26 ms·

There's been similar moves in the past. Most famous of which is Ford's $5 / day. http://www.saturdayeveningpost.com/2014/01/03/blogs/post-perspective/ford-doubl

There's been similar moves in the past. Most famous of which is Ford's $5 / day. http://www.saturdayeveningpost.com/2014/01/03/blogs/post-perspective/ford-doubles-minimum-wage.html http://www.saturdayeveningpost.com/2014/01/03/blogs/post-per... Ford's quote from the time is relevant today: “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.”

smilbandit 8y ago
and thus grew the middle class. The middle class is something we truly need to focus on growing again.
- WalterBright 8y ago
  America has always been a nation of middle class people, even back in colonial times. The exception was the southern slave economy, which didn't have much of a middle class.
  - jrochkind1 8y ago
    it's a pretty big exception, even if the other part is true. (And thanks for acknowledging the exception up front!) At the high points, 20% of the total U.S. population were enslaved. At that point, it's not just an exception, it's a problem with the entire premise, even if the entire rest of the population was 'middle class', which they weren't. What allowed the U.S. economy to function with an unusually large portion of _white_ people being "middle class" (compared to Europe)... was all the African people who weren't. There's no reason to treat those 20% of people as not part of the U.S. economy, they were a _crucial_ part. If we were to look at what portion of the _entire_ population of the U.S. was "middle class", including those 20% enslaved people, for whatever definition of 'middle class', that'd be closer anyway. There's no reason to look at things without them though, as if they were just a footnote. 20% of the population!
    - WalterBright 8y ago
      That 20% was in the slave economy of the south. The north did not have slaves, and the middle class was in the north.
      - jrochkind1 8y ago
        It's 20% of the population of the entire country. It was probably much more than 20% in the South, indeed (in some states as high as _65%_ enslaved people at some times!), and less in the North. The North did originally have some enslaved people. The economies were clearly related.
        WalterBright 8y ago
        The severing of the economies at the outset of the Civil War, and the total destruction of the southern economy during the war, yet the continued prosperity of the northern economy shows that the northern economy was not dependent on slaves. > The North did originally have some enslaved people. Yes, and the ending of that did not retard the economy or reduce the middle class in any detectable way. The middle class increased throughout the 19th century.
        jrochkind1 8y ago
        Slavery was integral to the entire U.S. economy, but that economy was changing in the mid-19th century, and indeed it's not totally false that those economic changes were part of what led to the civil war. // Capitalists in the North profited by investing in banks that handled the exchange of money for people, or in insurance companies that provided insurance for the owners’ investments in enslaved people. So did foreign investors in Southern securities, some of which were issued on mortgaged slaves. The hotbed of American abolitionism — New England — was also the home of America’s cotton textile industry, which grew rich on the backs of the enslaved people forced to pick cotton. The story of America’s domestic slave trade is not just a story about Richmond or New Orleans, but about America. // https://opinionator.blogs.nytimes.com/2015/04/03/how-the-slave-trade-built-america/ https://opinionator.blogs.nytimes.com/2015/04/03/how-the-sla... https://www.amazon.com/exec/obidos/ASIN/0345467833 https://www.amazon.com/exec/obidos/ASIN/0345467833 https://www.amazon.com/Slaverys-Capitalism-American-Economic-Development/dp/1538404389 https://www.amazon.com/Slaverys-Capitalism-American-Economic... https://www.amazon.com/Half-Has-Never-Been-Told/dp/0465049664 https://www.amazon.com/Half-Has-Never-Been-Told/dp/046504966... "“In the decades between the American Revolution and the Civil War, slavery—as a source of the cotton that fed Rhode Island’s mills, as a source of the wealth that filled New York’s banks, as a source of the markets that inspired Massachusetts manufacturers—proved indispensable to national economic development,” Beckert and Rockman write in the introduction to the book. “… Cotton offered a reason for entrepreneurs and inventors to build manufactories in such places as Lowell, Pawtucket, and Paterson, thereby connecting New England’s Industrial Revolution to the advancing plantation frontier of the Deep South. And financing cotton growing, as well as marketing and transporting the crop, was a source of great wealth for the nation’s merchants and banks.”" https://www.forbes.com/sites/hbsworkingknowledge/2017/05/03/the-clear-connection-between-slavery-and-american-capitalism/ https://www.forbes.com/sites/hbsworkingknowledge/2017/05/03/...
  - specialist 8y ago
    The USA has decided 3 times to create a middle class. By enacting massive transfers of wealth. Most recently the New Deal. Wealth and Democracy: A Political History of the American Rich by Kevin Phillips http://a.co/d/glFxd7G http://a.co/d/glFxd7G That the rich get richer is just math. Without deliberate wealth redistribution, growing inequity is inevitable. Gross inequity and democracy are incompatible. A democratic society must balance capitalism and socialism to survive.
    - WalterBright 8y ago
      The USA has always had a middle class. It never decided to create it, it just naturally happens in a free market.
      - specialist 8y ago
        Is the middle class currently growing, shrinking, or neither?
        Rescis 8y ago
        It's shrinking by your definition, growing by others (the poor of today are the middle class of history if you look at poverty levels, purchasing power, or class mobility). Further, we are in a noticeable amount of ways not a free market. If I took my car engine (the free market) to a mechanic and said "It's not working after I just made a couple of random small changes to it", the mechanic would rightfully laugh me out the door because me just meddling with a complex system, even if its only a small amount, can have disastrous side effects.
  - eeZah7Ux 8y ago
    Not at all: https://en.wikipedia.org/wiki/List_of_countries_by_income_equality https://en.wikipedia.org/wiki/List_of_countries_by_income_eq...
- kidsnow 8y ago
  Those making $200k-$500k are the new middle class. Are you making that much but only own one house? Are your cars more than 5 years old... Ding... you're in the middle class.
  - Sohcahtoa82 8y ago
    Depends on location. In the Bay area? Sure. I live in suburbs outside Portland, OR. My wife and I together make about $150k/year. We both own cars less than 3 years old. We only own 1 house, but we take a 2-week vacation a 1-week vacation every year.
    - thatfrenchguy 8y ago
      Sounds like middle class to me
      - Sohcahtoa82 8y ago
        Oh yeah, absolutely. I consider myself the quintessential middle class. My point was that kidsnow said $200-500k is middle class, but it really depends on location. It often feels that the majority of people on Hacker News are living in a Silicon Valley bubble. They talk as if $1,000,000 for a 1500 sq ft house is normal, as if $150k is decent entry-level wage, and...you get the idea. $200-500k is middle class for Silicon Valley, but the higher end of that range is definitely upper class where I live.
        caro_douglos 8y ago
        the SEC uses income thresholds of 200k for an individual and 300k for joint (two years in a row). Should people in the middle class be able to invest? https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=8edfd12967d69c024485029d968ee737&r=SECTION&n=17y3.0.1.1.12.0.46.176 https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=8edfd12967...
        Sohcahtoa82 8y ago
- AnthonyMouse 8y ago
  > and thus grew the middle class. The middle class is something we truly need to focus on growing again. But that's the problem with things like this. We keep focusing on the top and the bottom but not the middle. So we pass laws purporting to tax the rich (but really anyone with a full time job) and then the rich hire accountants and only the middle class pays. Then we clamor for a higher minimum wage, but the middle class already makes more than minimum wage, so the effect on them is to raise the prices they have to pay. What we need isn't just to get the people at $10 to $15, it's to get the people at $20 to $35 or $50.
  - prolikewh0a 8y ago
    >What we need isn't just to get the people at $10 to $15, it's to get the people at $20 to $35 or $50. Exactly. $10-$15/hr is absolute bare minimum to SURVIVE now unless you live in an extremely rural area. $15/hr is coming too late.
  - dv_dt 8y ago
    I submit that we have just focused on the top in terms of systemic gov't policy.
  - tcbawo 8y ago
    I wouldn't expect prices to rise significantly as automation kicks in. We will see a lot of competition and wage stagnation for those middle class jobs as efficiency eats away the margins they live on. Hopefully we find a solution before the pitchforks come out.
  - sureaboutthis 8y ago
    Where is that money coming from?
    - DoreenMichele 8y ago
      If they are worth that price, people will come up with the money. We aren't talking about charity here.
  - DoreenMichele 8y ago
skybrian 8y ago
Yeah, I don't take that explanation at face value because it's describing a perpetual motion machine. Sales to your own employees are only going to be a trivial amount of revenue for any reasonable business. And I'm sure he knew that. But interpreted charitably, it's showmanship. This is a way to show leadership, get a lot of publicity, and hire better workers, so what's not to like?
- sampl 8y ago
  > Sales to your own employees are only going to be a trivial amount of revenue for any reasonable business. So true. But I wonder if locking in a steady “home base” to the overall market of price-conscious general consumers makes it worthwhile strategically. Selling to employees isn’t sustainable long-term, but as a strategy for bootstrapping/sustaining word-of-mouth among your customers it might be very smart.
- samplesizeme 8y ago
  Give credence to the theory of velocity of money, and there is more to back this up.
- MrStonedOne 8y ago
  The point wasn't that paying employees more leads to sells. Its more of a remark about the overall world. Your employees are somebody's customers, your customers are somebody's employees, You are somebody's customer. If nobody in the world makes enough to be a consumer, nobody consumes, and thus you have no customers.
  - deleted 8y ago
    [deleted]
  - Smokey28 8y ago
    Exactly this. I've spent the last year or so studying Ford. His whole point was that if people didn't have the money to buy his product or time to use it (he reduced work hours as well) then your business will never survive. He wasn't banking on employee sales, he was looking at employees as a snapshot of a wider market. Great example is fast food as well. If you are offering the "lowest cost" food option, and providing the minimum wage, you've got product/purchasing power that are both at the bottom of the food chain. And if employees can't afford to buy your food... then who is going to? Your product doesn't match the market you'd supposedly be selling to. This is why Ford is considered the creator of the middle class. He took automation and used it as a way to set a different standard for society, one that inherently helped his own product succeed in the long run. Why is Bezos doing this? Because Amazon succeeds when people have more disposable income. And it starts with his company. sure he might get regulated to do it anyways, but now he is pushing the needle. Regulators might push an overall minimum wage hike to $15 because "if amazon can do it, why cant you?" The merits of that hike aside, know who stands to benefit from people having more money to spend? Amazon.
WalterBright 8y ago
Ford's move was because he had difficulty attracting and retaining workers for boring assembly line work.
- c0nducktr 8y ago
  Correct. > At the time, workers could count on about $2.25 per day, for which they worked nine-hour shifts. It was pretty good money in those days, but the toll was too much for many to bear. Ford's turnover rate was very high. In 1913, Ford hired more than 52,000 men to keep a workforce of only 14,000. New workers required a costly break-in period, making matters worse for the company. Also, some men simply walked away from the line to quit and look for a job elsewhere. Then the line stopped and production of cars halted. The increased cost and delayed production kept Ford from selling his cars at the low price he wanted. Drastic measures were necessary if he was to keep up this production. https://www.forbes.com/sites/timworstall/2012/03/04/the-story-of-henry-fords-5-a-day-wages-its-not-what-you-think/#4b385e9a766d https://www.forbes.com/sites/timworstall/2012/03/04/the-stor...
  - iguy 8y ago
    Came here to say this. His factory needed a stable workforce, more so than most at the time -- because one screw-up could stop the line. And he was willing to pay for this. Hire the most stable, least-drunk, workers around. Of course he wasn't above some good PR, either. (And this was also the era when you could get a patent on a perpetual motion machine, right?) He'd be thrilled to see his PR quoted uncritically a century later. This shift to more stable employment wasn't all gravy, by the way. In a factory town where the average guy keeps a job for a few months at a time, a recession means that it takes him a bit longer to find the next job... everyone's looking at the same time. But in a factory town where the average guy keeps his job for decades, layoffs are much more serious. Which is part of why the "great" depression gets this adjective in out memory, and others don't.
- zhte415 8y ago
  To add to the discussion, and your mention of boring assembly line work, a valuable quote (that occurs several hundreds of pages after the pin factory observation) from Smith's Wealth of Nations, written in 1776. > The man whose whole life is spent in performing a few simple operations, of which the effects too are, perhaps, always the same, or very nearly the same, has no occasion to exert his understanding,or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become. > The torpor of his mind renders him, not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgement concerning many even of the ordinary duties of private life. Of the great extensive interests of his country he is altogether incapable of judging; and unless very particular pains have been taken to render him otherwise, he is equally incapable of defending his country in war. > The uniformity of his stationary life naturally corrupts the courage of his mind, and makes him regard with abhorrence the irregular, uncertain, and adventurous life of a soldier. It corrupts even the activity of his body, and renders him incapable of exerting his strength with vigour and perseverance, in any other employment than that to which he has been bred. His dexterity at his own particular trade seems, in this manner, to be acquired at the expense of his intellectual, social, and martial virtues. But in every improved and civilized society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless the government takes some pains to prevent it. Vehicle production lines are now heavy users of automation, and workers skilled not only in assembly, but in process improvement, scrum, lean. Not simply being manual workers is to Amazon's benefit, as it was to Ford for he recognised the impact an individual worker had on the end-to-end production; embodied in concepts like TPS, lean, six sigma, but with long histories.
CobrastanJorji 8y ago
It's a great thing, that motto, but creatively employed, it can also produce company towns with "company stores" that accept scrip payments.
WheelsAtLarge 8y ago
I suspect other companies will have to match Amazon's wages. Walmart's employees are looking at Amazon and wondering why they don't get the same wages. This will become the de facto minimum wage at least in retail. This is good news overall.
- simonh 8y ago
  What Amazon is doing is building a moat to protect themselves from competition. Amazon has achieved a scale where they have driven down their cost of business per product sold as low as they can. Only other companies operating at a similar scale can compete. By increasing the cost of doing business for smaller competitors that don't have their scale, they are dramatically increasing the cost of anyone else doing what they did to get where they are. I'm sure Jeff feels good about this more. He can be rightly proud of it. He's managed to build a business successful enough that he can afford to do it. However don't lose sight of the fact this is also a shrewd and actually pretty aggressive business move.
  - alttab 8y ago
    It's truly surprising to me how many people took this announcement at face value. I personally recognized the ruthlessness of it almost immediately. It was seared into Jeff Bezos' quote - "We're excited about this change and encourage our competitors and other large employers to join us." Says everything right there.
louprado 8y ago
From the article above. "That morning, Ford would begin paying his employees $5.00 a day, over twice the average wage for automakers in 1914. In addition, he was reducing the work day from 9 hours to 8 hours, a significant drop from the 60-hour work week that was the standard in American manufacturing." For reference $5/day in 1914 is ~$15.62 an hour in 2018 dollars. The similarities likely end there. Unlike Ford, Amazon's hike is not twice the average wage of a fulfillment center employee. A manager at an employment agency recently told me that you can't hire someone for less than $15 an hour to work in a fulfillment center in Reno, NV. Reno is a major fulfillment/shipping hub in the US. This post should have been titled "Amazon raises pay to keep up with market rates just like every other company".
mtgx 8y ago
Why do most people react to this as this was a gift from Amazon, when in fact it was organized by workers and a demand they won? If anything this was a concession from Amazon, because Amazon workers were supporting a bill against Amazon, which probably had more in store for the company than just a minimum wage raise.

smilbandit 8y ago

and thus grew the middle class. The middle class is something we truly need to focus on growing again.

WalterBright 8y ago
America has always been a nation of middle class people, even back in colonial times. The exception was the southern slave economy, which didn't have much of a middle class.
- jrochkind1 8y ago
  it's a pretty big exception, even if the other part is true. (And thanks for acknowledging the exception up front!) At the high points, 20% of the total U.S. population were enslaved. At that point, it's not just an exception, it's a problem with the entire premise, even if the entire rest of the population was 'middle class', which they weren't. What allowed the U.S. economy to function with an unusually large portion of _white_ people being "middle class" (compared to Europe)... was all the African people who weren't. There's no reason to treat those 20% of people as not part of the U.S. economy, they were a _crucial_ part. If we were to look at what portion of the _entire_ population of the U.S. was "middle class", including those 20% enslaved people, for whatever definition of 'middle class', that'd be closer anyway. There's no reason to look at things without them though, as if they were just a footnote. 20% of the population!
  - WalterBright 8y ago
    That 20% was in the slave economy of the south. The north did not have slaves, and the middle class was in the north.
    - jrochkind1 8y ago
      It's 20% of the population of the entire country. It was probably much more than 20% in the South, indeed (in some states as high as _65%_ enslaved people at some times!), and less in the North. The North did originally have some enslaved people. The economies were clearly related.
      - WalterBright 8y ago
        The severing of the economies at the outset of the Civil War, and the total destruction of the southern economy during the war, yet the continued prosperity of the northern economy shows that the northern economy was not dependent on slaves. > The North did originally have some enslaved people. Yes, and the ending of that did not retard the economy or reduce the middle class in any detectable way. The middle class increased throughout the 19th century.
        jrochkind1 8y ago
        Slavery was integral to the entire U.S. economy, but that economy was changing in the mid-19th century, and indeed it's not totally false that those economic changes were part of what led to the civil war. // Capitalists in the North profited by investing in banks that handled the exchange of money for people, or in insurance companies that provided insurance for the owners’ investments in enslaved people. So did foreign investors in Southern securities, some of which were issued on mortgaged slaves. The hotbed of American abolitionism — New England — was also the home of America’s cotton textile industry, which grew rich on the backs of the enslaved people forced to pick cotton. The story of America’s domestic slave trade is not just a story about Richmond or New Orleans, but about America. // https://opinionator.blogs.nytimes.com/2015/04/03/how-the-slave-trade-built-america/ https://opinionator.blogs.nytimes.com/2015/04/03/how-the-sla... https://www.amazon.com/exec/obidos/ASIN/0345467833 https://www.amazon.com/exec/obidos/ASIN/0345467833 https://www.amazon.com/Slaverys-Capitalism-American-Economic-Development/dp/1538404389 https://www.amazon.com/Slaverys-Capitalism-American-Economic... https://www.amazon.com/Half-Has-Never-Been-Told/dp/0465049664 https://www.amazon.com/Half-Has-Never-Been-Told/dp/046504966... "“In the decades between the American Revolution and the Civil War, slavery—as a source of the cotton that fed Rhode Island’s mills, as a source of the wealth that filled New York’s banks, as a source of the markets that inspired Massachusetts manufacturers—proved indispensable to national economic development,” Beckert and Rockman write in the introduction to the book. “… Cotton offered a reason for entrepreneurs and inventors to build manufactories in such places as Lowell, Pawtucket, and Paterson, thereby connecting New England’s Industrial Revolution to the advancing plantation frontier of the Deep South. And financing cotton growing, as well as marketing and transporting the crop, was a source of great wealth for the nation’s merchants and banks.”" https://www.forbes.com/sites/hbsworkingknowledge/2017/05/03/the-clear-connection-between-slavery-and-american-capitalism/ https://www.forbes.com/sites/hbsworkingknowledge/2017/05/03/...
- specialist 8y ago
  The USA has decided 3 times to create a middle class. By enacting massive transfers of wealth. Most recently the New Deal. Wealth and Democracy: A Political History of the American Rich by Kevin Phillips http://a.co/d/glFxd7G http://a.co/d/glFxd7G That the rich get richer is just math. Without deliberate wealth redistribution, growing inequity is inevitable. Gross inequity and democracy are incompatible. A democratic society must balance capitalism and socialism to survive.
  - WalterBright 8y ago
    The USA has always had a middle class. It never decided to create it, it just naturally happens in a free market.
    - specialist 8y ago
      Is the middle class currently growing, shrinking, or neither?
      - Rescis 8y ago
        It's shrinking by your definition, growing by others (the poor of today are the middle class of history if you look at poverty levels, purchasing power, or class mobility). Further, we are in a noticeable amount of ways not a free market. If I took my car engine (the free market) to a mechanic and said "It's not working after I just made a couple of random small changes to it", the mechanic would rightfully laugh me out the door because me just meddling with a complex system, even if its only a small amount, can have disastrous side effects.
- eeZah7Ux 8y ago
  Not at all: https://en.wikipedia.org/wiki/List_of_countries_by_income_equality https://en.wikipedia.org/wiki/List_of_countries_by_income_eq...
kidsnow 8y ago
Those making $200k-$500k are the new middle class. Are you making that much but only own one house? Are your cars more than 5 years old... Ding... you're in the middle class.
- Sohcahtoa82 8y ago
  Depends on location. In the Bay area? Sure. I live in suburbs outside Portland, OR. My wife and I together make about $150k/year. We both own cars less than 3 years old. We only own 1 house, but we take a 2-week vacation a 1-week vacation every year.
  - thatfrenchguy 8y ago
    Sounds like middle class to me
    - Sohcahtoa82 8y ago
      Oh yeah, absolutely. I consider myself the quintessential middle class. My point was that kidsnow said $200-500k is middle class, but it really depends on location. It often feels that the majority of people on Hacker News are living in a Silicon Valley bubble. They talk as if $1,000,000 for a 1500 sq ft house is normal, as if $150k is decent entry-level wage, and...you get the idea. $200-500k is middle class for Silicon Valley, but the higher end of that range is definitely upper class where I live.
      - caro_douglos 8y ago
        the SEC uses income thresholds of 200k for an individual and 300k for joint (two years in a row). Should people in the middle class be able to invest? https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=8edfd12967d69c024485029d968ee737&r=SECTION&n=17y3.0.1.1.12.0.46.176 https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=8edfd12967...
        Sohcahtoa82 8y ago
AnthonyMouse 8y ago
> and thus grew the middle class. The middle class is something we truly need to focus on growing again. But that's the problem with things like this. We keep focusing on the top and the bottom but not the middle. So we pass laws purporting to tax the rich (but really anyone with a full time job) and then the rich hire accountants and only the middle class pays. Then we clamor for a higher minimum wage, but the middle class already makes more than minimum wage, so the effect on them is to raise the prices they have to pay. What we need isn't just to get the people at $10 to $15, it's to get the people at $20 to $35 or $50.
- prolikewh0a 8y ago
  >What we need isn't just to get the people at $10 to $15, it's to get the people at $20 to $35 or $50. Exactly. $10-$15/hr is absolute bare minimum to SURVIVE now unless you live in an extremely rural area. $15/hr is coming too late.
- dv_dt 8y ago
  I submit that we have just focused on the top in terms of systemic gov't policy.
- tcbawo 8y ago
  I wouldn't expect prices to rise significantly as automation kicks in. We will see a lot of competition and wage stagnation for those middle class jobs as efficiency eats away the margins they live on. Hopefully we find a solution before the pitchforks come out.
- sureaboutthis 8y ago
  Where is that money coming from?
  - DoreenMichele 8y ago
    If they are worth that price, people will come up with the money. We aren't talking about charity here.
- DoreenMichele 8y ago

skybrian 8y ago

Yeah, I don't take that explanation at face value because it's describing a perpetual motion machine. Sales to your own employees are only going to be a trivial amount of revenue for any reasonable business. And I'm sure he knew that. But interpreted charitably, it's showmanship. This is a way to show leadership, get a lot of publicity, and hire better workers, so what's not to like?

sampl 8y ago
> Sales to your own employees are only going to be a trivial amount of revenue for any reasonable business. So true. But I wonder if locking in a steady “home base” to the overall market of price-conscious general consumers makes it worthwhile strategically. Selling to employees isn’t sustainable long-term, but as a strategy for bootstrapping/sustaining word-of-mouth among your customers it might be very smart.
samplesizeme 8y ago
Give credence to the theory of velocity of money, and there is more to back this up.
MrStonedOne 8y ago
The point wasn't that paying employees more leads to sells. Its more of a remark about the overall world. Your employees are somebody's customers, your customers are somebody's employees, You are somebody's customer. If nobody in the world makes enough to be a consumer, nobody consumes, and thus you have no customers.
- deleted 8y ago
  [deleted]
- Smokey28 8y ago
  Exactly this. I've spent the last year or so studying Ford. His whole point was that if people didn't have the money to buy his product or time to use it (he reduced work hours as well) then your business will never survive. He wasn't banking on employee sales, he was looking at employees as a snapshot of a wider market. Great example is fast food as well. If you are offering the "lowest cost" food option, and providing the minimum wage, you've got product/purchasing power that are both at the bottom of the food chain. And if employees can't afford to buy your food... then who is going to? Your product doesn't match the market you'd supposedly be selling to. This is why Ford is considered the creator of the middle class. He took automation and used it as a way to set a different standard for society, one that inherently helped his own product succeed in the long run. Why is Bezos doing this? Because Amazon succeeds when people have more disposable income. And it starts with his company. sure he might get regulated to do it anyways, but now he is pushing the needle. Regulators might push an overall minimum wage hike to $15 because "if amazon can do it, why cant you?" The merits of that hike aside, know who stands to benefit from people having more money to spend? Amazon.

WalterBright 8y ago

Ford's move was because he had difficulty attracting and retaining workers for boring assembly line work.

c0nducktr 8y ago
Correct. > At the time, workers could count on about $2.25 per day, for which they worked nine-hour shifts. It was pretty good money in those days, but the toll was too much for many to bear. Ford's turnover rate was very high. In 1913, Ford hired more than 52,000 men to keep a workforce of only 14,000. New workers required a costly break-in period, making matters worse for the company. Also, some men simply walked away from the line to quit and look for a job elsewhere. Then the line stopped and production of cars halted. The increased cost and delayed production kept Ford from selling his cars at the low price he wanted. Drastic measures were necessary if he was to keep up this production. https://www.forbes.com/sites/timworstall/2012/03/04/the-story-of-henry-fords-5-a-day-wages-its-not-what-you-think/#4b385e9a766d https://www.forbes.com/sites/timworstall/2012/03/04/the-stor...
- iguy 8y ago
  Came here to say this. His factory needed a stable workforce, more so than most at the time -- because one screw-up could stop the line. And he was willing to pay for this. Hire the most stable, least-drunk, workers around. Of course he wasn't above some good PR, either. (And this was also the era when you could get a patent on a perpetual motion machine, right?) He'd be thrilled to see his PR quoted uncritically a century later. This shift to more stable employment wasn't all gravy, by the way. In a factory town where the average guy keeps a job for a few months at a time, a recession means that it takes him a bit longer to find the next job... everyone's looking at the same time. But in a factory town where the average guy keeps his job for decades, layoffs are much more serious. Which is part of why the "great" depression gets this adjective in out memory, and others don't.
zhte415 8y ago
To add to the discussion, and your mention of boring assembly line work, a valuable quote (that occurs several hundreds of pages after the pin factory observation) from Smith's Wealth of Nations, written in 1776. > The man whose whole life is spent in performing a few simple operations, of which the effects too are, perhaps, always the same, or very nearly the same, has no occasion to exert his understanding,or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become. > The torpor of his mind renders him, not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgement concerning many even of the ordinary duties of private life. Of the great extensive interests of his country he is altogether incapable of judging; and unless very particular pains have been taken to render him otherwise, he is equally incapable of defending his country in war. > The uniformity of his stationary life naturally corrupts the courage of his mind, and makes him regard with abhorrence the irregular, uncertain, and adventurous life of a soldier. It corrupts even the activity of his body, and renders him incapable of exerting his strength with vigour and perseverance, in any other employment than that to which he has been bred. His dexterity at his own particular trade seems, in this manner, to be acquired at the expense of his intellectual, social, and martial virtues. But in every improved and civilized society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless the government takes some pains to prevent it. Vehicle production lines are now heavy users of automation, and workers skilled not only in assembly, but in process improvement, scrum, lean. Not simply being manual workers is to Amazon's benefit, as it was to Ford for he recognised the impact an individual worker had on the end-to-end production; embodied in concepts like TPS, lean, six sigma, but with long histories.

CobrastanJorji 8y ago

It's a great thing, that motto, but creatively employed, it can also produce company towns with "company stores" that accept scrip payments.

WheelsAtLarge 8y ago

I suspect other companies will have to match Amazon's wages. Walmart's employees are looking at Amazon and wondering why they don't get the same wages. This will become the de facto minimum wage at least in retail. This is good news overall.

simonh 8y ago
What Amazon is doing is building a moat to protect themselves from competition. Amazon has achieved a scale where they have driven down their cost of business per product sold as low as they can. Only other companies operating at a similar scale can compete. By increasing the cost of doing business for smaller competitors that don't have their scale, they are dramatically increasing the cost of anyone else doing what they did to get where they are. I'm sure Jeff feels good about this more. He can be rightly proud of it. He's managed to build a business successful enough that he can afford to do it. However don't lose sight of the fact this is also a shrewd and actually pretty aggressive business move.
- alttab 8y ago
  It's truly surprising to me how many people took this announcement at face value. I personally recognized the ruthlessness of it almost immediately. It was seared into Jeff Bezos' quote - "We're excited about this change and encourage our competitors and other large employers to join us." Says everything right there.

louprado 8y ago

From the article above. "That morning, Ford would begin paying his employees $5.00 a day, over twice the average wage for automakers in 1914. In addition, he was reducing the work day from 9 hours to 8 hours, a significant drop from the 60-hour work week that was the standard in American manufacturing." For reference $5/day in 1914 is ~$15.62 an hour in 2018 dollars. The similarities likely end there. Unlike Ford, Amazon's hike is not twice the average wage of a fulfillment center employee. A manager at an employment agency recently told me that you can't hire someone for less than $15 an hour to work in a fulfillment center in Reno, NV. Reno is a major fulfillment/shipping hub in the US. This post should have been titled "Amazon raises pay to keep up with market rates just like every other company".

mtgx 8y ago

Why do most people react to this as this was a gift from Amazon, when in fact it was organized by workers and a demand they won? If anything this was a concession from Amazon, because Amazon workers were supporting a bill against Amazon, which probably had more in store for the company than just a minimum wage raise.