The labor situation Wilson refers to most likely concerned him because

women and children had to do the jobs of male workers who became soldiers.

Your answer would be women and children had to do the jobs of male workers who became soldiers. This would be your answer because when the men go to war, no one is taking their place in their job, and that'll drop the industry, so women and children took over the men's jobs while they were gone. Because of this, President Wilson got concerned for the people taking over the jobs of the people in the workforce, and wanted to change the regulations of the workforce.