Economic Lessons

Henry Ford and the $5 wage

Posted By Ira Gorelick

Ira Gorelick is a Teacher and Student of Economics and has published numerous classes on Communication and Economics.
May 12, 2020

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Henry Ford and the $5 wage
Ira Gorelick
May 12, 2020

He says Ford proved that higher wages led to more productivity, which in turn was good for business. That positive feedback loop gave rise to a broad, prosperous middle class. But over the years, waves of economic pressures and political changes have broken that link.

“Today, overwhelmingly employers view the lowest wage as the most competitive wage,” Shaiken says.

These days, global supply chains feed a hypercompetitive auto industry where no one wants to give up even an inch of ground, and keeping up with technology takes precedent over stabilizing the workforce. This just isn’t Henry Ford’s economy anymore, Shaiken says.

“There are very real economic pressures out there that push down on wages,” he says. “So it’s not a simple story, but that doesn’t mean that there isn’t a core truth into what Ford found.”

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