In an interview published in the October, 1926 issue of a business magazine called The World’s Work, Henry Ford announced that he was instituting a 5-day, 40 hour work week throughout his business enterprises -- with no reduction in pay.
Five days work for six days pay. It was a big deal. Remember, the norm at the time was a 6 day, 48 hour week.
A dozen years earlier, Ford had shocked the industry by instituting am 8-hour day and a $5 daily minimum-wage. (The average in the auto industry at the time was $2.34 for 9-hours.)
Five days work for six days pay. It was a big deal. Remember, the norm at the time was a 6 day, 48 hour week.
A dozen years earlier, Ford had shocked the industry by instituting am 8-hour day and a $5 daily minimum-wage. (The average in the auto industry at the time was $2.34 for 9-hours.)
So why did he do these things? There were no labor unions to worry about at the time. There was no shortage of factory labor.
Was Ford a bleeding heart liberal? Was he a socialist? A communist? Was he an altruistic humanitarian?
None of the above. Ford was a capitalist, through and through -- and hard nosed as they come. But in seeking to maximize returns, he beyond the next quarter's profits. According to Ford's own account, when he originally instituted the $5 minimum wage, he was concerned mainly with retaining a quality workforce, which was being undermined by high labor turnover.
Regarding the reduction in hours, his reasoning was somewhat different. Here, in his own words, is Ford's explanation of why he did it.
The country is ready for the five day week. It is bound to come through all industry ... because without it the country will not be able to absorb its production and stay prosperous.
The harder we crowd business for time, the more efficient it becomes. The more well-paid leisure workmen get, the greater become their wants. These wants soon become needs. Well-managed business pays high wages and sells at low prices. Its workmen have the leisure to enjoy life and the wherewithal with which to finance that enjoyment.
The industry of this country could not long exist if factories generally went back to the ten hour day, because the people would not have the time to consume the goods produced. For instance, a workman would have little use for an automobile if he had to be in the shops from dawn until dusk. And that would react in countless directions, for the automobile, by enabling people to get about quickly and easily, gives them a chance to find out what is going on in the world-which leads them to a larger life that requires more food, more and better goods, more books, more music -- more of everything. ….
Just as the eight hour day opened our way to prosperity, so the five day week will open our way to a still greater prosperity.
[emphasis added]
Wow! Reading these words today is like a breath of fresh air, isn't it? Make no mistake, this stuff is radical . Because it reflects a recognition that in the end, there can be no difference between a company's employees and its customers. Corporate policies that seek to exploit cheap labor eventually destroy the market for the very goods that cheap labor is producing.
Listen to this. Henry Ford in his own words. “The people who consume the bulk of goods are the people who make them. That is a fact we must never forget -- that is the secret of our prosperity.”
The secret of our prosperity. Well, sorry to say, American business has forgotten that secret. And it's lack of remembrance is the source of our current Great Recession. Offshoring, out-sourcing. part-timing, pension-raiding, benefit cutting -- business tactics like these, pursued over a period of decades, has systematically undermined the American consumer. It's no wonder income disparity hasn't been this high since the eve of the Great Depression.
The nation is stuck at 20% unemployment/underemployement. Why? Because the job market has been gutted through a series of short-sighted schemes instituted to “maximize shareholder value”.
Adjusted for inflation, average weekly wages haven’t increased since 1973. All the wives and kids who can find a job are already working. And now that the home equity is gone, there’s nothing left to borrow against. It's no wonder the consumer has finally run out of gas.
Ask yourself this, "Where is a recovery going to come from when our biggest export over the past three decades has been jobs?"
What we need is a renaissance of American thinking. We need to realize that making cheap goods abroad will not sustain a domestic market. We need to realize that nobody's going to have a job if everything we buy is made aborad.
We need to realize we're all in this together.
We need few more Henry Fords.
