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Posted by on Sep 2, 2013 in Business, Featured | 3 comments

Happy Labor Day! Now Get Back to Work

labor-day_Image-credit--(a-href='http-__www.123rf.com_photo_15915306_poster-with-huge-smiling-workman-and-lettering-labor-day-vintage-style-in-dull-color.html')yearah-_-123RF-Stock-Photo(_a)700x300

Ah, Labor Day: in America the official end of summer – well, if you’re a school kid living up North, anyway.

But as we stoke the fires for this year’s family barbecues, I hope you take a moment with me to consider something from a century ago almost to the day; something I never thought would be relevant to us in the Twenty-first Century. I wish I’d been right on that account.

In 1913, Henry Ford opened his first factory equipped with an assembly line, and he made history. A few months later he doubled the daily wage for his workers, from $2.50 a day to $5. With that bold stroke, he made history again.

As Ford himself frequently pointed out over the rest of his life, this decision to double his factory’s rate of pay greatly expanded the middle class. Before this, most Americans were poor, and a tiny number were rich. The spark Ford lit in Michigan started a fire that spread across the country.

Now, if you buy Ford’s own story, he did this so his workers could afford to buy the cars they built. More buyers allowed his factories to work at full capacity, which allowed him to lower the price of each car, creating a virtuous circle of rising wages and sustaining consumerism. His suppliers and competitors had to raise their wages to match his, in order to attract or keep workers of their own, so the cycle fed itself.

But the truth is more interesting. When Ford opened his first assembly line, the work was so mind-numbingly dull that his workers quit faster than he could hire and train their replacements. He was literally in danger of going bust because he had too little labor to fill orders. So he doubled his wage, and people stayed – despite the depressing, soul-quashing work. The outflow of workers turned around so effectively that overnight he had his pick of the employment pool.

He was right about the rest of his story: other employers were forced to raise their wages, too. American workers could, finally, afford to buy things. His decision did, truly, establish our vast middle class.

Which brings us to today. 15% of the US population is under the official poverty line of $23,021 for a family of four. Think about that number for a minute: four people living for the whole year on $23 thousand. Economists often cite something called the “twice poverty” number to give a more realistic view of who is really poor, officially or no. That number (four people living at $46 thousand per year) is 33.9% – one third of us.

A lot of the good achieved in the Twentieth Century is unwinding or has unwound in recent years

It seems that a lot of the good achieved in the Twentieth Century is unwinding or has unwound in recent years. For now, I leave you with these questions:

100 years ago, a Capitalist doubled what he paid his workers, and he grabbed the cream of the crop as a result. His company prospered. The entire economy prospered. It was a virtuous circle, although not undertaken for reasons that were all that virtuous.

How do we kick off a command performance? Who will step up to do it?

And what will happen to us all if no one does?

Image credit: yearah / 123RF Stock Photo

Ted Coiné

Ted Coiné

Keynote speaker. Author of A World Gone Social: How Companies Must Adapt to Survive. Three-time CEO. Chairman and Founder of Switch and Shift. Ted Coiné is one of the most influential business experts on the Web, top-ranked by Forbes, Inc., SAP Business Innovation, and Huffington Post for his leadership, customer experience, and social media influence. Ted consults with owners, CEOs and boards of directors on making their companies more competitive by making them more human-focused. He and his family live in Naples, Florida.

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  • Redge

    You raise some interesting questions Ted. What’s just as interesting is the notion that the labour unions of the day still thought there was more to be had. It seems that one good intention was followed by another intention of entitlement that also pervades too many businesses today.

    Of all the plant turnarounds I’ve facilitated over the years, I primarily served as a catalyst for lean thinking and for initiating efforts to improve the work environment. Although executive management teams typically retain my services to return their operations to profitability, I always suggest that the solution lies with / within the work force itself.

    A faltering operation is plagued with people who don’t want to be there anymore. I can’t begin to tell you how many times I’ve heard the same “I wouldn’t recommend this place to my friends or family.” Sustainability includes a stable workforce and one of my “turnaround” goals is to become “the employer of choice” – a place where people want to work and be proud of.

    Simply paying higher wages is not a long term solution, however, I do believe that paying a fair wage is part of the equation. The global economy was borne from the need to remain competitive and satisfy our capitalist demand for continued growth ever increasing returns on our investements. As a result, we see varying economies of scale and have ready access to low wage labour countries.

    It is one thing to enjoy your work and the people you work with (for). It is entirely another to be compensated for intolerable working conditions at a place that does little more than serve as a paycheque.

    • http://www.savvycapitalist.blogspot.com TedCoine

      Redge,

      First, let me start by saying that you have a great tag line: “People are first. Business is second nature.” Brilliant!

      I’ve been one of those people: “I wouldn’t recommend my friends or family worked here.” It stinks. I wrote a post just the other day (http://switchandshift.com/no-trust-when-your-employee-holds-back-socialsaturday) about someone who felt that way before he (finally) left in disgust. I think this type of situation is more prevalent when one’s prospects are poor, as in a bad economy today, or in bad times as were the case in 1913 and before. We’ve come a long way, thankfully!

      You’re absolutely right, money does not make a bad work environment good – not even close! Once we hit a certain threshold, which each of us defines by his/her own personal income set point, anything more is gravy, and quality of experience takes precedence. In Ford’s time, when most people were poor? People would put up with a lot of unhappiness for a chance to join the middle class.

      Finally, to address unions: two of the biggest influences in my life, my Father and my good friend Bernie Turner (founder of Walden University) were on different sides of the union lines earlier in their careers. My father was #1 in personnel negotiating for management during a protracted strike at Virginia Carolina Chemical in the 50s or 60s; Bernie was a union organizer for the garment workers union in the 40′s. Their two perspectives couldn’t be more different, as you could imagine! Fortunately, both were/are incredibly moral and (thus) fair people, not strict partisans. For instance, I learned this from my father: “A management that has a union typically deserves a union.” He understood that his company had earned its union, and he was determined not to lose that perspective throughout the strike.

      Thanks so much for your thoughtful comments! Sharing your thoughts makes you an important member of the Switch and Shift community, and we’re grateful.

  • http://www.savvycapitalist.blogspot.com TedCoine

    BTW my main source is Robert Lacy’s phenomenal biography, “Ford.” http://www.amazon.com/Ford-ROBERT-LACEY/dp/0330298798/ref=zg_bs_917072_82

    I’ve read a couple, so I may have the source wrong, but I believe this is the one.