A New $5 Day?

John Landry

Back in 1914 Henry Ford had the crazy idea of giving his factory workers a huge raise. He doubled the standard wage from $2.50 to a whopping $5. The business press excoriated him for his “five dollar day,” but it turned out to be a brilliant move.
He had two reasons. The first, which he gave publicly, was that his new assembly-line system enabled him to produce far more cars than ever before. But after all that efficiency a Model T still cost $500, beyond the reach of most employees at Ford and elsewhere. With the huge raise he hoped to spark a movement to enable American workers to buy a car.
The other reason was that he was having a terrible time staffing his wonderful assembly line. Turnover was enormous as people reacted to the new kind of stress of working on a continually moving line. High pay would make them think twice about leaving, or joining a union.