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In reply to the discussion: "Sorry, It's Not a 'Law of Capitalism' That You Pay Your Employees as Little as Possible. It's..." [View all]HiPointDem
(20,729 posts)111. I read your link. The suit wasn't about wage levels. The suit was about ford not paying a
dividend in a year of record profits because he wanted to expand his plant capacity.
Raff and Summers (1987) conduct a case study on Henry Fords introduction of the five dollar day in 1914. Their conclusion is that the Ford experience supports efficiency wage interpretations. Fords decision to increase wages so dramatically (doubling for most workers) is most plausibly portrayed as the consequence of efficiency wage considerations, with the structure being consistent, evidence of substantial queues for Ford jobs, and significant increases in productivity and profits at Ford. Concerns such as high turnover and poor worker morale appear to have played a significant role in the five-dollar decision. Fords new wage put him in the position of rationing jobs, and increased wages did yield substantial productivity benefits and profits. There is also evidence that other firms emulated Fords policy to some extent, with wages in the automobile industry 40% higher than in the rest of manufacturing...
http://en.wikipedia.org/wiki/Efficiency_wage
http://en.wikipedia.org/wiki/Efficiency_wage
ford was also an early adopter of outsourcing -- again, under competitive & economic pressure: "During this period (depression) Ford's use of outside suppliers increased considerably...it appears that these companies paid less than Ford....Murray Body...employed 500 women on a Ford contract and paid them on a piecework basis as little as $3 a day..."
Another thing usually elided is that Ford's $5 a day wasn't -- it was standard pay + a bonus, which you could only get by letting Ford spies come to your home & check to make sure you were following it's rules, e.g. no liquor in the home, etc.
http://books.google.com/books?id=Rl6ApEbSsDAC&pg=PA168&dq=henry+ford+cut+wages+depression&hl=en&sa=X&ei=0R4EUr2GFonhiALwnoGAAQ&ved=0CGUQ6AEwBg#v=onepage&q=henry%20ford%20cut%20wages%20depression&f=false
The decision had nothing to do with workers being able to buy his cars. Ford increased wages to reduce labor turnover and get better workers generally. It was an expansionary time & Ford's goal was to expand & improve production so as to make it more efficient generally & also produce economies of scale. That's why he needed a skilled & stable workforce, so that process wouldn't be hijacked by labor -- not so that his particular workers would be able to buy the cars they were producing. That would be a pretty small market, if only his highly paid workers were able to buy his cars.
The reason for high wages was to produce efficiencies that lowered the cost of production, PERIOD, allowing Ford to produce cheaper cars -- for EVERYONE, not just for his own workers. To expand the market for his cars generally.
Higher labor inputs at the beginning = greater profits down the line, on volume with lower margins.
Same reason microsoft etc paid wages higher than average when it and the computer industry was expanding, & same reason they're lowering wages today.
Just as Ford began to lower wages in the 20s due to competitive & profit pressures:
January 1, 1914: Ford introduces the five-dollar-a-day wage, twice what his workers earned before and twice what they could earn at any other auto company...
1927: Ford's River Rouge plant is the greatest industrial complex in history, but Ford must lower wages and speed up his assembly line in order to maintain low prices. Competition from other manufacturers leads Ford to shut down the line. The massive layoffs are a harbinger of the great economic debacle to come...
http://faculty.weber.edu/kmackay/a_job_at_ford.htm
1927: Ford's River Rouge plant is the greatest industrial complex in history, but Ford must lower wages and speed up his assembly line in order to maintain low prices. Competition from other manufacturers leads Ford to shut down the line. The massive layoffs are a harbinger of the great economic debacle to come...
http://faculty.weber.edu/kmackay/a_job_at_ford.htm
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"Sorry, It's Not a 'Law of Capitalism' That You Pay Your Employees as Little as Possible. It's..." [View all]
Hissyspit
Aug 2013
OP
My brother is in the same boat. He worked for many years as a civilian ship radio operator, and
Nay
Aug 2013
#40
My bro will apply for SS next year; he's got that long to wait for age 62. He has worked all
Nay
Aug 2013
#69
no, it's a law. the article is kind of silly, i think. competition of various kinds makes it a law
HiPointDem
Aug 2013
#3
Here in NYC, I think people just expect you to be preoccupied when walking on the street.
branford
Aug 2013
#106
Capitalism is the economic system in all first-world (and most other) countries, not just the USA.
branford
Aug 2013
#145
no, they're countries that were deliberately & forcefully *undeveloped* by british (& later US)
HiPointDem
Aug 2013
#100
"China and India are currently the perfect examples." That's an ironic comment, given the history.
HiPointDem
Aug 2013
#91
Capitalism *does* prevent it. For example, the Green Bay Packers were a successful community-
HiPointDem
Aug 2013
#95
capitalism has not lifted people out of poverty. it has lifted the general standard of living &
HiPointDem
Aug 2013
#87
how about the type of social safety net system like they have in Northern Europe and Scandinavia
CreekDog
Aug 2013
#114
So we should rid capitalism of unions, safety and environmental regulations and minimum-wage laws?
Enthusiast
Aug 2013
#138
Respectfully, did you even read my full, original post, no less any of the follow-ups?
branford
Aug 2013
#143
Competitors already exist, so barriers to entry are immaterial. If walmart raises wages,
HiPointDem
Aug 2013
#113
maybe no one. but competitors are multiple, and all can steal market share. which reduces
HiPointDem
Aug 2013
#119
maybe. maybe not. walmart apparently feels differently. do you think it's sheer bloody-mindedness
HiPointDem
Aug 2013
#122
motto of capitalism = grow or die. if you're not making at least that 3% growth, you're dying.
HiPointDem
Aug 2013
#126
What does growing have to do with paying your employees as little as legally possible?
Hippo_Tron
Aug 2013
#128
there's growth & there's growth. costco is a pygmy compared to walmart & a kind of niche
HiPointDem
Aug 2013
#136
The author isn't a critic of capitalism, he's an Oppenheimer/Merrill Lynch shill who got busted
HiPointDem
Aug 2013
#118
Tell that to the formerly destitute rural Chinese who now have electricity and medical care.
branford
Aug 2013
#34
It is a law of capitalism that paying people as little as possible can cause business failure
Coyotl
Aug 2013
#39
this is mythology. they never tell you how ford subsequently *lowered* wages.
HiPointDem
Aug 2013
#96
No, he was not a great guy, he wasn't even a human being by any civilized standard,
Egalitarian Thug
Aug 2013
#103
I read your link. The suit wasn't about wage levels. The suit was about ford not paying a
HiPointDem
Aug 2013
#111
In addition to his other "fine" qualities, Ford was also a rabid anti-semite!
branford
Aug 2013
#115
Indeed. I figured that was included under racist. He was a big supporter of Hitler. n/t
Egalitarian Thug
Aug 2013
#133
Still trying to pick myself up off the floor after seeing Henry Blodget's byline on this . . .
stranger81
Aug 2013
#83
omg, written by an oppenheimer/merril lynch analyst. that would explain why this article is so
HiPointDem
Aug 2013
#99
Companies didn't act this way 60 years ago. Hell companies didn't act this way 40 years ago.
liberal_at_heart
Aug 2013
#88
I always struggle with conceptualizing the type of business Republican policies are targeted at
Sen. Walter Sobchak
Aug 2013
#98