My first diary, guys, so please be gentle...
It's long been quoted that Henry Ford raised the pay of his manufacturing workers because he knew he'd sell more cars as a result.
The TEAOPers always came back with "that's a misquote" or "prove he said that" but tracking it down has proven to be a bit of a task.
Until now.
Go below the squiggly for more...
http://www.saturdayeveningpost.com/...
But Ford had an even bigger reason for raising his wages, which he noted in a 1926 book, Today and Tomorrow. It’s as a challenging a statement today as it as 100 years ago. “The owner, the employees, and the buying public are all one and the same, and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers. One’s own employees ought to be one’s own best customers.”
It might have been just another of Ford’s wild ideas, except that it proved successful. In 1914, the company sold 308,000 of its Model Ts—more than all other carmakers combined. By 1915, sales had climbed to 501,000. By 1920, Ford was selling a million cars a year.
“We increased the buying power of our own people, and they increased the buying power of other people, and so on and on,” Ford wrote. “It is this thought of enlarging buying power by paying high wages and selling at low prices that is behind the prosperity of this country.”
In 1919, he did it again, to $6.00 a day. And got even higher production from it. Ford said “The payment of five dollars a day for an eight-hour day was one of the finest cost-cutting moves we ever made, and the six-dollar-a-day wage is cheaper than the five. How far this will go we do not know.”
After the crash of '29, he tried raising wages to $7.00 a day, but it failed to work because he was one company and couldn't lift an entire economy on his own.
Ford didn’t blame the workers though. He blamed business leaders who were “continually putting the profit motive over what he called the wage motive.”
Ford would tell Garrett: “When business thought only of profit for the owners ‘instead of providing goods for all,’ then it frequently broke down.”
Exactly so. Had other businesses been willing to take a short-term loss, it would have helped stabilize the non-financial economy.
In the end, the point was:
While it worked, though, Ford’s $5.00-a-day policy helped the company achieve record profits. It made its cars affordable to its workers (who could purchase a Model T with four months’ wages.) It helped put 15 million Americans behind the wheel of an automobile. And it set a standard for wages that, despite all the predictions of doom for the Ford Motor Company, every other car company eventually adopted.
Now we can confidently throw the proof right in the face of the other side. SMART businessmen understand that if businesses don't pay well, you don't have as many cutomers customers.