On This Day

henry ford, henry ford portrait
Hartsook/Library of Congress
Henry Ford

On This Day: Henry Ford Introduces $5 Workday

January 05, 2012 05:00 AM
by findingDulcinea Staff
On Jan. 5, 1914, Henry Ford introduced a minimum wage scale of $5 per day, more than doubling the wages for most employees of his Ford Motor Company.

The Ford Wage Increase

facebook
Ford also offer profit sharing to employees who lived a clean lifestyle, reduced the daily worker’s shift from nine hours to eight hours and declared that no employee would “be discharged except for proved unfaithfulness or irremediable inefficiency.”

Ford treasurer James Couzens said, “It is our belief that social justice begins at home. We want those who have helped us to produce this great institution and are helping to maintain it to share our prosperity. We want them to have present profits and future prospects. … Believing as we do, that a division of our earnings between capital and labor is unequal, we have sought a plan of relief suitable for our business.”

The wage increase, which was national news, fostered goodwill for Ford, who was generally praised in non-business circles for his generosity toward his workers. His primary motivation for the wage increase, however, was economic. Ford hoped to reduce the company’s high turnover rate and retain its best employees. The increased cost of wages was offset by increased production and decreased training programs and other costs associated with hiring new employees. Furthermore, the wage increase provided Ford employees with enough money to purchase Ford automobiles, further increasing sales.

Ford was criticized by some business leaders and business journalists who believed that he was harming his company or acting like a socialist; the Wall Street Journals wrote that he brought “Biblical or spiritual principles into a field where they do not belong.” Ford was proven correct however, as his wage increase had its intended effect: turnover declined sharply and profits doubled from $30 to $60 million between 1914 and 1916.
facebook

Most Recent Beyond The Headlines