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Time for a New Five-Dollar Day

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Renew Deal Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-13-10 08:32 AM
Original message
Time for a New Five-Dollar Day
There's so much in this article that I didn't know what to clip. Just read the entire thing. There is a rightist tone in one part of it, but it's still very good.
______________________________________________________________________

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.
<snip>

On both counts, the five-dollar day was a huge success. Even before unionization in the 30s, workers in automobiles and other industries were eventually able to buy cars in sizable numbers. And Ford's turnover dropped substantially, so productivity and profitability went up from the start.
<snip>

Tea Party leaders talk about getting back to "constitutional" government, with something like the limited role it had in the 19th century. That's when the United States, under Alexander Hamilton and other economic nationalists, focused on developing domestic industry. Think China right now, a corporate paradise with low taxes, little regulation, meager social services, and a surprisingly good infrastructure for business.

Chinese consumers lose out, yet the economy thrives because companies can leverage their low costs to sell to affluent consumers elsewhere. As an advanced economy with a much higher cost structure, the United States is more like Japan, which has been suffering a debt hangover for a while now. Its merchants are practically begging recalcitrant consumers to buy, with little success.

Henry Ford helped create America's astonishing 20th-century prosperity with his five dollar day. Maybe it's time for his 21st-century counterparts to follow his lead with some kind of boost to wages, at least in less competitive industries. Like Ford, they can do it to spark consumer spending. Or they can do it to reduce turnover in our case, anger at the political system that might turn against both parties at the next election.

http://blogs.hbr.org/hbr/hbreditors/2010/11/time_for_a_...
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Tuesday Afternoon Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-13-10 08:36 AM
Response to Original message
1. If I could just get a $5.oo/hr raise. I would be ecstatic. If my salary were
doubled I would probably faint.
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rug Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-13-10 08:40 AM
Response to Reply #1
4. I guess we won't be seeing you in the front ranks on the ramparts.
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Tuesday Afternoon Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-13-10 08:42 AM
Response to Reply #4
6. you won't be seeing me anywhere, except at work, trying to make some OT
which thankfully is more than $5.oo per hour.
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InvisibleTouch Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-13-10 08:39 AM
Response to Original message
2. Exactly! Pay people a decent wage...
...and keep jobs at home, and people will actually have money to spend on the products they're making, to keep the economy rolling. Out of work people with no income don't - can't - buy. Companies looking for cheap labor in China for the sake of short-term greed, are shooting themselves in the foot. It's amazing to me that it's not obvious to them.
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hobbit709 Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-13-10 08:40 AM
Response to Original message
3. Henry was a reactionary old bastard.
But smart enough to know that to sell your product, your employees have to make enough to buy it.
Unlike the reactionary bastards of today who can't see past the next quarterly report on increasing profits by offshoring the jobs that would enable people to buy their stuff.
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geckosfeet Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-13-10 08:41 AM
Response to Original message
5. Ford had some understanding of what it was to work that assembly line. Understanding
and high regard for the dedication and pride his employees had. This kind of connection to ones business simply does not exist anymore - at least not at a level that would benefit the US economy. If it did, the landscape of the US economy would be different.
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burnsei sensei Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-13-10 08:54 AM
Response to Original message
7. A decent wage.
Revolutionary suggestion in the first Gilded Age, and in the Gilded Age we now see.
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kentuck Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-13-10 09:04 AM
Response to Original message
8. Global economy =
"They need to open up their markets so our workers can compete with theirs."

Yeah, that's the ticket!

Where do we compete with them?

What do we have that we can make cheaper than they?

Wages need to go much lower.
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Scruffy1 Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-13-10 09:07 AM
Response to Original message
9. Actually this whole Ford story is a farication
Henry never wanted to pay his workers more, but did give into his wife and his business partner who were for it. So he put a caveat on it that it only applied to senior workers and he made damn sure the turnover was such that hardly any new hire ever got. The myth was created for a lawsuit brought on by one of his competitors and to protect Henry from a charge of corporate malfeasance.
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stray cat Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-13-10 09:21 AM
Response to Original message
10. Are you paying for the increase and will you pay more for food and products?
Higher wages should mean higher prices for American goods and not buying cheaper equivalent products elsewhere
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Renew Deal Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-13-10 09:24 AM
Response to Reply #10
11. So your point is that you would prefer to keep most people poor
as long as you can still buy your cheap walmart crap.
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OneGrassRoot Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-13-10 09:28 AM
Response to Original message
12. Can the brilliant among us calculate....

how much of a pay increase those making less than $50k/year, for example, could receive if the tax cuts for the rich expire and, perhaps even a tax hike on the richest x percent is instituted?

I know there are many unknowns in that question, but can someone calculate a practical, doable scenario to show how that wealth that is currently being hoarded by so few can translate into helping so many...very directly?

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