Wages Now and Then

Yesterday, Governor Andrew Cuomo announced his plan to raise the minimum wage for all SUNY workers to $15 an hour: "Cuomo lifts minimum wage for workers at New York universities."

This morning, on The Writer's Almanac, Garrison Keillor recalled that on this day in 1914, Henry Ford announced an increase in the wage he paid his workers: $5 for an eight-hour workday instead of the previous $2.34 for a nine-hour workday. 

As Keillor tells it, "This announcement was met with disbelief and criticism. The financial editor of the New York Times ran into the newsroom and said in a whisper: 'He's crazy, isn't he? Don't you think he's crazy?' The Wall Street Journal accused Ford of bringing 'biblical or spiritual principles into a field where they do not belong.' People were convinced that Ford would go bankrupt, and that the city of Detroit would collapse."

Ford's motives, it turns out, were economic. "He was experiencing high turnover rates, and on any given day 10 percent of the workforce didn't show up." His stated reasons for doubling his workers' pay were two: to retain good workers who were invested in the company and to enable his workers to earn enough to afford the automobiles they made.

Ford's radical idea was a success. Between 1914 and 1916, the company's profits doubled.
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