In the first decades of the twentieth century, social justice was in the air. The UK brought in Old Age Pensions in 1908. The first minimum wage laws were brought in by Massachusetts in 1912. BC and Manitoba adopted them in 1918. Ontario and three other Provinces followed suit in 1920.
Ontario is about to celebrate 100 years of workers’ compensation as it brought in the first Workers’ Compensation plan in 1914. Ontario announced its first widow’s pension in 1920
But one announcement in the USA was a real game-changer.
On January 5, 1914, Henry Ford called reporters to the Ford Plant in Dearborn Michigan to hear an important announcement.
“The Ford Motor Company, the greatest and most successful automobile manufacturing company in the world, will, on January 12, inaugurate the greatest revolution in the matter of rewards for its workers ever known in the industrial world.”
He explained the details: not only would the plant switch from two nine-hour shifts to three eight-hour ones, allowing it to run around the clock, but each man over 22 would receive the minimum wage of $5 a day, and men under 22 would qualify if they had dependants.
“The commonest labourer who sweeps the floor shall receive his $5 per day,” Ford told the reporters.
“We believe in making 20,000 men prosperous and contented rather than follow the plan of making a few slave drivers in our establishment millionaires.”
Henry Ford had, in effect, breathed life into the new social policy of the minimum wage.
Henry Ford was not, by any standard we would use today, a progressive man. He would go on to become an outspoken union buster. He was also solidly against the rights of women and an overt racist. His recruiting practices through a ‘Sociological Department’ were both patronizing and demeaning.
Yet his ground-breaking wage increase, which more than doubled the average payment of $2.34 a day, revealed a real interest in both equality and enterprise. Ford talked of topics such as social justice and fairness. He believed that “dying rich was a disgrace.” Ford also understood that paying his employees a living wage would make them more productive:
“Recognizing the human element in mass production, Ford knew that retaining more employees would lower costs, and that a happier work force would inevitably lead to greater productivity. The numbers bore him out. Between 1914 and 1916, the company’s profits doubled from $30 million to $60 million. “The payment of five dollars a day for an eight-hour day was one of the finest cost-cutting moves we ever made,” he later said.”
Ford’s 114% increase in base wages in 1914 is the rough equivalent of an increase of Ontario’s $10.25 minimum wage to $21.90 an hour.
One hundred year celebrations are usually big deals when people indulge grand dreams yet for most, a $21.90 an hour minimum wage is unthinkable.
But let’s not squelch grand dreams. Let’s remember that 100 years ago, the unthinkable was implemented.
js/29/12/2013 – mash up excerpted from Turn out the Lights:
. Byron Preiss Visual Publications, Inc. and Forbes Inc., Forbes greatest Business Stories of All Time, John Wiley & Sons, Inc., 1996 http://www.wiley.com/legacy/products/subject/business/forbes/ford.html