On Jan. 5, 1914, America learned that the Ford Motor Co. was going to pay the unheard of wage of $5 per day to their employees. At that time, an autoworker made on average of $2.34 per day. There were dozens of pay scales and the car companies were operating on a “lay on or lay off” basis. Workers were hired as needed and laid off when there was no work.
James Cousins, in his memoirs, related how on Christmas break in 1913, he stood at his office window in Highland Park, looking down on the thousands of men trudging out into the cold, with lunch pails in hand, onto Woodward Avenue. They had worked at top speed for a year and yet they were going to spend the Christmas holiday with no pay, and no assurance of exactly when they would again return to their jobs.
The company was turning out a better and cheaper car for the customer every year and the stockholders were becoming extremely wealthy. Was it fair for a corporation, which by 1913 had more than $28 million in surplus, to keep paying Tim Smith and Carlo Pastucci only $2 or $2.50 per day?
We know for certain that Henry Ford also had indeed been contemplating the lot of the autoworker. In 1912 when he visited English Operations, Mr. Ford had a discussion with Sir Percival Perry who had improved working conditions there.
Thus, on Jan. 5, 1914, the Detroit newspapers were called after a director’s meeting and the most formidable event in industrial history was announced.
The Cleveland Plain Dealer called the $5 day “a blinding rocket through the dark clouds of the present industrial depression.”
Most people who are now up in age, remember the $5 day, or of being told of it. What most people do not know is that a worker did not automatically receive the $5 pay. A worker’s pay was divided into “wages” and “profits.” One had to sign up for the profit sharing.
A Sociological Department was instituted at Ford Motor Co. to administer the new pay plan. Mr. Ford, who was willing to pay unheard of wages, had definite ideas of what criteria would prevail in the pay plan.
He was not about to simply pay a man double the wages if there was a chance he might drink the money away or carouse around, neglecting his family.
A pamphlet of the plan reported that “Thrift, good service and sobriety will be encouraged and rewarded.” A worker had to let a social worker come into the home and survey the living conditions.
They also had to be willing to receive help in running
their home and finances efficiently.
Today, one may often hear reference to the famous profit program as the use of profits to “alter and control the lives and behavior of the Ford workers.” Indeed that is correct. However, the statement implies negative influence and undue meddling into personal lives. It would be different to evaluate if workers were greatly helped.
We do know for certain that guidance and counseling was desperately needed by most workers.
In 1914, Ford Motor Co. did a detailed study of the work force. Only 29 percent were American born. The majority of the workers could not speak or understand much English, let alone read or write.
Workers, for the most part, were either peasants or farmers. How were these people to know about health care and other habits that would strengthen the family?
The one thing we know for certain is that with the pay of $5 per day, the worker on the line now could purchase the product that his employer was producing – a car. Could there be any other event in history that did more to usher in a substantial middle class in America?
It also appears that Mr. Ford meant it when he said, “The highest use of capital is not to make more money, but to make money do more for the betterment of life.”