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Monday, September 14, 2015

Best Thing I've Read Today

Jon Schwarz points out that, adjusted for inflation, Henry Ford was paying employees a minimum wage of $15/hour a hundred years ago and, just like today, all the pundits said it would kill his business and cost jobs...

Ford famously decided in 1914 to raise his workers’ wages to $5 a day while cutting the workday from nine hours to eight. Five dollars in 1914 has the same buying power as $119.32 in 2015. Divided by eight, that’s $14.92 an hour.

When Ford made his announcement, the New York Times proclaimed that “The theory of the management at Ford Motor Company is distinctly Utopian and runs dead against all experience.” According to the Wall Street Journal, Ford had “committed economic blunders, if not crimes” that would “get riddance to Henry Ford of his burdensome millions” and “may return to plague him and the industry he represents, as well as organized society.”

Instead, Ford had kicked off the age of mass consumption, a huge century-long economic expansion, and the creation of the first real middle class in world history. As Ford later wrote: “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.”
Read Schwarz's full piece here.