How Henry Ford invested in people and succeeded
Henry Ford: The Visionary Who Transformed American Industry and Society
Henry Ford (1863-1947) stands as one of the most influential industrialists in American history. While often remembered as the man who pioneered the assembly line and made automobiles accessible to the average American, Ford’s impact extended far beyond manufacturing innovations. His revolutionary business decisions, particularly the infamous “$5 Day,” fundamentally reshaped American industry, labor relations, and helped create the modern middle class.
Early Life and Ford Motor Company
Born on July 30, 1863, in Greenfield Township, Michigan, Ford displayed mechanical aptitude from an early age. After working as an engineer at Edison Illuminating Company, he began experimenting with gasoline engines and automobiles. In 1903, he founded the Ford Motor Company, which would become one of the world’s largest and most profitable businesses.
Ford’s introduction of the Model T in 1908 democratized automobile ownership. His vision was clear: create a car for the common man. “I will build a motor car for the great multitude,” he declared. By 1919, half of all cars in America were Model Ts, and Ford’s company was valued at approximately $250 million (equivalent to about $3.9 billion today).
The Revolutionary $5 Day
Perhaps Ford’s most transformative decision came in January 1914, when he shocked the business world by doubling his workers’ wages overnight to $5 per day. This bold move was met with fierce criticism from competitors and financial experts who predicted disaster. The Wall Street Journal went so far as to attack Ford for committing “economic blunders, if not crimes.”
The wage increase was a response to serious operational challenges. Before the “$5 Day,” Ford’s factories were plagued by:
- Annual worker turnover reaching a staggering 370%
- Daily turnover of 10% of the workforce
- Grueling 9-hour shifts of repetitive assembly line work
- An average employee tenure of just 90 days
This constant churn was financially devastating. In 1913 alone, Ford had to hire 52,000 men just to maintain a workforce of 14,000. The costs of continually training new workers severely impacted the company’s efficiency and bottom line.
More Than Just Higher Wages
The $5 Day program came with significant conditions. To qualify, workers had to:
- Be at least 22 years old
- For men, be supporting a family
- For women, be single and supporting family
- Have at least six months of service at Ford
- Maintain a “clean, sober life”
Ford even established a “Sociological Department” that conducted home visits to ensure employees avoided alcohol and gambling, kept clean homes, saved money, and didn’t take in boarders. Immigrant workers faced additional requirements, including mandatory attendance at the Ford English School to learn American customs and English language.
While these paternalistic practices would be considered invasive and inappropriate today, they reflected Ford’s belief that he was helping to elevate his workforce to middle-class respectability.
Transformative Results
The business impact of the $5 Day was profound and immediate:
- More than 10,000 job seekers swarmed Ford’s Highland Park plant the day after the announcement
- Worker turnover plummeted from 370% to just 16%
- Productivity increased by 40-70%
- Company profits doubled from $30 million to $60 million in just two years
Ford himself later explained: “The payment of five dollars a day for an eight-hour day was one of the finest cost-cutting moves we ever made.”
Creating Customers and a Middle Class
Perhaps the most revolutionary aspect of Ford’s wage policy was its broader economic impact. Ford understood that his workers were also potential customers. At $5 per day, his employees could now afford the very products they were building. With the Model T priced at $360 in 1916, a Ford worker could purchase one with approximately two months’ salary.
As Ford succinctly put it: “The owner, the employees, and the buying public are all one and the same.”
The ripple effects extended throughout the economy. Other manufacturers were forced to raise wages to compete for workers, helping to create an emerging middle class with significant purchasing power. Consumer spending surged, boosting the entire economy and making the “American Dream” attainable for many working-class families for the first time.
Legal Challenges and Response
Not everyone appreciated Ford’s worker-focused approach. Shareholders, led by the Dodge brothers, sued Ford, claiming he had no right to value workers above shareholder profits. The case reached the Michigan Supreme Court, where Ford actually lost.
Ford’s response was characteristic of his determination – he simply bought out most shareholders to gain majority control (51%) of his company, allowing him to continue implementing his vision without interference.
A Complex Legacy
Henry Ford’s legacy is multifaceted and complex. While his $5 Day program helped transform American labor and create a more prosperous working class, he remains a controversial figure due to his well-documented antisemitic views published in his newspaper “The Dearborn Independent” and his sometimes authoritarian management style.
Nevertheless, his fundamental insight about the relationship between wages, productivity, and consumption remains relevant today. Ford recognized that treating workers as valuable assets rather than costs to be minimized could create a virtuous economic cycle that benefited everyone – workers gained economic security, the company gained efficiency and profits, and society gained a stable, consuming middle class.
In an age when many executives view labor costs as something to minimize, Ford’s counterintuitive approach stands as a powerful reminder that worker prosperity and business success need not be opposing forces. As one observer noted, the $5 Day “wasn’t a handout or socialism – it was capitalism at its most strategic.”
Comment
Henry Ford’s philosophy is as relevant today, as ever!
In the age of globalism, where the corporations beat the drum of Geopolitics, the victims of their greed and calculated agenda are the people.
In recent years, gap between the minimum wage and the median wage (as opposed to the average salary) which currently stands at £37,430, has been shrinking, and the number of jobs that have sat at minimum wage have been increasing steadily for years.
How do you devalue labour? As with everything else, it is about supply and demand, therefore by increasing the supply, the value falls, and that is exactly what has been happening across the board as a result of mass immigration.
Henry Ford realised that investing in his workforce, would increase moral, loyalty and productivity, and despite the fact that his actions were met with hostility and legal action by shareholders, he stuck to his philosophy and succeeded.
Fast forward to today and we are facing the same issues, disposable income falling month on month, GDP per capita has been falling continually, for the last 4 years and now we are being dragged back into a political alliance that will devalue the British workforce even more.
This is not about socialism, it is about protecting the citizens of this country and ‘common decency’
There is always a need for both points of view, that is those who favour low taxation and free markets, as well as those who favour higher taxation along with investment in people, each one plays an important role in maintaining a moral, social and corporate equilibrium.
Labour is no longer the party that fights for the interests of working people, it is servant of the globalists that is taking steps to the detriment of working people, by making them dispensable.
At a time where working people are in despair and so many others completely blinded by the false narrative, which is designed to turn citizens into worthless units in an elitist global state, we need to address the real agenda here and perhaps, we could learn from a very forward thinking man who understood this over a century ago.