TBT: ‘No One Loses Anything:’ Ford Rings in New Year in 1914 with promise of $5 Workday

Jan 04, 2024

Shortly after the advent of the moving assembly line, which drastically improved production time of the wildly popular Model T, Ford Motor Company had another issue on its hands. Employee turnover and absenteeism in Ford’s factories stood as a barrier to mass production to meet the ever-growing demand. The solution, introduced 110 years ago this week, was the $5 workday. The implications of the raise can be seen today not only within the company but also with the creation of the American working middle class.

The $5 workday – which doubled workers’ previous earnings – was to be paid as profit sharing for each employee at Ford’s Highland Park plant where the Model T was produced. Announced on Jan. 5, 1914, the change also reduced the workday to eight hours from nine, which enabled the company to add a third production shift at the plant.

“No one loses anything by raising wages as soon as he is able. It has always paid us,” Henry Ford said. “Low wages are the most costly any employer can pay. It is like using low-grade material – the waste makes it very expensive in the end. There is no economy in cheap labor or cheap material.”

Workers flock to Ford

The day after the announcement, 10,000 people lined up outside the Highland Park plant looking for work. The opportunity famously drew workers from around the country in search of prosperity in Detroit working for Ford.

Employees were soon able to make a better life for themselves, saving more money and buying higher- priced homes – a key tenet of company founder Henry Ford’s philosophy that a worker is better able to focus on the demands of the job if their home life is free of worry. The effects of the pay hike were also reflected in the daily absentee rate, which quickly fell from 10% to less than 1% by 1916. Ford had been hiring as much as 60% of its workforce anew each year due to turnover, which also improved dramatically with the wage increase.

The rise of ‘Fordism’

The $5 workday eventually spread to workers at the Rouge and other Ford plants. Wages continued to rise through the 1920s, hitting $7 per day before the onset of the Great Depression. Employees were saving more money and buying new, more expensive houses in better neighborhoods. 

The term “Fordism” – meaning production on a grand scale performed by highly paid workers – quickly spread throughout the world. Competitors in the automotive industry and their suppliers, and later those in other industries, also adopted this philosophy.

Ultimately, the $5 workday helped stabilize the workforce and improve quality at Ford Motor Company, but it also had a lasting impact on society as a whole, as the average worker now had the means to afford the vehicles they were making, as well as additional disposable income and more leisure time.

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