When Henry Ford Paid a Living Wage

If you like obscure anniversaries, on January 5, 1914, Henry Ford announced he would start paying his workers $5 for an eight-hour workday, an increase from an average of $2.34 for a nine-hour workday.

The resulting reaction was not what you might expect.  Some thought he was crazy.  The Wall Street Journal editorialized that he was bringing “biblical or spiritual principles into a field where they do not belong.”  There was real concern that Ford would collapse, taking Detroit with it.

But Ford saw things differently.  His factory was plagued with high turnover rates; the absentee rate on any given workday was ten percent.  Sometimes men would grow tired of their job and walk out in the middle of the day, halting the entire assembly line.  Ford decided to pay more to keep good workers, and so they could afford to buy the cars they were making.

There was another side to this, too.  To earn the $5, workers had to adhere to some very strict rules.  They had to be clean, sober, not gamble or abuse their families, save some of the money, learn English if it was a second language, and (suprisingly today) not allow their wives to work outside the home.  Home visits ensured the rules were followed.

The result?  The raise took effect on January 12, and thousands came to the factory seeking work that day in single-digit temperatures.  Turnover dropped dramatically, and the company’s profits doubled between 1914 and 1916.

 

References:

The Five-Dollar Day; Jump-starting the Middle Class, http://www.henryford150.com/5-a-day/?elq=f794c2100bae4329b27b1eebd458c728&elqCampaignId=16969&elqaid=19705&elqat=1&elqTrackId=1d1172afd4524ffd824c8619ad61427e

The Writer’s Almanace, January 5, 2016, http://writersalmanac.org/

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