By on October 13, 2014

HFM&GV

Over at Bloomberg View, Megan McArdle, in a post titled “Employees Are Not Your Customers” happens to use one of the more enduring myths of automotive history to prove her point. That myth is that Henry Ford started paying his famous $5 a day wage in 1914 so his employees could afford to buy Model Ts. She was using the story as an example to make a specific point so Ms. McArdle doesn’t tell her readers the real reason why Henry started paying a more livable wage. That gives us an excuse to learn some history.

McArdle elucidates:

The other day, I noted in passing that it is arithmetically impossible, except in some bizarre situation with little bearing on the real world, to make money by paying your employees more and thus enabling them to afford your products.

Someone asked me to show my work. So let’s run a simple model based on Henry Ford’s legendary $5-a-day wage, introduced in 1914, which more than doubled the $2.25 workers were being paid.

That’s about $700 a year, almost enough to buy a Ford car (the Model T debuted at $825). Now let’s assume, unrealistically, that the workers devoted their extra wages to buying nothing but Model Ts; as soon as they bought the first one, they started saving for the next.

Is Ford making money on this transaction? No. At best, it could break even: It pays $700 a year in wages, gets $700 back in the form of car sales. But that assumes that it doesn’t cost anything except labor to make the cars. Unfortunately, automobiles are not conjured out of the ether by sheer force of will; they require things such as steel, rubber and copper wire. Those things have to be purchased. Once you factor in the cost of inputs, Ford is losing money on every unit.

But can the company make it up in volume, as the old economist’s joke goes? Perhaps by adding the workers to its customer base, Ford can get greater production volume and generate economies of scale. But Ford sold 300,000 units in 1914; its 14,000 employees are unlikely to have provided the extra juice it needed to drive mass efficiencies.

So if Henry didn’t pay his employees more money so they could afford his automobiles, why did he pay them $5/day? Well, the answer to that question involves another one of those automotive legends.

ford-pay-five-dollars-a-day-392x500

That particular myth is that Ford invented the assembly line or, more in a more modest version, he was the first to use an assembly line to build cars.  Henry understood the value of publicity and very early on he started to put together a public relations effort that went far beyond simple advertising. Ford’s publicity machinery cranked out the image of the mechanical and business genius from Dearborn, the farm boy who made it big. I’d be surprised if Ford’s propaganda team didn’t originate the notion that Henry Ford invented the assembly line. In fact, though, Ransom E. Olds was building cars with an assembly line process a decade before Ford moved from the station assembly process to assembly lines. When Ford built the big Highland Park plant in 1910, it used station and sequential assembly processes until 1913.

That’s not to say that Henry Ford wasn’t a manufacturing innovator. Ford’s great contribution to mass production was reducing assembly to the simplest tasks, something a minimally trained person could do. It’s well known that Ford changed the automobile industry from producing luxury cars and toys for the wealthy to making mass market transportation devices. Those luxury cars were often hand-built by skilled craftsmen. In addition to changing what cars were, Henry Ford also changed who made cars, from skilled fabricators and artisans to semi-skilled industrial workers.

plant

Thousands of job seekers descended upon the Highland Park Ford plant after Henry Ford announced his $5/day wage.

Going to an assembly line process with simplified tasks allowed Ford to massively ramp up production. Production went from 94,662 in 1912 to 224,783 to 1913, the first year of the assembly line. Ford and his lieutenants first use of an assembly line was for putting together the innovative magneto that was a critical component of the Model T. By the time they initiated final assembly on a line, almost the entire Highland Park plant was using that process for subassemblies. That way they worked out the kinks in the process.

Ford’s assembly lines  along with Ford’s embrace of Taylorism (also known as Scientific Management) which included things like timing employees with stopwatches, plus the fact that Henry’s factories, modern as they were in their day, were noisy and dangerous (at the Rouge complex, started in 1916, there was an office tasked with placing employees into jobs who had hitherto been somehow disabled on the job), made working for Ford in 1913 a miserable existence. In 1913, Ford had to employ over 40,000 new hires just to keep 13,000 workers on the job. Even with only minimal training needed, that kind of employee turnover will kill a business model based on productivity, as Henry’s Model T plan was. In order to reduce his employee turnover rate, Ford made the logical decision: pay them more and they won’t quit. It worked.

It’s true, however, that Ford’s increased wages (paid as a bonus, not available to all employees and subject to having their lives spied upon by Henry’s “Social Department”) did ultimately increase the market for inexpensive automobiles. Overnight, the wage floor for automaking in Detroit, already the center of the industry, doubled. In short time $5/day was a standard wage. Still, Megan Mcardle’s point must be stressed, paying your employees enough money to afford your products is no business model. At best it’s transferring money from one pocket to the other while incurring some costs that likely will not offset profits on those sales. While many car companies do offer employee discounts today , those are only possible because of profitable retail and fleet sales.

While Henry Ford may be unfairly credited with inventing the assembly line, he usually doesn’t get any credit for an innovation of his that has made the lives of working men and women much more pleasant, the weekend. Having the weekend off from work is conventionally attributed to organized labor. The labor movement has given workers a lot of things, but not the weekend. That, too, was Henry Ford’s innovation. Originally, Ford employees worked a six day work week, with 9 hour days. That was reduced to five and a half days, with a half day on Saturday. I don’t know if it was Henry’s idea or not, but he finally figured out the math. His business model, as mentioned, was productivity. There are 24 hours in a day and running two 9 hour shifts meant that his factories were sitting idle for 6 hours a day, 2/3rds of a full shift. By going to an eight hour workday and a five day standard work week, Ford was able to run his factories with three shifts, 24 hours a day. Eliminating the half shift on Saturdays meant that, with overtime, FoMoCo plants could run 24/7/365 if he wanted.

Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can get a parallax view at Cars In Depth. If you think that 3D is a plot to get you to buy yet another new television set, don’t worry, all the photo and video players in use at the site have mono options. Thanks for reading – RJS

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110 Comments on “Henry Ford Paid His Workers $5 a Day So They Wouldn’t Quit, Not So They Could Afford Model Ts...”


  • avatar
    319583076

    I worked at Taylor Guitars in El Cajon, CA when they were transitioning from craftsman-built premium acoustic guitars to assembly-line-built high production models – late 90s/early 00s. Unlike Ford, they aggressively expanded their product line and kept their prices premium. Apparently, Bob Taylor was following Paul Reed Smith to a greater or lesser degree.

    Henry Ford is history worth studying.

    • 0 avatar
      petezeiss

      Now that’s fascinating; I worked weekends selling acoustics during that time frame and watched Taylor walk away with such a huge chunk of Martin’s business.

      It was SO easy to talk customers, especially women, up from the better laminate body guitars to an 810 or 410 with those easy actions that were very friendly to soft fingers. Back then, most sold between $800-$1200.

      Taylor really Jappanned the rest of the premium acoustics.

      • 0 avatar
        319583076

        Of all the stories I could relate, the following is most appropriate for this site:

        Bob and Kurt Listug had covered parking spots near the front door. Kurt was daily driving a 911 Turbo, it looks like he’s since expanded or upgraded his Porsche collection. These guys turned a hobby business into an empire.

        Of course, Bob and Kurt benefitted the most and the only true believers that survived the transition were in sales, marketing, and select management positions.

      • 0 avatar
        319583076

        And…while I’m thinking of it – I got to work with Matt Guzzetta (check him out if you have time) while I was there, which was a real treat.

        On some weekends he would bring in his custom Datsun 510. It looked pretty ragged on the outside, but he had replaced the drivetrain with a Ford 5.0 backed up by a Corvette manual transmission, I can’t remember what differential he had installed. All custom fitted and he added a couple of 5.0 badges to the fenders. He related that he like to cruise So Cal freeways and surface streets looking for unsuspecting victims and walk them.

        I also got to hang out with Larry Breedlove quite a bit while I was there. I couldn’t say enough great things about Larry nor could I think of a single bad thing to say about him. What a great guy.

      • 0 avatar
        319583076

        Apparently, the rear end was Corvette, also.

        • 0 avatar
          petezeiss

          Thanks for your responses. Work is harrying right now but I’ll enjoy coming up to speed on Taylor and researching about Breedlove’s company this evening. Been out of that world for too long.

          BTW, are you also a luthier?

          • 0 avatar
            319583076

            No. I went to California as an aspiring musician. I really got lucky to get that job at Taylor – I was working in their Tooling Department with Matt. I sometimes wish I had stayed there, it might have worked out well for me. Then again, it might not have.

            I left CA to finish school and I’m now a structural engineer. I still play a little here and there and have lost touch with those I knew at Taylor.

            There’s a short piece about Matt in this Taylor-generated “magazine”:

            http://www.taylorguitars.com/sites/default/files/WS_Fall2012.pdf

    • 0 avatar
      John Marks

      Interesting about Taylor. My son cross-shopped against Martin and chose a Taylor.

      FYI re: Classical-Guitar Luthierie:

      http://www.stereophile.com/content/fifth-element-87

      Includes a sound sample recorded by me of a friend who was a student of Pepe Romero’s.

      John Marks
      Stereophile magazine

      • 0 avatar
        petezeiss

        Martins can sound astonishingly unimpressive when new. Somehow Taylors arrive at the store already loud, bright and clear in the treble and midrange.

        My store once received a 45K Gene Autry commemorative D-45. Brazilian rosewood sides and back notwithstanding, it didn’t project *any* frequency range as well as a $500 Alvarez-Yairi dreadnought we had on display.

        But after 20 years of regular playing that D-45 will be the guitar equivalent of a 9’6″ Bösendorfer and be worth a house. To understand the Martin mystique one needs to experience the instruments they grow to be.

      • 0 avatar
        petezeiss

        Damn, another comment eaten.

        Gist was that Martins with regular playing grow into little Bösendorfers while Taylors arrive at the store already loud and clear in the treble and midrange.

        There will forever be two equally passionate camps.

  • avatar
    Pch101

    Henry Ford came to the realization that he (and everyone else) had been underpaying their workers. They couldn’t pay low wages and expect to keep a stable workforce at the same time.

    The jobs themselves sucked, so the only way to motivate workers was with pay. Self-actualization was not an option.

  • avatar
    kmoney

    Love these articles. For anyone interested, PBS American Experience did an episode on Henry Ford last year.

    http://www.pbs.org/wgbh/americanexperience/films/henryford/

    Very even handed, and a really good watch.

  • avatar
    28-Cars-Later

    Great article Ronnie.

  • avatar
    bunkie

    “Still, Megan Mcardle’s point must be stressed, paying your employees enough money to afford your products is no business model. At best it’s transferring money from one pocket to the other while incurring some costs that likely will not offset profits on those sales.”

    The glaring flaw in this argument is that the majority of those wages were not spent on buying Model Ts, but on every other thing that workers buy. Furthermore, the benefit of higher wages is not a zero-sum game. This is basic economics and has been proven again and again. The attempt to deny it should be roundly condemned.

    • 0 avatar
      highdesertcat

      What I took away from the article was that HF paid them the $5/day so that the employees could not afford to quit because no one else would pay them that much.

      Put that into today’s vernacular of the minimum wagers wanting an increase to $15/hr and the two are diametrically opposed in scope and concept.

      We all know about the quality of work that the employees of the Big Three cranked out during the decades leading up to the demise of 2008, so both arguments are now mutually exclusive to what is the reality.

      The reality is……. ahhh, but that is already understood and lived every day by the auto-industry employees of today.

      • 0 avatar
        tonycd

        “The reality is……. ahhh, but that is already understood and lived every day by the auto-industry employees of today.”

        What does this mean? As near as I can tell, the auto industry workers of today have reduced bargaining power, far less job security than in Detroit’s Golden Age, and according to objective surveys, are building far higher-quality vehicles than decades ago when they made a lot more inflation-adjusted dollars. What exactly is the point being made here?

        • 0 avatar
          highdesertcat

          If you don’t know, you’re not up to date and need to follow the excellent articles at ttac closer.

          You may wish to research Chattanooga and Mercedes production in the US, right to work states in the North, and, gasp, the UAW.

          The only reason Detroit is building better vehicles today is because two American automakers died, and a third one nearly did, had it not hocked itself up to its Blue Oval.

          Their foreign competition is slacking off, overconfident, falling in quality because they haven’t had competition from Detroit in decades.

          • 0 avatar
            tonycd

            Answer the question, please. What exactly is “understood and lived every day” by today’s American auto workers? Hard work? Insecurity? Reduced living standards? Other than ad hominem attacks on some unspecified something (trade unionism? the President? Americans in general?), what is actually the point here?

          • 0 avatar
            wumpus

            Not only do foreign manufactures barely have to compete with Detroit, BMW need not compete with MB or Lexus, Toyota isn’t the slightest bit worried about Hyundai, and Mazda is doing dandy.

            Or maybe I missed the sarcasm.

      • 0 avatar
        jhefner

        This was also during the time of a depression (but not the Great Depression of 1931.) Jobs were hard to come by at all; much less jobs that paid $5 an hour; hence the thousands of unemployeed that mobbed Highland Park after the announcement. So yes; Ford workers put up with a lot because the alternative was very grim.

        Not intending in any way to take away from (but hopefully instead to enhance) Ronnie’s fine articles on Henry Ford, Netflix is currently airing a show titled “Henry Ford: Tin Lizzy Tycoon”:

        http://dvd.netflix.com/Movie/Henry-Ford-Tin-Lizzy-Tycoon/70008347

        I watched it awhile back, and it seemed to line up well with what I have learned from Ronnie’s articles in the past as well as what little I know about Henry Ford. I cannot recommend it highly enough.

      • 0 avatar
        bunkie

        “What I took away from the article was that HF paid them the $5/day so that the employees could not afford to quit because no one else would pay them that much.”

        I find that argument to be very weak. the net effect of higher wages at Ford would have been to put pressure on other manufacturers of all sorts (not just autos) resulting in generally rising wages. Any benefit HF got from this (assuming he did it for your stated reason) your point would have been very short-lived.

        • 0 avatar
          jhefner

          “I find that argument to be very weak. the net effect of higher wages at Ford would have been to put pressure on other manufacturers of all sorts (not just autos) resulting in generally rising wages. Any benefit HF got from this (assuming he did it for your stated reason) your point would have been very short-lived.”

          The other auto makers were strongly adament about Ford not raising their wages; since raising wages cut into their bottom line without the increase in production that Ford was achieving with their moving production line. They could only match wages without raising production for so long before they were forced out of businesss. And Ford could then afford to raise wages yet again if need be.

          • 0 avatar
            Arthur Dailey

            Ford created the blue collar middle class, which lead to the development of a mass market for automobiles.

            Ford could afford to turn over assembly line workers because of the limited learning curve for their roles. They reached peak efficiency very quickly and enticing them to stay too long would be counter-productive as when they aged their bodies would break down and they would slow down.

            Taylorism as mentioned is designed to allow for the quick and easy replacement of workers by de-skilling their jobs.

            By creating a $5 per day wage, Ford put pressure on other employers in the geographic area and in his industry. They would eventually have to match his wages.

            The result being a new class of workers who could afford consumer goods such as cars and eventually single family homes that required an automobile for shopping, travel etc.

            Ford therefore should be credited with creating mid to late 20th century American society, based on single family dwellings, automobiles and a national road network.

            Without these the demand for his products would have remained limited. As we have seen, new car ownership/demand slipping among young, urban youth who are living in condos and forced to accept non-traditional employment.

  • avatar
    carguy

    It just goes to show what full employment does for wages. A big part of our the wage stagnation over the past 15 years has been a perpetual oversupply of labor driving down wages and job security.

    • 0 avatar
      highdesertcat

      Correct, and the fact that many of America’s workers are too stupid to work but the simplest of tasks.

      That’s the reason that Japan, South Korea and now China have taken away much of America’s industry. They could do it better, and cheaper.

      Seems to me, that should be the concern of any administration. But it’s not.

      • 0 avatar
        tonycd

        How did the word “administration” even get into this thread?

        • 0 avatar
          highdesertcat

          Does that bother you?

          It is the job of any administration to foster the betterment of the nation.

          That has not been happening for the the past 15 years. We have an oversupply of labor because we have lost jobs to other nations that can do it better and cheaper.

          • 0 avatar

            Additionally, we have an oversupply of low-skilled labor in large part because we have been outsourcing by importing the low-skilled labor. The Senate immigration bill would have doubled legal immigration to 2 million a year.

            PS: I agree completely about the job of an administration.

          • 0 avatar
            dtremit

            Better *or* cheaper, in most cases. Japanese manufacturing wages are higher than ours. Germany’s are 50% higher.

            South Korea is probably the lone exception.

    • 0 avatar
      tonycd

      Our “perpetual oversupply of labor” the past 15 years has been by design.

      America’s economy grew throughout 150+ years with a system of tariffs that prevented employers from shipping off American jobs en masse to the lowest-wage foreign countries they could find. In the 1980s, that long-standing system was dismantled for the benefit of the rich, with the predictable and premeditated results that have followed: the well-documented “race to the bottom” that has resulted in everything from your stereo to your pants being made in Indonesia or Lesotho.

      As for the “stupidity of American workers,” it’s worth noting that the very same Americans who have favored “free trade” exportation of American jobs are the same ones who are dismantling the edifice of American mass public education, the same one that helped make our populace one of the world’s best educated, basically because 1) rich people don’t want to pay taxes, and 2) white Southerners can be persuaded to vote Republican by the promise that they can stop paying taxes for public schools while sending their own kids to segregated private ones.

      So if our workers are “too stupid” to deserve jobs, it’s by the conscious planning of the same Koch-school pluocrats who don’t give a damn whether we have them anyway.

      If you don’t believe this, look up the full range of legislation that’s been written virtually word-for-word in various states by the plutocrat-funded American Legislative Exchange Council (ALEC). Then ask yourself who benefits from the enormous amount of money spent to run it and to buy the compliant legislators who obey it.

      • 0 avatar
        highdesertcat

        It should come as no surprise to you then that there is a faction in the America, mostly people who provide the jobs, who do not share your sentiments.

        As an Independent, I blame both sides of the political spectrum for America’s woes of today.

        • 0 avatar
          Arthur Dailey

          Who ‘provides’ jobs?

          Many of the most highly paid CEO’s & executives are nothing but carpet baggers and caretakers, moving from one organization to another and doing nothing but manipulating stock prices so that they can make profits from their options.

          Others are members of the ‘lucky sperm’ club.

          For those who are true entrepreneurs who have created and built and are maintaining a business, then they should receive full credit and deserve tax breaks for creating and maintaining jobs.

      • 0 avatar
        highdesertcat

        Amazing how WordPress muscles in and marks a benign reply as “spam”.

        • 0 avatar
          tonycd

          RE: “Spam”…

          cat, at this point I have to share a smile with you. The spam filter did the exact same thing to me at the exact same point in this thread.

          • 0 avatar
            highdesertcat

            tonycd, sorry about the delayed response. Things have been hectic around here for me. I got ripped away from my keyboards and just now got back, all sweaty and nasty.

            Anyway, I wanted to respond to say that Ronnie and the boys and girls at ttac are having problems with wordpress.

            Regrettably, it has turned a number of avid reader/contributors off and they have left the fold.

            Among them, seven people from within the industry I have known since the 1980s.

            I was really sorry to see that happen; ttac used to be the best site with a widely diverse set of contributors to the discussion.

      • 0 avatar

        +1

      • 0 avatar

        Well put Tony. Thank you.

      • 0 avatar
        geeber

        toncyd: America’s economy grew throughout 150+ years with a system of tariffs that prevented employers from shipping off American jobs en masse to the lowest-wage foreign countries they could find.In the 1980s, that long-standing system was dismantled for the benefit of the rich, with the predictable and premeditated results that have followed: the well-documented “race to the bottom” that has resulted in everything from your stereo to your pants being made in Indonesia or Lesotho.

        That is not accurate. The initial push against tariffs was made by progressives – particularly William Jennings Bryan (the “Great Commoner”) and President Woodrow Wilson. This was LONG before the 1980s. They understood that industrialists of the time were using tariffs to protect entrenched monopolies/oligopolies at the expense of everyone else.

        After World War II, there was a bipartisan agreement in this country that the United States should promote free trade among nations. Part of this was the realization that the Hawley-Smoot Tariff signed into law in 1930 by President Hoover had helped exacerbate the Great Depression, particularly among farming communities and even among the auto industry (American cars were very desired all over the world at that time). Hudson, for example, sent over 15 percent of its total production overseas prior to 1930. When other countries enacted retaliatory tariffs in response to the Hawley-Smoot Tariff, that source of sales was shut off to Hudson and other manufacturers just when they needed it most, as domestic demand was literally collapsing.

        Today we manufacture plenty of items in this country. Our country is still the first or second largest manufacturing economy in the world (depending on how you measure it). What is driving the loss of jobs is automation and the institution of improved production processes, such as the Toyota Lean Production System. The value of manufactured goods in this country has INCREASED in value over the past decade. What has fallen is manufacturing employment, and that is because of the factors I highlighted.

        The good news is that today’s workers enjoy more fulfilling jobs in a much better environment than their counterparts in the 1960s and 1970s.

        (If you want to find out what manufacturing plants were like in the 1970s, read A Savage Factory by Robert Dewar. He was a supervisor at the Ford Sharonville transmission plant during that time. The picture he paints isn’t a pretty one. Then read his follow-up article, posted on this site a few years ago, that details his visit to the plant around 2008. Even he couldn’t believe how much conditions had improved at the plant. When he asked why things were so much better, the answer everyone – workers and management- gave, was simple. “Fear.” As in, fear of Japanese competition.)

        The bad news is that employers are much pickier about who they hire. Semi-literate high school dropouts aren’t going to make $60,000 a year bolting parts on to Fords and Chevys.

        Of course, the good news is that customers buying today’s Fords and Chevys aren’t going to experience parts falling off their shiny new cars, as happened too often during the “good old days.”

        tonycd: As for the “stupidity of American workers,” it’s worth noting that the very same Americans who have favored “free trade” exportation of American jobs are the same ones who are dismantling the edifice of American mass public education, the same one that helped make our populace one of the world’s best educated, basically because 1) rich people don’t want to pay taxes,

        Virtually no one wants to pay taxes. But, in 2014, the top income earners pay a higher percentage of total federal income taxes than they did in 1980, before the Reagan tax cuts. We are increasingly dependent on the wealthy for tax revenues at both the state and national level. The problem is that, contrary to popular belief, the incomes of the wealthy tend to be more volatile than those of middle-class wage earners. This problem was noted in a recent National Conference of State Legislatures (NCSL) article.

        tonycd: and 2) white Southerners can be persuaded to vote Republican by the promise that they can stop paying taxes for public schools while sending their own kids to segregated private ones.

        Please…have you actually been to the South? It’s not 1955 there anymore. We visit there regularly. I can tell you that there is less racial tension and animosity in the places I’ve been to in the South than in “progressive” Philadelphia and New York City.

        Also note that, if we are dismantling our education system, we sure have a funny way of doing it, considering that spending per-pupil in this country has more than doubled since 1980, and that is after adjusting for the rate of inflation.

        In Pennsylvania alone, we’ve experienced a 133-percent increase in basic education spending over that time frame (again, adjusting for inflation).

        Where is the money going? Well, in Pennsylvania, the enrollment of public school students has declined by roughly 60,000 students since 2000. Meanwhile, the number of public school employees has increased over the same time period by 17,000 people.

        • 0 avatar
          thelaine

          Well said Geeber.

        • 0 avatar
          mikey

          @ geeber….It must of been you, that first told me about “A savage factory” I downloaded to my Kindle that day.

          An excellent read. It runs a close second to “Rivet Head”

          • 0 avatar
            geeber

            Mikey, that is a very eye-opening book. After reading it, I wondered how on earth the Ford Motor Company survived the 1970s.

        • 0 avatar
          highdesertcat

          geeber, excellent dissertation! Well-read, informed and accurate.

          We need more contributors like you instead of the union-ideologues with an agenda to raise wages and drive employers out of business.

          I applaud you! You should teach Micro- and Macro-Economics at the Graduate level, if you don’t already.

    • 0 avatar
      jhefner

      The problem with your statement is that 1914 was at the tail end of the recession of 1913-1914; trade and industrial activity had dropped roughly 20% during that time, and unemployment was widespread. That was why thousands descended on Highland Park after the $5 wage announcement; many of them did not have jobs at all; and would welcome any type of working conditions for an opportunity to make $5 an hour. The closest thing we have to it today are the folks willing to work in less than ideal conditions to make good money in the burgeoning oil and gas shale boom.

      As Ronnie keeps trying to stress, Ford’s decision had nothing to do with allowing each worker to purchase a Model T NOR the nation’s employment situation at the time; but rather stopping the high employee turnover rate prior to the raise. You can’t expect to run a business at it’s best when you are having to hire 40,000 employees a year to fill 13,000 positions; you are constantly in a state of filling empty positions and training new employees rather than running the company.

  • avatar
    Master Baiter

    You mean the free market works? Who’d have thought?

    • 0 avatar
      highdesertcat

      Yah, in spite of the current administration’s kicking and screaming and throwing a fit.

    • 0 avatar
      wumpus

      If only it worked enough for this not to be “news”. When was the last time you heard of a company having trouble hiring workers raising wages? Companies moving overseas, demanding H1-Bs, demanding direct subsidies, and general whining I’ve all heard (over and over). Can’t say I’ve heard of raising wages.

  • avatar
    RogerB34

    ” I’d be surprised if Ford’s propaganda team didn’t originate the notion that Henry Ford invented the assembly line.”
    Doesn’t matter.
    Employees could quit or work Ford’s discipline.
    Many could not but note the pic of applicants.
    Then the norm for all businesses was 8 x 6.
    It was also the norm in RR, auto, steel industries to lay off manual labor late in the year. Especially the auto industry tooling and setting up for new models. Unemployment Merry Christmas and rehire late winter or early spring.
    Worked every year until Spring 1930.

  • avatar
    Conslaw

    I submit to you that, while paying your workers enough to afford your products may not be the path to economic success, if you live in an economy where most workers can’t afford the (consumer) products they make, that’s not a good economy. It’s also not a good economy when most of the things you buy are imported because you can’t afford to make them in-country. Globalization seems to foster both of these economic types.

  • avatar
    JGlanton

    McCardle doesn’t sound very bright. How the hell does she equate one-worker’s annual wage to one car to decide whether the company is making money?

    • 0 avatar
      jacob_coulter

      She’s making the point that even if the worker went out a bought a new car with his increased salary, it’s still not enough to offset the wage increase for the Ford Motor Company.

      If you give a worker a $700 raise purely to buy one of your $700 cars, you’re losing money if the goal was to increase profits. Obviously it costs the company money to make a $700 car, the profit on the car is nowhere near what the raise “cost” them to make the sale.

  • avatar
    Xeranar

    There is some serious misinterpretation going on in why workers quit in the early 20th century going on here. The idea that people stayed in one job is a relatively modern one, really something post-WWII Americans think normal because Unions and long-term office work became more prevalent. Prior to that people would work seasonally, going from the farm to the factories and back again, bouncing from place to place that was willing to pay the most. It wasn’t unusual for a place like Ford or competitors to lay off massive amounts of people as demand fell and rose. You’re factually correct that $5 a day was to stabilize his work force but you seriously misunderstand the interpretation of the concept of paying your workers enough to afford a product.

    If I pay a worker enough that they can reasonably afford my product I am creating a built in market for which to ship product. It also creates a consumer-driven society rather than capitalist-driven one. Ford can still easily make 20-30% margin on each unit sold and still give each worker $5 a day because there is an outside market, just as Dodge has an outside market, and the baker has an outside market, and the stock yard….See where this is going? By having a greater transfer of wealth between individual citizens rather than the capitalist class more products can be consumed, standard of living increases, and capitalism due to volume gains makes greater profit (per se…there is a limiting factor). Now of course there is a limit to the sheer volume a society can consume but since we’re importing such vast amounts of cheap labor in the form of cheap goods it suggests that we have the capital to produce with it rather than ship it abroad for greater profit margins per unit.

    Still, regardless of the historical example there are plenty of economic backing for paying workers a much greater portion of wages, especially in low-R&D/capital requirement industries.

  • avatar
    TW5

    Henry Ford pioneered the first moving assembly line, an achievement people mistakenly recount to one another as the first assembly line. No myth. People just forget the details.

    Furthermore, the McArdle “analysis” is meaningless because she casually neglects the economic multiplier effect created by velocity of money and expansion of the money supply via consumer credit. She has an MBA from University of Chicago, so the omission was seemingly intentional.

    Ford’s wages and shift structure probably did drive sales of Ford automobiles and build the Michigan economy, but it is important to point out that his wage increases were backed by legitimate increases in productivity via the moving assembly line and the 24-hr three-shift structure. Since the expansion of the money supply was backed by genuine productivity increases and economic efficiency, people became wealthier, rather than collecting piles of less-valuable dollars, like we did in the 1970s. This is also the primary argument against raising the minimum wage. If it puts people out of work, we may not get any boost in productivity or velocity of money. If the wage increase is not backed by a boost in labor productivity, we will simply end up with piles of less valuable dollars. Some economists argue that labor productivity has already grown exponentially faster than real wages, but that’s not generally true of the min wage brigade.

    • 0 avatar
      Russycle

      There are entire blogs devoted to mocking McArdle’s analytic talents. Whether she’s incompetent or dishonest is hard to say, there’s an abundance of evidence to support either contention. In her defense “MBA” and “possesses a basic understanding of economics” don’t go together as often as you’d think.

      I actually agree with her in this case, relying on selling product to your employees isn’t a great business plan, unless you’re Amway. But on the macro level, creating a working class with expendable income is a great way to grow your economy. Too bad we’ve spent the last 20+ years pissing that away.

    • 0 avatar
      ClutchCarGo

      But is there not a moral component of a minimum wage? Is it acceptable to have a business model that delivers low-price goods/services predicated on paying less than subsistence wages to the workers while providing the business owners with generous profits? In other words, is it OK for you to enjoy a $2 Big Mac if it requires that the person who prepared it for you has to depend on govt handouts in order to survive? If a job is valuable enough to be done, shouldn’t the person benefiting from the job be required to pay the worker enough to get by?

      • 0 avatar
        highdesertcat

        “But is there not a moral component of a minimum wage? ”

        No.

        • 0 avatar

          HDC at some point don’t low wages become a form of servitude, I would say below a living wage, at that point I do think there is a moral component to a minimum wage.

          • 0 avatar
            highdesertcat

            crazycarlarry, that may have been true before America turned into a socialist welfare state where money was taken from the people who had it and redistributed to the perpetually unemployed.

            But if the Feds decided to fix minimum wage at, say, $15/hr, people living in NYC would still not be able to make ends meet, while people in Bumfock, NM, would be swimming in dough, and using it for toilet paper.

            My kids and grand kids all had minimum wage jobs when they lived with me and were my responsibility, and that instilled in them the desire to do better and get ahead.

            We should keep in mind though, that today we live in a totally different America where the government will take care of someone in America, both legal and illegal, from cradle to grave, all without having to ever go to work.

            In America we vote for what we want, and the majority rules. This is what the majority voted for. This is what the majority wanted. This is what the majority got.

            I’m cool with that as long as they don’t ask me to pay for it and support it.

        • 0 avatar
          ClutchCarGo

          So, HDC, by your logic, virtual slavery would be legal? With no floor on wages, it would be acceptable for a business to take workers’ labor and profit from it while returning no pay, as long as the worker was desperate enough to go along with the scheme (like having a “job” to avoid a vagrancy charge)?

          • 0 avatar
            highdesertcat

            ClutchCarGo, legal or not, it happens every day in America.

            If employees feel abused, unappreciated or underpaid, they can always leave and work elsewhere. Don’t make the employers the bad guys here — they’re out to make a buck. And they provide the jobs.

            I have employed hundreds of men and women for various projects and told them they could take it or leave it. ALL of them took it.

            A lot of people in America decided that our current form of government would take care of them from cradle to grave and that they don’t have to work to get all the benefits of citizenship. So now you want to raise wages on employers so they can pay more taxes to make that pipe dream a success?

            And if you think that slavery is some sort of taboo in American society, you really need to word up.

            Slavery is alive and well in America and knows no boundaries as it encompasses all walks of life in modern-day America, and I’m not talking sweat shops or prostitution here.

            Where have you been? Freeze dried or doing hard time? People don’t have to work in America! There is no vagrancy. The gub’ment sends them money and foodstamps in the form of debit cards.

          • 0 avatar
            dtremit

            @HDC

            “If employees feel abused, unappreciated or underpaid, they can always leave and work elsewhere. Don’t make the employers the bad guys here — they’re out to make a buck. And they provide the jobs.”

            But what if all the jobs they can get are equally awful? Does that make it OK?

            And before you start arguing people should educate themselves — someone has to make the sandwiches and clean the toilets.

            We may or may not live in a society where *anyone* can make it big, but that’s irrelevant. There is no society where *everyone* can make it big.

            As for food stamps — they’re not subsidies for the poor; they’re subsidies for corporations. They allow the recipients’ employers to pay them less — yes, the vast majority of working-age recipients work — and the money provides a huge source of profit for the grocery chains that pay among the lowest wages.

      • 0 avatar
        TW5

        Is a price floor “moral”?

        Minimum wage functions as a price floor. Price floors create a surplus supply of labor and a shortage of demand. In general, people lose employment, and unskilled, inexperienced young people are usually the hardest hit, especially those without healthcare from mom and dad. Does that sound moral? To continue driving down the under-24 labor force participation rate until every college-aged American is forced to buy their way into the economy with school loans?

        The goal is to raise household income, particularly for the bottom income quintile. Minimum wage is not very effective, but it was chosen because it is lazy, low-hanging political fruit. We have other effective policy tools, like earned income tax credits. The current EITC is much too small to adequately compensate lower-middle class employees for the regulatory/tax burden placed upon their labor, but the mechanism is available to us, and the administering bureaucracy already exists (IRS).

        Government philosophy is also a consideration. Corporations are for-profit institutions, and they can’t really serve a populist agenda because the assets/liabilities are privately-owned. Governments are socioeconomic organizations with such goals as “insuring the domestic tranquility” and “promoting the general welfare”. If our founding documents identify the US Federal Government as responsible for socioeconomic policy goals, why are some politicians lazily dumping responsibility onto corporations with min wage laws, and then imagining that no consequences will result? Minimum wage serves a plethora of agendas, but none of them appear to focus on the economic plight of the lower-middle class.

        • 0 avatar
          highdesertcat

          TW5, the future rests in the hands of the young. In America, they will vote for what they envision the future of our nation to be.

          I think that is most appropriate, since they are the ones who will be paying for it as more and more businesses decide to move operations and headquarters to business-friendly environments like Ireland, The Netherlands and other clairvoyant business-oriented societies.

          I find it most entertaining that my cousins in Europe see their governments abandon the socialist-welfare philosophy they so firmly embraced since the end of WWII, only to adopt austerity measures in its stead, and cutting bennies.

          What is an eye-opener for them, after having worked for decades and paying in up to 75% of their earned income, the payout is not nearly as much as what they were promised it would be.

          In many cases, their parents received a much bigger payout after having paid in far less, over a shorter period of time.

          Kinda like America’s social security retirement system for those with at least forty quarters.

          My parents got a great deal more from their social security retirement than my wife and I do, and my parents paid in a lot less for a shorter period of time than my wife and I did.

          Things change. Life is a b!tch. And then you die. It’s hell after that……

    • 0 avatar
      dal20402

      Today, we have the opposite problem from the ’70s: we’ve been enjoying real and substantial increases in productivity for the last 20 years or so, without any corresponding increase in wages. We can largely thank tax policy for that. We’ve passed a threshold where it has become more profitable for wealthy investors to park income and place it in various tax-sheltered places than it is to plow it back into the business, even after accounting for the substantial efficiency gains you get from paying better-than-market wages. (Don’t believe me? Ask Costco.)

      • 0 avatar
        highdesertcat

        dal20402, you’re right. And those with money who can, are retrenching instead of putting their money to use to stimulate the economy and create demand.

        But IMO the first responsibility of a company, and employer, is to its owners or shareholders, stock holders. The name of the game is to make money and be profitable, for the owners, shareholders, stockholders.

        Employees are free to come and go as they please. Businesses, employers have to exercise proper stewardship of the investment that the owners, shareholders, stockholders have placed in them. All employees have to do is do their job., and employees take no risk.

        Businesses, employers need pay employees the minimum and only more if the employees are keepers.

      • 0 avatar
        TW5

        Labor productivity has been on the rise, but so has compensation (about 4.5% per annum for 30 years). Workers are not receiving the compensation as cash, rather as non-cash benefits like health insurance and retirement matching. Why? because those forms of income are tax-subsidized. Unfortunately, lower-middle class workers and hourly workers are usually excluded from benefits.

        We have similar issues today as we had in the 1970s, but today we have growing disparity of income because demand for hourly wage labor is slack due to global competition and US tax burden on laborers.

  • avatar
    OneAlpha

    It’s important to judge men by the standards of the time they lived in, not the ones of the historian’s own lifetime.

    For example, it’s been said that Charlemagne was an enlightened ruler – “for his time.” But for who else’s time was he supposed to have been enlightened?

    Henry VIII’s? Theodore Roosevelt’s? Barack Obama’s?

    Martin Luther is said to have hated Jews, but at the time in which he lived, so did everybody else. Anti-semitism in 16th Century Europe was no more significant than wearing pants.

    Henry Ford was no saint, but neither was he a monster. He paid his employees very good money to do a job that was no more dangerous than any other industrial position of the time.

    He provided jobs for men who would’ve otherwise lived out their lives in wretched poverty behind a mule on some subsistence farm someplace in Appalachia.

    Ford materially advanced the lives of millions of people, and all we hear about today was that he was a real-life version of C. Montgomery Burns.

    Yeah, let me go get my little violin, and you can tell me all about it.

    • 0 avatar
      FreedMike

      Yep, and the man who coined the phrase “all men are created equal” was a slaveowner.

      Unfortunately people don’t fit in neat moral categories, as you say. Ford was one of them.

    • 0 avatar

      ” Anti-semitism in 16th Century Europe was no more significant than wearing pants.”

      While commonplace, ot certainly was significant to the Jews who were being treated per Luther’s advice to persecute them (after Jews disappointed him by rejecting his version of Christianity). The 16th century saw an increase in blood libels against Jews in Germany. Some attribute this to Gutenberg’s invention of the movable type printing press, others to Luther’s influence.

      It’s true that the past, as the saying goes, is a foreign country, they do things differently there. However, since there were people, in his day, who did not share Luther’s antipathy towards Jews and Judaism it’s hard to say that he was entirely a product of his era.

  • avatar
    wmba

    I think we get all hung up about Henry Ford and mass production. He was hardly first at it. The American watch industry had a good 40 year head start and blew out the Swiss industry in the 1870s. Then you have the automatic cigarette manufacturing machines and cookie machinery (the first Oreo biscuit as it was called then came out in 1912 and that was just a bigger manufacturing outfit intent on bigger markets).

    Interchangeable parts, automatic screw machinery, specialized lathes and mills, all are1870s stuff. Legions of sweating men using blacksmith techniques to churn out pretty unsophisticated vehicles would have made manufacturing men of 30 years before snigger at the crudeness of it all.

    Mass production of Model T’s – the difference was the physical size of the finished product, the fact the market was big enough to allow investment in techniques for more economic priduction in the first place. But it was hardly the first industry to go that way. Just another myth for the average Joe to grasp onto as fact.

  • avatar
    thelaine

    Another great article Ronnie. Please keep bringing the History.

  • avatar
    jacob_coulter

    A tight labor market = higher paying middle class jobs.

    Companies are not going to be “shamed” into higher wages, they’ll do it because they have to or else workers will vote with their feet.

    Yet the ones in charge of our government want to import millions of foreign workers and make it even easier for companies to outsource. Guess what that will do to wages in the US?

    Yet it you make that point, you’re a racist and/or xenophobe.

    • 0 avatar
      AJ

      ^The importing of millions of foreign workers is with the expatiation that they’ll thank them with their votes. While Americans have been dumbed down enough not to notice, care, or are also in on the take.

      Anyway, thanks for the history, Ronnie.

    • 0 avatar
      highdesertcat

      ” else workers will vote with their feet.”

      Exactly! Employers know which of their workers are keepers, and which are not.

      All the unemployed in America were not keepers and employers currently looking for talent know this.

      That’s why America’s unemployed remain unemployed.

      If they had been worth keeping, their employer would have found them another job. Toyota moved a lot of their keepers to new operating locations (at Toyota’s expense).

      Those that were not keepers they put on California’s welfare rolls. And many of those are probably still there, on those rolls sucking on sushi and lobster with welfare and foodstamp debit cards.

      I’d like to recommend an old-school book: “On Hiring” by Robert Half.

      If you want to know what employers look for in successful job-applicants, that’s the book to get.

      • 0 avatar

        This is said with the quiet belief that the so-called “not keepers” are fundamentally worthless. Not just as workers, but as human beings. Odd that.

        • 0 avatar
          petezeiss

          “Odd that.”

          Not when you’ve spent a lifetime working to escape them and their ilk.

          Luckily for future Americans the indoctrinated assumption that every human being is intrinsically valuable, educable and deserving will pass along with us boomers.

          • 0 avatar
            SayMyName

            To be fair, that IS an outdated and rather naïve (quaint, even) notion.

            I personally find no inherent value to a random collection of skin and bones; it’s what a person makes of their life and abilities that gives them value – or not – to me.

            I’ve reached this (admittedly cold) conclusion after seeing so many examples of the species utterly waste any value, opportunities, or abilities they may have had. That’s their choice, I suppose, but it should also come with consequences. Past a certain age, it’s pretty clear who is a worthwhile contributor to society and who, frankly, is not.

          • 0 avatar
            darkwing

            You’ll have to explain to me how the generation of Roe v. Wade and the Great Society values human life. Seems to me all you guys care about is squeezing every last dime out of the rest of us before you croak.

          • 0 avatar
            petezeiss

            @SayMyName

            While many of us dream wistful dreams of a proactive population policy, the British SF author Neil Asher presents an interesting suggestion of the sheer physical enormities of such an endeavor in his Owner series, particularly vol.2, Zero Point.

            10 bucks for Kindle, a great read if you hate crowds.

          • 0 avatar
            FreedMike

            “I personally find no inherent value to a random collection of skin and bones; it’s what a person makes of their life and abilities that gives them value – or not – to me.”

            And who decides what abilities are worthwhile – you? God, I hope not.

          • 0 avatar
            SayMyName

            It’s a surprisingly low bar, FreedMike… and yet I suspect [some] would have difficulty clearing it.

      • 0 avatar
        FreedMike

        “All the unemployed in America were not keepers and employers currently looking for talent know this.”

        Clearly, there’s a middle ground between “superstar” and “unproductive lump.” There are millions of people who are competent at what they do, but ended up squeezed out. Yes, if they’d been a bit better at their jobs, maybe they’d have kept them, but that doesn’t make them unemployable, unproductive or undesirable employees.

        That’s not why they’re having trouble finding new jobs either. The problem is the lack of new jobs.

        • 0 avatar
          highdesertcat

          FreedMike, you need to qualify your statement ” The problem is the lack of new jobs” with the addendum “in the area where they want to work.”

          There are millions of jobs in America that go unfilled every day and have remained unfilled for years.

          So many, in fact, that America has to import people legally (H1B visas) to fill some of them.

          Also keep in mind that the vast majority of illegal aliens coming to the US actually find work in America once they get to an area that has jobs. We in NM try to steer them to the East Coast Blue States. Works real good!

          Some illegals skip through the US altogether and head straight for Canada to find work. I wish more of them would.

          • 0 avatar
            FreedMike

            And here we go with the whole “they just don’t want to take jobs they don’t want” argument.

            Has it occurred to you that they might not want those jobs for a reason? Perhaps they’re not qualified for them. I’m a mortgage underwriter, and if God forbid I lose my job, I’m not going to be looking for a job as a computer programmer, or a welder, or a bank teller. There are jobs I’m not physically suited for, like construction.

            So, no matter how many of those jobs are out there, I’m not going to apply, and even if I do, no one’s going to hire me – I’m not qualified. Would that make me a lazy, unproductive member of society? No. It would make me someone who wants to maximize his economic potential. That’s what companies do when they look at my resume and decide I’m a poor fit as an Oracle programmer, isn’t it? So why shouldn’t workers do the same?

            And don’t give me the “go work at Wal-Mart / flip burgers at McDonald’s” argument either – competition for these lousy jobs is FIERCE, and folks who make a good middle class living don’t get hired there. They don’t want us because a) we’re gone the second we get a better job, which means they wasted all the time they spent training us, and b) there’s a long line of folks who are desperate enough to stay on a low paying job forever because there’s nothing better out there for them. It makes more economic sense for low wage employers to NOT hire people who are accustomed to making a good living. If companies like that are allowed to decide what makes economic sense for them, why aren’t workers?

            And then there’s the whole “I won’t even look at your resume if you’re out of work” attitude, which a very large percentage of companies have. And the reason for this is the “if an employee lost his job, he must not have been cutting the mustard” attitude…which you clearly have. Talk about stupid…they pass up good people that way.

            Your arguments worked just fine in 1970. Today, it’s a whole different ball game out there.

          • 0 avatar
            highdesertcat

            It’s too bad my response has disappeared into the vast ttac-server void……

            Same facts, different interpretations.

          • 0 avatar
            SayMyName

            “Same facts, different interpretations.”

            Indeed. One interpretation that relies heavily on personal responsibility, taking the initiative and making hard choices, and one that rests on making excuses about why it’s so very, very hard in this cruel world to find work.

            It’s always easier to b!tch about the unfairness of your situation, than actually doing something to change it.

    • 0 avatar
      danio3834

      “Yet the ones in charge of our government want to import millions of foreign workers and make it even easier for companies to outsource. Guess what that will do to wages in the US?”

      This thinking relies on the assumption that jobs are a finite resource. The US economy wouldn’t be as large as it is without huge amounts of immigration. Even new immigrants needs food, services and even aspire to buy new cars. It’s tough to grow an economy with a stagnating population. Check out Japan.

    • 0 avatar

      I’m not so worried about the foreign workers, I think we’ve always had them Henry Ford sure did, I’d just like the 50,000 factories the US has lost to so called Globalization back, and productive, and then the guest worker issues would lessen.

  • avatar
    mr_min

    Ronnie,
    I’d love to know how you reached the following conclusion “having the weekend off from work is conventionally attributed to organized labor. The labor movement has given workers a lot of things, but not the weekend. That, too, was Henry Ford’s innovation.”

    There is a large statute near my home town with 3 eights on top of a pillar to celebrate the 1855 stoneworkers victory in introducing the 8 hr day. This was 60years before Ford.

    • 0 avatar

      The fact that the 8 hour day was not commonplace in industry in general by the 1920s, when Ford switched FoMoCo to a 5 day, 40 hour work week, shows how little influence the stone workers’ union in your town had on industry. When was that statue erected? Much of the unionized stone cutting industry was still working 9 hour days in the 1890s.

      Henry Ford undoubtedly had a more to do with the general acceptance of the five day, forty hour work week than the labor movement.

      As trade unionists, I wonder if those stone cutters thought that industrial workers even needed to be organized.

      • 0 avatar
        mr_min

        Well I am in Australia home of the 8hr day…
        And by the 1920 the 8hr days was common practice (in Australia), so those stone cutters had big influence on the Australian labour market. I understand that this was pushed by the International Union movement, obviously I can’t comment on the effectiveness of the 8hr movement in USA.

        I didn’t include the fact that they took wage cuts to get the 8hr day, as it was seem more a social reform issue than a labour issue.

  • avatar
    cackalacka

    $700 year/ $5 day = 140 day work year.

    Haven’t heard much from McMegan over the past year, but it would appear that her calculator is still broken.

    Must be a nice gig to willfully mislead rubes.

    Oh, and Mr_Min is correct, this Saturday and Sunday were given to you by organized labor.

    • 0 avatar
      dtremit

      Also, by 1914 the T was down to $440. By 1916 it was $340 (though it went up during WWI).

    • 0 avatar
      geeber

      What she is saying is that the difference between people who made $2.25 per day and people who made $5 per day came to about $700 annually ($715, to be exact). The extra money still wasn’t enough to buy a Model T at that time.

      She is correct, but she could have worded it much more clearly. (If you haven’t heard much from her over the past year, I can only assume you must not be surfing the web much. She has regularly written columns for the Bloomberg Review and The Atlantic sites throughout the year.)

      The problem comes when we assume that everyone was working five days a week for 52 weeks a year. In those days, new-car sales were highly seasonal. Most new vehicles were bought in the spring and summer, and then demand dramatically declined in the fall and winter. When demand fell, workers were laid off and sent home without pay. Remember that this was in the days before welfare programs and widespread unemployment benefits. If you didn’t work, you didn’t get paid.

      To counteract this, automakers began rolling out their new models in the fall. That was supposed to spread the demand for new cars more evenly throughout the year. Packard, in particular, took the lead in this regard.

  • avatar
    Joh

    Why do I bother reading the comments here?
    Some folks have WAY too much time and WAY too little compassion for the world.

  • avatar

    If you’ve got minimum skills, minimum education, show minimum motivation and provide a minimum contribution to the workplace, why should someone be forced to pay you more than the minimum wage? Minimum wage jobs are generally entry level positions. They were not intended to be the job that you support your family on. BUT, when you have people that fit into the above category, they do not understand the concept. I’ve worked with folks that have the attitude of “I’m doing the bare minimum, because they pay me the bare minimum.” That’s self-defeating. WIth that attitude one will NEVER excel and earn an adequate living. Work is called that for a reason. If one wants better, one has to put forth exceptional effort while realizing less than exceptional recognition. This will change in time and one will either be fairly compensated – OR will have acquired a skill level that makes them more valuable to another employer who does value their work ethic and pay them accordingly.

    A related issue to all this is the fact that our currency is not tied to a tangible standard (Thank you Nixon administration). You’ve probably all heard this: A 1963 quarter could buy one a gallon of gas – give or take – in 1963. That same quarter today is worth around $5.00 – give or take – due to the content of silver in the coin. That same 1963 quarter will buy you a gallon of gas with some change left over if you consider it’s “value”. So our money hasn’t truly “lost” value.

    Unemployment before going off the gold standard was around 3% consistently. Up until lately no better than 6%. While I will admit that it isn’t THAT simple – to me there seems to be a connection. Our currency was also stronger when we were on a standard. As it is now, when the government needs more money, they just crank up the presses. More currency tied to what – air? Being tied to a standard would eliminate this inflationary practice and eventually return us to a more stable economy. What is necessary is someone with the nerve to do it in spite of all outcry to the contrary.

    I have really enjoyed the article and ALL of the discussion. At least there some thinking individuals left and I enjoy reading what they have to say. Thanks all!

    • 0 avatar
      dtremit

      “If you’ve got minimum skills, minimum education, show minimum motivation and provide a minimum contribution to the workplace, why should someone be forced to pay you more than the minimum wage? Minimum wage jobs are generally entry level positions. They were not intended to be the job that you support your family on.”

      They may not have been intended to be that job, but for more and more Americans, they are that job. The reality is, many of the jobs in between minimum wage work and highly skilled work have disappeared — factory jobs, secretarial work, and so on. And the number of minimum wage, minimally skilled jobs has dramatically increased, particularly since computers and automation make formerly skilled work unskilled.

      Millions of people doing minimum wage work don’t really have an effective path out of it. Again, the distinction between “anyone” and “everyone” is important. Can minimum wage earner Mike go get some training and become an electrician? Sure. But we need a lot more burger flippers in our economy than we do electricians.

      No matter what, there’s going to be millions of Americans doing minimum skill jobs — because people need their hotel rooms cleaned and their store shelves stocked and their Amazon packages picked. I don’t think it’s moral to pretend that there aren’t large numbers of people who are going to be stuck working at those jobs for large portions of their lives.

      I’m not certain that increasing the minimum wage is the best solution to that problem, but it’s the tool we already have, and it enjoys broad political support (70% overall, and a slight majority even among Republicans). So it’s probably what we’re stuck with for now.

      • 0 avatar
        highdesertcat

        But that is the new America we all have to recognize.

        Under the Uber-Left Liberal Democrat Greenweenie Agenda, everybody is worth something, even if they are not, and everybody deserves CEO pay, even if they are doing minimum-wage work.

        (I haven’t heard any Blue-Collar worker p!ssing and moaning about the $25M A-Rod is going to get for the 2015 Season, but CEO’s get paid too much if they get more than a worker-bee gets)

        No matter how high they jack up the minimum wage, it just justifies the cost of everything else going up too.

        Here’s an eye opener: in anticipation of higher minimum wages, the cost of rice and rent has been jacked up already. My wife’s family real estate business jacked up the rents eff 1 Jan 2014 by anywhere from 6%-12% depending on property.

        This caused several minimum-wage renters to be placed over their housing budgets and they had to give notice and move, at which time the business put that property on the market and made a killing selling it to eager buyers, at top dollar.

        The new owners then jacked up the rents even more for their new tenants.

        True story that. It’s happening all over America.

        • 0 avatar
          psarhjinian

          “Under the Uber-Left Liberal Democrat Greenweenie Agenda…”

          Do you know what an Uber-Left Liberal Democrat Greenweenie is?

          Here’s an example: Me.

          Here’s examples of what aren’t: Any currently sitting federal American Democrat, with the _singular_ possible exception of Elizabeth Warren.

          Most Democrats are neo-liberals, which is pretty much the same thing as neo-conservative, only they’re okay with gay marriage.

          • 0 avatar
            Pch101

            You should have scrolled past that one. Simply isn’t worth the time.

          • 0 avatar
            highdesertcat

            psar, you know I’m an Independent, right?

            I have equal disdain for both sides of the political aisle since I started life and grew up as a Democrat, then switched to Republican once I got my first job and started paying taxes.

            It is only after someone has passed through the bowels of both of these political parties that we can appreciate the wisdom of Independents.

            More and more voters are switching everyday. Come join us.

      • 0 avatar

        You make a good point. In light of the fact that we – as a country – have aborted/murdered 50 million of the potential humans that could be alive today, we are realizing the loss of these potential workers/wage earners who could have, over the years, taken those entry level jobs and paid into the economy through taxes and purchased goods and services.

        Government never creates private sector jobs, but does what it can to hinder those who do create those jobs. I know this is a simplification of the facts, but it is generally true.

        My point on the currency not tied to a tangible standard was to point out our money is so devalued by the current system that it is partially responsible for folks needing to earn more. If the nations currency was worth more, folks would be better off – assuming they would still earn what they are earning currently.

        Also, the point made elsewhere about raising the minimum wage only escalating the cost of goods and services is accurate. I cannot imagine that most business owners would agree to taking less income to offset the cost increase of higher wages. There are few people that exist that would do that.

        As far as businesses moving off shore or otherwise avoiding taxes, what would you do if given the choice: do this and keep most of what you earn OR do that and keep less of what you earn? I think the answer is obvious, but I could be wrong. Yet that is what our government does to business – the very business that creates the jobs – they make it unattractive to do business here.

        And, as was mentioned elsewhere, I too am disappointed with BOTH parties. I apologize for the ramble; I get carried away on this stuff at times.


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