Ford's Five Dollar Wage Changed Everything

On January 5, 1914, Henry Ford and his vice president James Couzens stunned the world when they revealed that Ford Motor Company would double its workers’ wages to five dollars a day. This groundbreaking decision for the average Ford assembly line worker salary generated glowing newspaper headlines and editorials around the world. The notion of a wealthy industrialist sharing profits with workers on such a scale was unprecedented.

In the century since, many theories have been posited for Ford’s bold move. Some suggested the increase was to justify assembly line speed-ups. Others speculated it was to counteract high labor turnover due to increasingly monotonous assembly line work. Ford admirers believed it was pure philanthropy and a progressive step towards improving Henry Ford's workers' rights. Cynics asserted that it was little more than an elaborate publicity stunt. As usual, the truth lay somewhere in the middle.

More Monotony, But More Money

To a large degree, Ford’s implementation of the Five-Dollar Day cannot be appreciated without first understanding his advances with the moving assembly line. Experiments through 1913 and into 1914 reduced the time required to build a Model T automobile from 12½ hours to a mere 93 minutes. Increased efficiencies lowered production costs, which lowered customer prices, which increased demand. The public was eager to buy all of the cars Ford could build.

Explosive production gains came at the cost of worker satisfaction. The very goal of the moving assembly line was to take what had been relatively skilled craftwork and reduce it to simple, rote tasks. Workers who had taken pride in their labor were quickly bored by the more mundane assembly process. Some took to lateness and absenteeism. Many simply quit, and Ford found itself with a crippling labor turnover rate of 370 percent. The assembly line depended on a steady crew of employees to staff it, and training replacements was expensive. Ford reasoned that a bigger paycheck might make the factory’s tedium more tolerable.
If the need to retain workers was a partial motivation for the Five-Dollar Day, then the solution may have worked too well. Within days of the announcement, thousands of applicants came to Detroit from all over the Midwest and entrenched themselves at the Ford’s gate. The company was overwhelmed, riots broke out, and the crowds were turned away with fire hoses in the icy January weather. Ford announced that it would only hire workers who had lived in Detroit for at least six months, and the situation slowly came under control.