#5 1914 · Ford Motor Company · Manufacturingattack-invisible-cost
Ford doubled wages to five dollars a day — because the assembly line's real cost was everyone quitting
the problem
Turnover on the new assembly line ran ~370%; Ford hired 52,000 men a year to keep 14,000 jobs filled
background
The moving assembly line of 1913 made Ford's cars radically cheaper by making Ford's jobs radically worse — repetitive, relentless, interchangeable. Workers answered with their feet: turnover hit roughly 370%, daily absenteeism ran to a tenth of the workforce, and Ford hired some 52,000 men in a year to keep about 14,000 positions filled. Every departure meant training, errors, and stopped lines.
On 5 January 1914 Ford roughly doubled the prevailing wage to five dollars for an eight-hour day — half of it profit-sharing conditional on conduct. Crowds rioted at the gates for jobs; rivals called it economic madness.
the move
Ford roughly doubled pay overnight. The wage looked insane and attacked the invisible cost: training churn, absenteeism, and the line stoppages they caused.
the payoff
Turnover and absenteeism collapsed, productivity rose, the best workers queued at the gate — and workers could now afford the product.
what came after
Turnover and absenteeism collapsed, output per man rose, and the wage paid for itself out of the churn it deleted — economists would later name the mechanism 'efficiency wages'. The popular retelling ('so his workers could afford the car') is romance; the documented driver was turnover.
filed under
references
- [1]Henry Ford — the five-dollar wageWikipedia, 2026en.wikipedia.org
- [2]Ford's five-dollar dayThe Henry Ford (museum), 2014thehenryford.org