Tuesday, July 8, 2014

A Myth about the Wages Henry Ford Paid

You may have heard that Henry Ford paid his workers a higher wage so that they could buy his cars. That is an old wife's tale. The actual reason that Ford paid more than other businesses was because he found that it cost him more to hire and train new workers than the cost of the higher wages he had to pay experienced workers. He was hiring workers away from other car producers and getting the best and most experienced people because of his higher wages. These experienced workers produced cars for Ford faster and with fewer defects than if he had less experienced workers. 

The average Ford worker could not, even at the higher wage of a dollar more per hour, afford the cost of a new car, and at the time there were no car loans available at the local bank. The majority of people could only buy one of Ford's cars after saving up for several years.


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