This day in history: Henry Ford implements $5 per day wage in 1914
(CBS DETROIT) - On Jan. 5, 1914, Henry Ford implemented a $5 per day wage for his workers.
The announcement from Henry Ford and Ford Motor Company's vice president James Couzens was shocking, as paying workers $5 a day doubled their wages, according to The Henry Ford.
This implementation came with Ford's advancement of the assembly line.
From 1913 to 1914, Ford reduced the time to build a Model T from 12 and a half hours to 93 minutes. This, in turn, lowered production costs, lowered vehicle prices for customers, and increased consumer demand.
This led to a decrease in worker satisfaction, as their work turned into simple, repetitive tasks.
"Workers who had taken pride in their labor were quickly bored by the more mundane assembly process," according to The Henry Ford. "Some took to lateness and absenteeism. Many simply quit, and Ford found itself with a crippling labor turnover rate of 370 percent."
So, although there are many theories as to why Ford started paying his workers $5 a day, many believe it was to gain and retain employees.
Thousands of people traveled to Detroit to apply for jobs, causing crowds and riots outside the company's gates, but then Ford said it would only hire people who had lived in Detroit for at least six months, according to The Henry Ford.
But, workers soon found out they wouldn't immediately get the $5 per day.
Workers still made $2.30 and were given a $2.70 bonus if they followed all of the company's requirements.
Here's how workers would be eligible:
- abstain from alcohol
- not physically abusive toward their families
- not take in boarders
- keep homes clean
- contribute to a savings account
In addition, inspectors from the company would go to the workers' homes to see the living conditions and if workers were following the requirements. Workers resented this intrusion into their personal lives, and his department dedicated to checking on workers at home was later dissolved.
The wage increase prompted other automakers to raise their wages, and autoworkers made living wages, bringing those in the working class into the middle class.