A
century ago, Henry Ford rocked the world of American business when he
doubled the wages of his workers to five dollars a day. The response
of the business industry was largely negative, with the Wall Street
Journal commenting that Ford “has committed economic blunders, if
not crimes.” But charges of economic malfeasance were proved wrong
as Ford not only quickly established his company firmly atop the
industry but set the foundation for the growth of the
twentieth-century consumer economy.
By
1914, Ford already had revolutionized American culture both with his
novel idea that automobiles should be affordable for the working
class and not just toys for the rich, and through his perfection of
the assembly line to mass produce his Model T allowing him to lower
their price. The impact of Ford’s innovations rippled throughout
society, leading to the rapid growth of a wide range of related
industries, such as those necessary for constructing highways,
vulcanizing rubber and refining gasoline.
The
assembly line transformed the labor process, stripping away workers’
autonomy and skills, making the work itself repetitive and
monotonous. Consequently, absenteeism and worker turnover rates
soared. As Ford biographer Steve Watts says, “In short, the
company’s labor problem stemmed from its inability to make human
efficiency as great as technological and organizational efficiency in
the production of the Model T.”
To
address these problems, Ford decided in early 1914 to give workers a
$2.60 daily bonus on top of their $2.40 salary. As Ford saw it, the
raise not only would help solve his labor problems, but would benefit
the entire country. With the wage hike, he would later say, “we
increased the buying power of our own people, and they increased the
buying power of other people, and so on and on. It is this thought
of enlarging buying power by paying high wages and selling at low
prices which is behind the prosperity of this country.”
In the words of historian Harold Livesay, “Auto workers’ wages,
as Ford predicted, nourished service businesses and helped create a
market for other mass-produced consumer goods—washing machines,
refrigerators, electric irons, indoor plumbing, sewing machines.”
In short, it helped establish the foundation of the economic success
of twentieth-century America by vastly expanding the purchasing power
of the middle and working classes.
Since
the assembly line set the work pace, Ford could not tie his raise to
workers’ productivity. And since Ford was not comfortable with
many aspects of this emerging consumer culture, his goal was to use
the bonus in an attempt to impose a traditional morality on his
workers. Thus the Ford Company established its Sociology Department
to determine who received a bonus by interviewing workers and
inspecting their homes in an effort to encourage such values as
family life, home-owning and responsible consumerism and dissuade
workers from alcohol, sexual immorality and the hedonistic
attractions of jazz-age culture.
As
Watts comments, “This prescription for creating new people to
inhabit a new world by dint of an old-fashioned Victorian creed was
replete with tension.” In his factories, Ford imposed a regimented
work discipline that deprived labor of creativity and joy. In doing
so, he reinforced the idea that one works only for the wages and that
getting to spend those wages on consumer goods is the reward for
working a boring job.
In a consumer culture though, people need to be encouraged to spend
as a means of self-fulfillment. And yet Ford desperately wanted to
control how his workers sought to fulfill themselves. He wanted to
preserve what he saw as traditional American values. But as
journalist Upton Sinclair wrote, “Henry Ford was doing more than
any man now alive to root out and destroy this old America; but he
hadn’t meant to do it, he had thought that men could have the
machinery and comforts of a new world, while keeping the ideas of the
old.”
If
Ford found himself trapped in the cultural contradictions of consumer
capitalism, at least his generous wages allowed his workers
full participation in that culture. But it appears the Ford model is
going the way of the Model T. Stubbornly high unemployment rates and
business resistance to raising the minimum wage indicate, as Reuters
journalist Chrystia Freeland says, “the creative destruction of
twenty-first-century capitalism seems to be requiring U.S. companies
to learn to prosper with fewer U.S. workers and with fewer U.S.
middle-class consumers.”
Ford
would view this economic transformation as not just a blunder, but an
economic crime, for, as he commented in justifying his five dollar a
day wage, “No one made himself wholly what he is: in a sense all
humanity cooperated in the success that some men think they alone
won.”
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