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The Wisdom of Henry Ford

Posted by MacZad
Aug 23 2012

The paragraphs below summarize the history of Henry Ford's unprecedented liberalization of pay and working hours for his workers early in the 20th Century. Obviously, he increased wages and cut work hours because it made good business sense. However, it's also apparent that he was somewhat altruistic as he went further than he would have had to because he had the vision to see that better pay and fewer working hours would increase consumer demand. Unfortunately, few of today's industrial leaders share that vision. In the video link at the end of this post there's one that does.

Ford astonished the world in 1914 by offering a $5 per eight-hour day wage ($110 today), upped from a previous rate of $2.34 for nine hours (the policy was adopted for female workers in 1916). The news shocked many in the industry--at the time, $5 per day was nearly double what the average auto worker made--but turned out to be a stroke of brilliance, immediately boosting productivity and building a sense of company loyalty and pride among Ford's workers. The best mechanics in Detroit flocked to Ford, bringing their human capital and expertise, raising productivity, and lowering training costs. Detroit was already a high-wage city, but competitors were forced to raise wages or lose their best workers. Ford's policy proved, however, that paying people more would enable Ford workers to afford the cars they were producing and be good for the business and the economy.

Twelve years later in May of 1926, Ford Motor Company became one of the first companies in America to adopt a five-day, 40-hour week for workers in its automotive factories. The policy was extended to Ford's office workers the following August. According to an article published in The New York Times, Edsel Ford, Henry's son and the company's president, explained that, "Every man needs more than one day a week for rest and recreation. The Ford Company always has sought to promote [an] ideal home life for its employees. We believe that in order to live properly every man should have more time to spend with his family."

Henry Ford said of the decision: "It is high time to rid ourselves of the notion that leisure for workmen is either 'lost time' or a class privilege." At Ford's own admission, however, the five-day workweek was also instituted in order to increase productivity: Though workers' time on the job had decreased, they were expected to expend more effort while they were there. Manufacturers all over the country, and the world, soon followed Ford's lead, and the Monday-to-Friday workweek became standard practice.

The result was not only improved performance for Ford Motor Company. Mr. Ford's business decisions are widely credited with the creation of the American middle class that today's politicians speak to as a voting bloc and the manufacturers of the world desire as a market for their products.

Ford's actions were good for business, and good for America. Over the last few decades government policy and manufacturer business decisions have not followed the principles of Mr. Ford, and the American economy is now paying the price. American manufacturers have sought out cheap labor in foreign countries for the production of goods consumed by Americans. Government tax, trade and regulatory policies have primarily rewarded these decisions or created disincentives to locating manufacturing here in the United States. Mr. Ford's principle that workers needed to be able to afford to buy the products produced was violated. American policy needs to support the return of American manufacturing to maintain the middle class born of Henry Ford's business policies.

This post is a mashup of content (sometimes used word-for-word) from the following sources:

eNotes --- Norman's Demesne --- timelines --- suite101

Categories: Miscellaneous