DID YOU KNOW that Henry Ford Unilaterally Doubled the Wages of his Workers?

January 5th, 1914, Henry Ford shocked the nation by more than doubling his workers salaries to $5 per day from about $2.38 per day. What Henry Ford understood was that if his workers couldn’t afford his product then they couldn’t become in addition to employees customers. Henry Ford clearly understood that if he wanted to sell more of his cars he needed more people to be able to afford them. This wasn’t in any way a gift to his workers, it was simply a basic understanding that he would do better if they also did better. (http://www.thedailybeast.com/articles/2014/01/06/henry-ford-understood-that-raising-wages-would-bring-him-more-profit.html)

Today however all the talk is about how to pay less and less for employees. The presumed proper accounting and therefore reward only values financial equity and input and not sweat equity and employee input. Employees are squeezed harder and harder so as to reward financial inputs more and more. Essentially starving employees and making them completely unable to participate in the market as consumers and valued customers.

The less employees make the less secure they are. The lower their compensation is the harder it is for them to obtain and pay for standard necessities such as housing, food and transportation. Housing becomes unaffordable. Food becomes unaffordable. Transportation becomes unaffordable. A downward spiral ensues and finally an equitable society ceases to exist. We are left only with the haves and the have nots: nothing in between.

The irony of this particular moment in time, is that the United States one of the pioneers of a more equitable income distribution is now careening down a path of more and more inequality just as some third world countries like Chile, Costa Rica, and Uruguay have finally embraced and put in place systems that are creating more equitable economies. And so the United States moves more and more in the direction of countries such as Russia, Brazil and India with huge wealth disparities and the concomitant social problems.

The reality is that Henry Ford’s decision to double salaries was only the first step in creating and enabling a more just society. In the 1920’s employees gained pensions and healthcare benefits. In the 1930’s federal legislation empowered unions and enforced a federal minimum wage. Then a period of relative stability and equality ensued. However in the 1980’s the tide started to turn back. Ronald Reagan one of the most anti-labor presidents started his union busting crusade. “Union-busting was only one aspect of Reagan’s anti-labor policy. He attempted to lower the minimum wage for younger workers, ease the child labor and anti-sweatshop laws, tax fringe benefits, and cut back job training programs for the unemployed. He tried to replace thousands of federal employees with temporary workers who would not have civil service or union protections.” (http://www.dickmeister.com/id89.html)

Thirty five years later the pendulum has swung back all the way. The fact is that doubling employees wages did not kill Ford, the fact is that by 1916 profits at Ford had doubled and sales continued to boom. What the country needs today is another leader who understands the importance of a living wage for general all around growth.

Photo credit: www.fordfarm.com