‘It’s not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages’ (Henry Ford, cited in Johnson and Weinstein 2004, p. 2). When the Ford Motor Company announced that it would more than double the wages of its workers in January 1914 to a ‘five-dollar day’ minimum, was this a contradiction to Henry Ford’s statement? If customers are actually the ultimate payers of wages, then more than doubling these wages can only be justified if, in some other way, it generates an equal or superior amount of value (either through a better product, lower costs, or both). According to the theory of incentives and efficiency wages, this is indeed the case, and Henry Ford even asserted that this decision was one of the best-cost cutting judgements they ever made (Raff and Summers 1987). This paper will outline the history of Ford Motor’s 1914 decision and relate it to the theory of incentives and efficiency wages.
The decision to implement the five-dollar day minimum wage at Ford Motor came at a moment when the firm’s labour force had expanded more than thirty-fold in the previous six years. Output had risen twenty-five-fold in the previous five years and worker tasks had become increasingly menial and repetitive, with no room for discretion. This led to widespread employee dissatisfaction, with turnover reaching 370 per cent in 1913 (this was extremely high relative to other firms and industries). This level of turnover has been attributed to wage inequities and inadequate work conditions apart from job monotony. Absenteeism also soared. There were no formal vacations for the working class; therefore voluntary lay-offs could be seen as their replacement. Despite all these problems, Fo...
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Ford offered an incredible perk for people working in his company. He offered the workers $5 a day minimum wage even though in other auto industries the wages were $2.34. So Ford was paying more than double the average wage to his workers, this shows his dedication to his work. Henry Ford despised Labor Unions for the sole reason that they were pointless and that because he thought he knew how to take care of his workers better than anybody else did. However, in 1941 he faced a general strike from his workers that made him change his mind, reluctantly. Ford had worked a lot to create a car that would be affordable to any common person. He stated, “ I will build a car for the great multitude…so low in price that no one will be unable to own one.
By 1927, Ford was a very successful industrialist, who had made a fortune out of manufacturing cars and displayed a new model of industrial production. He paid his workers much higher than average wages and offered various other incentives to encourage them to live the lives he thought they should. However, he was not a totally honest employer. He was violently anti-union and employed thugs to intimidate anyone who tried to organize and represent his workforce. Ford's generosity as a boss was dependent on letting the company make decisions for the workers, not just in the factories but in the way employees lived their lives, spies were actively out and about observing workers' off duty lives. Ford thought he could create a vast rubber plantation in Brazil, thus ensuring a reliable supply of latex for his new Model A as well as for his Ford trucks and tractors. In the process, he intended to show the world that his system of production would also elevate the lives of his workers.
In conclusion, the period from 1875 to 1890 brought many attempts at bettering the working conditions, but many of the working class’s attempts at being recognized went unnoticed. This resulted in violence, frustration, and unnecessary deaths. The series of failed strikes and attempts to receive government intervention resulted in heightened anger among the employees. Without an increase in wages, decrease in working hours, and improvement of working facilities, many workers left their jobs leaving the employer angry and in need of workers. None were available, however, because they were either protesting for better working conditions, signing a contract with a better company, or blocking rail and roadways in order to get their points across to the government.
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Factory workers of this time had very little freedom. Aside from having to work outrageous hours for 6 days of the week, there was no job security, no solid way to survive day-to-day, and if a family member were to suffer an accident, families had no financial means to carry on. In the early 1900s, there were no labor laws, including the right to organize, an eight-hour day, safety standards, or unemployment/disability pensions. M...
The last bolt is screwed on as a relieved automotive worker marvels at his wondrous creation: a car. With the roar of an engine, the car slowly disappears into the distance. The worker gradually turns around, picks up his tools, and continues to work on a new car. As a consumer, we rarely wonder how things are made; we simply take everything we own for granted. For once, have you wondered how many hours of hard labor many automotive workers must go through? The automotive industry has been around for many years, but it has not always been as efficient as it currently is. As the industry continues to evolve, many new innovative ideas are still being developed. In the past, automotive workers have had to work in harsh conditions without much security or job benefits. Nevertheless, through the continuous development of organized collective bargaining, workers are being treated as they should be. Being the largest automobile manufacturer in the world, General Motors Corporation has been greatly affected by the needs of their workers. Rick Wagoner, CEO of General Motors, is currently in charge of “running the show” at GM. Being the most successful automotive company since 1931, it is obvious that he not only has to satisfy customers, but also the workers within the company. From the smallest things such as a work raise to bigger things such as the working condition, the management of General Motors has been pressured to make both positive and negative changes to the way the company is run as a whole in order to satisfy the workers who are part of the UAW Union. Therefore, the formation and development of unions encompasses both pros and cons.
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During both the Progressive Era and New Deal Era many American citizens faced low pay. To deal with this, workers from both eras fought unfair labor practices by creating unions and strikes. During the Progressive Era employers soon realized better paid workers are better able to afford the products they were selling. Henry Ford was one of the first employers to realize this, in result he raised the pay of worker to an average of $5 per day. This resulted in Ford’s annual input increasing from 34,000 cars to 730,000 cars from 1910 to
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Ford used Taylor’s scientific management principles and come up with the mass production and assembly line. This benefitted the motor vehicle industry highly. The effects of Taylorism and Fordism in the industrial workplace were strong and between the period of 1919-1929 the output of industries in the U.S doubled as the number of workers decreased. There was an increase in unskilled labour as the skill was removed and placed into machines. It lead to the discouragement of workers ability to bargain on the basis of control over the workplace.
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