But Ford had another idea that is less discussed. He bet the company on a bizarre notion: If he doubled workers' wages from $2.50 to $5 a day, he could reduce production problems, accidents and absenteeism. At the same time, worker turnover and training would be reduced. Productivity would increase.
The bet paid off. It made Henry Ford rich. It opened the door to careful labor force management and higher wages for many workers. It contributed to the creation of a middle-class America.I think they call that capitalism.
I remembered this bit of history as I read Neal Gabler's "The Secret Shame of Middle Class Americans" in the May issue of The Atlantic. It's something everyone should read, particularly those in the top tier of corporate America.
The article explains the anger and discontent that Donald Trump has mobilized for himself, as himself, and that Bernie Sanders has mobilized for his part of the Democratic Party. After nearly half a century of slow but constant decline, a majority of Americans are angry. The root of that anger is the terms of trade for work.
Yes, you read that right ‐ nearly half a century of decline. It has taken that long to cross all collar colors. It started in the 1960s with the peak of power for the coal and auto unions. It spread further when the communications workers lost their power in the '70s. And it climaxed when Ronald Reagan broke the air traffic controllers union in 1981.
All those events marked the decline in the terms of trade for American workers. Along the way, pensions have disappeared, benefits have been whittled away, job security has vanished and wage gains have trailed inflation. According to data from the Federal Reserve Bank of St. Louis, labor's share of the business sector peaked in 1960. It began a steep decline in 2000.
At the same time, corporate executive salaries have soared and corporate profitability, by multiple measures, has reached record levels. Much but not all of the gain has been achieved by exporting American jobs.
Much reporting at several different income levels - percentile-wise. Bottom line:
Those higher up the wealth scale do progressively better. At the 99th percentile, 20 percent of wealth was lost between 2007 and 2013 but wealth increased 145 percent between 1983 and 2013.
No solution in sight
There is no sign this trend will reverse. Will the solution come from Washington? Probably not. In any case, no one can hold his breath that long.
We need a 21st-century Henry Ford. Shout if you see him.