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The original Henry Ford, committed to raising productivity and lowering prices remorselessly, appreciated this profoundly—and insisted on paying his workers twi
by skylan_q 13y ago
The original Henry Ford, committed to raising productivity and lowering prices remorselessly, appreciated this profoundly—and insisted on paying his workers twice the going rate, so they could afford to buy his cars.
When will this myth die? He paid double so that he could retain employees because turnover was costing him too much. It's mathematically impossible to pay your employees and expect them to be the the purchasers of your product while remaining profitable.
- danbruc 13y agoIt is only impossible if only your employees are your customers - this was obviously never the case.
- skylan_q 13y agoI'd hope that most people could see through this. My issue is that the Ford myth is often postulated this way. People fear going through the simple arithmetic demonstrating the impossibility of the proposition. It's easier to spread a rumor than it is to correct it... :(
- anthuswilliams 13y agoWhat are you talking about? If other people are buying his cars, he will still make less money paying his employees to buy his cars than he would have otherwise.
- sonoffett 13y agoRight, because only the employees are purchasing the product.
- gregpilling 13y agoYes it is a myth. Turnover was at 9 months average per employee on the floor, and there were so many car companies in Detroit that it was easy for a skilled worker to quit and find work somewhere else for the same or better pay. So Ford raised wages and then held employees to a high standard of conduct. He had people inspect workers homes for alcohol use or signs of bad behavior in the eyes of Henry Ford. "Wheels for the World" is an excellent book about Ford's early years. You can see the same thing happening now in Shenzhen. Workers know that they can get a job easily if they have some experience, so many don't return to work after a holiday. Wages have also gone up rapidly there. I just returned from a month in Chana and managed to tour a couple of factories while I was there. The complaint from the factory owners was skilled labor and the price they had to pay to retain them.
- skylan_q 13y agoYou can see the same thing happening now in Shenzhen. Workers know that they can get a job easily if they have some experience, so many don't return to work after a holiday. Wages have also gone up rapidly there. I just returned from a month in Chana and managed to tour a couple of factories while I was there. The complaint from the factory owners was skilled labor and the price they had to pay to retain them. <sarcasm> Sounds terrible! Imagine a world where labor restrictions and regulations are so loose that barely anyone faces unemployment and the companies must attract workers?! The unimaginable horror!