employees safety and privileges.

Labor unions were created to help working men and women get better wages and conditions. In the days before labor unions, life for the workers was often incredibly hard. They were expected to toil in unsanitary, dangerous conditions for very little pay. If they complained about their appalling treatment, they could easily be fired, as their bosses knew that there would be countless others who were poor, hungry, and desperate enough to take their place.
It was in the interests of the bosses to keep their workers in line and to treat them as individuals rather than as a collective unit. This made it easier to control the workers as, under the unregulated capitalist system, they tended to see each other as competitors rather than comrades. The guiding principle behind the establishment of labor unions was completely different: solidarity. The workers who formed the first labor unions understood the importance of organizing themselves: standing together as one allowed them to present their demands for better wages and conditions to employers and lawmakers alike. Forming themselves into labor unions made the workers more united and more powerful; they were now a force to be reckoned with in their dealings with employers.