Henry Ford's Approach To Compensation

1913 saw the introduction of Henry Ford's moving assembly line, where parts from outside suppliers were put together far more quickly.  Only a year later, be began compensating workers very highly for the time (up to $5 a day, double the previous compensation model) while reducing their workday by an hour.  The goal was that the employees would be motivated to perform their roles well, to stabilize turnover, and could purchase from his own inventory, not necessarily the elevation of the working class.  More applicants, longer seniority, greater output of effort, and the ability for them to directly or indirectly increase his own sales were the consequences.  More financially secure workers have more money to spend, perhaps on vehicles like Ford's, or they can spend more in the local area as a whole, which brings more money to other establishments, which in turn allows them greater flexibility in the broader community buying things like automobiles.

Yes, profit is what remains after all expenses, including payroll, are paid from the revenue, so for the short-term, low wages might boost profit. The moral dimensions of this aside, enough of this either leads to a workforce that cannot afford to pay for the products or services of their own industries (short of perhaps true minimal, practical necessities) or trampled workers that, unless they have corporate "Stockholm syndrome," have no loyalty to their companies.  When the community at large cannot afford what is being sold, company profits will wither.  Now, livable or premium compensation do not have to mean someone is always paid enough to afford whatever their labor provides for others.  A company that creates/distributes cars costing $1,000,000 are not paying their workers unlivable wages if they are unable to purchase a one million dollar product.  What Ford did nonetheless helped expand his revenue.

Ford sidestepped several low wage problems while doing something that would strike many modern Americans as more foreign: his repair workers at one factory were paid only when in the break room and not while enacting repairs.  Once comfortably situated in the room and receiving pay specifically to wait around, they might not exactly want to leave the leisure to go fix a malfunction.  Not only would they have to get up again to perform more labor, something many people like to avoid when possible, but their payable time would stop until they resumed their break.  A way to minimize the number of disturbances would be to simply perform repairs with the best quality work one is capable of.  Thus, there was incentive for both high quality of effort/results and long periods of relaxation.  Not paying workers for actual work is still exploitation of a kind by default, yet the highly atypical approach to compensation here provided incentives of its own.

In the modern American workplace, employers can moreso tend to actively, intentionally underpay workers with the goal of leaving more profits (for themselves or shareholders) and treat inactivity as a sign of inefficiency or laziness.  An employee who has no immediate tasks to fulfill might need to remain on standby, and he or she might only be inactive because they competently handled all of their current job duties.  Because they are good workers, they have nothing left to do.  A great many employers do not acknowledge this.  The multiplication of pointless tasks by employers and workers pretending to be busy just to pass time are what naturally results from this kind of stupidity.  The sarcastic notion of walking fast or looking intently at a computer screen to seem busy is sometimes turned to as a reaction to this madness.

Ford did not bother with this nonsense of automatically treating all workers at ease as useless employees.  Like all non-rationalists, he still had his errors and sins.  The full $5 a day had asinine restrictions.  An antisemite, he wrote four volumes of The International Jew proposing fallacious and slanderous ideas about Jews, which reportedly played a role in inspiring Hitler and by extension the rise of Nazism in post-WWI Germany.  When it came to workplace practices, though, his actual practices were pro-worker to abnormal degrees.  Doubling maximum pay, encouraging leisurely breaks as long as work is finished, and stimulating the local economy all do not have to kill every business and could indeed lead to greater success.  An example from the historical record like Henry Ford's business is not what makes this true or what it is necessary to discover this, and his company remains an example anyway.