A Novel Concept: Wage Motive

[Detroitej72]

$5 day

Ford astonished the world in 1914 by offering a $5 per day wage, which more than doubled the rate of most of his workers. [[Using the consumer price index, this was equivalent to $111.10 per day in 2008 dollars.) The move proved extremely profitable; instead of constant turnover of employees, the best mechanics in Detroit flocked to Ford, bringing their human capital and expertise, raising productivity, and lowering training costs. Ford called it "wage motive." The company's use of vertical integration also proved successful when Ford built a gigantic factory that took in raw materials and shipped out finished automobiles.


This worked for Old Henry, back in the day, why can't corporations follow the same formula today?

[East Detroit]

Wall Street investors want companies to grow every year so that they can siphon off profits.

Since that is impossible, companies are now cutting expenses in order to provide more profits to said Wall Street masters.

Maybe these companies should buy back all their stock.

[Meddle]

This worked for Old Henry, back in the day, why can't corporations follow the same formula today?

Would you be willing to pay $70,000.00 for a basic Ranger P/U with no options?

[oldredfordette]

Robert Reich has an idea why:
http://robertreich.org/post/93255628...-class-worrier

[Mikeg]

why can't corporations follow the same formula today?

I'm sure that unilateraly doubling their employee's wage rate would work for any manufacturing corporation today, as long as over the previous four years at the old wage rate, they have been able to reduce their product's labor input by 87% and it's selling price by 35% while seeing their sales increase by 340% - all of which Ford did with the Model T from 1910-1914 before doubling his worker's wages.

Since Old Henry's "wage motive" is being held here as such an exemplary practice and worthy of imitation, what about the rest of his HRM practices, such as the full discretion his managers had on hiring and firing and the ability to send Ford inspectors into the worker's home to check on their living conditions and personal habits in exchange for continued employment at the doubled wage?

Bottom line, Old Henry had a unique set of circumstance in front of him when he announced the $5 daily wage and there were no EEO regulations constraining his decisions on those would get to benefit from it.

[gnome]

this was equivalent to $111.10 per day in 2008 dollars

I believe auto workers today would balk at having their wages cut in half.

[Johnlodge]

I believe auto workers today would balk at having their wages cut in half.

No kidding. And don't forget to include bennies.

[maxx]

For all those who declare that any form of socialism is evil and that U.S. capitalism today is just peachy:
"Our choice in the years ahead is either demagoguery that turns Americans further against one another and the rest of the world, or genuine reform that enlarges shared prosperity. It is the responsibility of all of us to fight the former and work toward the latter."
[Robt. Reich]

[oladub]

The following is from the Robert Reich article orf posted, "It wasn’t just greed. It was also the systematic and ever cleverer manipulation of laws and rules by those able to pay lobbyists, legislators, lawyers, accountants to do their bidding. As income and wealth have risen to the top, so has the power to manipulate the system in order to acquire even more money and more influence." -Robert Reich

So far, so good. The has been going on in most administrations since Woodrow Wilson's. But then Robert Reich just notes the effects of international competition not acknowledging his own role as being a 'free-trader' advocate and promotor of nafta under Clinton.

While there has been a tilt at the top with laws and trade policies tilting the econonic plane toward the rich, the same thing is happening at the bottom. Whereas in 2000, one in ten jobs was held by a foreign born residents, legal and otherwise, more recently one in seven jobs is held by a foreign born resident. The reason I bring this up is because Mr. Reich does not bring supply demand into his equation. Sending jobs out of the country with nafta agreements reduces the number of jobs obviously so the same number of workers are competing for fewer jobs. Bringing in large numbers of foreign workers to compete for the remaining jobs further increases the competition for the fewer remaining jobs. Under this distorted supply demand situation, workers cannot demand higher pay because workers are a surplus commodity.

I am not disagreeing with Mr. Reich's statement; only suggesting it covers more territory than he suggested whatever role he may have played in making things worse.

[rb336]

I believe auto workers today would balk at having their wages cut in half.

weren't you watching the last few years?

[LodgeDodger]

I'm sure that unilateraly doubling their employee's wage rate would work for any manufacturing corporation today, as long as over the previous four years at the old wage rate, they have been able to reduce their product's labor input by 87% and it's selling price by 35% while seeing their sales increase by 340% - all of which Ford did with the Model T from 1910-1914 before doubling his worker's wages.

Since Old Henry's "wage motive" is being held here as such an exemplary practice and worthy of imitation, what about the rest of his HRM practices, such as the full discretion his managers had on hiring and firing and the ability to send Ford inspectors into the worker's home to check on their living conditions and personal habits in exchange for continued employment at the doubled wage?

Bottom line, Old Henry had a unique set of circumstance in front of him when he announced the $5 daily wage and there were no EEO regulations constraining his decisions on those would get to benefit from it.

Excellent post, mikeg.

[LodgeDodger]

I'd like to add that I'm sure we all know by now that it wasn't really five dollars a day.

[maxx]

When will the Chinese cars arrive here? I thought their arrival was imminent, but I guess not.

http://www.askmen.com/top_10/cars_200/222_car_list.html