Back almost a century ago, Henry Ford had established the assembly-line method of production for his Model T-Fords, which sold for $500 apiece. (He had famously quipped that the buyer could acquire his cars in any color they wanted….as long as it was black.) Then in1914, Ford decided that that it was a smart and profitable move to pay his assembly-line workers a “living wage,” which was all of $5 per day. Until then, his plant workers were earning slightly more than half that. (It also says reams about the erosion of the dollar’s buying power, if a century ago one could lead a lower middle class life-style by earning $5 a day.) Ford also reduced the normal work day from a 9 to 8 hour shift. Columnists speculated that that Ford’s motive was to put more money into his workers pockets so they could buy more of his cars. But there was much more to it than that. By nearly doubling his worker’s salaries, and creating better working conditions, Ford created a fierce loyalty among his assembly-line employees. This resulted in far less turn-over, which, in turn, resulted in far less recruiting, hiring and re-training costs. In the end Ford made a bundle by treating his employees with a greater degree of decency than other similar employers at the time.
All this came to mind because of recent discussions about paying low-end workers a living wage, which some estimate to be about $15 an hour in this day and age. As we all know, the current federally mandated minimum-wage is $7.25 an hour. It was last raised in 2009, and don’t look for the current highly dysfunctional and polarized Congress to be increasing it anytime soon. So, at $7.25 an hour, if one is lucky enough to have obtained a 40 hour a-week job, one would thus earn the magnificent sum of $290 a week. Before deductions, which would likely bring it down to about $250 a week. So, do you think you can live on about 1000 bucks a month. That would have to pay your rent and utilities, and maybe put some food on the table. You would also need money for transportation and an article or two of clothing, since garments tend not to last forever. And maybe even cable, and a cell phone. Of course, this assumes that a 40-hour a week job is obtainable, which is becoming less and less likely, since companies are turning more and more, with the speed of light, to part-time employment. This is so they can avoid paying their employees health care benefit costs, or heavens forbid, comply with Obamacare mandates.
So if you tend to be toward the low end of the totem pole, employment-wise, and are having trouble meeting you monthly bills, maybe you can turn to Robert Iger for some financial assistance. Perhaps, if you ask nicely, he would help you out with some short-term loans. After all, he’s pretty well-off, financially. You see, Robert Iger is the CEO of Walt Disney-the company that produces all those cutesy cartoon movies. As head of Disney, he’s pulling down a mere $37 million a year. Think he can afford to throw a few shekels your way? If not, you can always turn to Mark Parker, who’s the CEO of Nike. He’s only making $35 million a year, so he may be more reluctant to fork over some cash to help out with your monthly bills. Of course, all this is small potatoes compared to the $96 million a year that Larry Ellison is compensated for as head of Oracle, the computer hardware and software giant. I wouldn’t, however, factor into your monthly budget, any hope of obtaining financial assistance from any of these CEOs. Because the larger question is whether any corporate executive, no matter how productive they may be, is worth tens of millions a year in compensation. Especially when many of their workers are likely struggling financially because they’re in low-paying jobs. Such are the inequities of our capitalist system, however. So when people talk about paying a “living wage” these days, of maybe $15 an hour, such actions could result in these multi-millionaire CEOs of having to shave a few million off their yearly compensations. Perish the thought.
Also on this Labor Day, one has to consider the job situation in this country, or to be more precise, the lack-of-jobs situation. Political foes of this Administration readily point out the high unemployment rate that currently exists, after nearly 5 years of Obama being in the presidency. And the rate is high, standing at 7.4% with about 11.5 million workers that are seeking jobs being unemployed. But there are other factors at play in our capitalistic society. Large American, multi-national corporations currently employ about 21 million workers in the U.S. but have shipped about 10.3 million jobs overseas, where, of course, labor is much cheaper. Apple, for example, whose products like the IPhone are so enamored by so many people, has shipped thousands of jobs to China, where many of these IPhones are manufactured. After all, if a widget costs $5 to produce in this country, but only 75 cents in Bangladesh, why not set up a factory over there. If just half the jobs that American manufacturers shipped to foreign countries were brought back here, the unemployment rate would be so low that people would be dancing in the streets. Think such an event can occur, given the rules and mandates of our capitalist society?
So let’s raise a bottle of beer to all you minimum wage earners struggling to make ends meet. After all, some states mandate a minimum wage higher than $7.25 an hour. In California it’s $8, while Washington state has the highest minimum wage at $9.19. Of course, Georgia is still stuck in a 1950s time warp at $5.15 an hour. Perhaps, however, some capitalist along the way might come up with the idea that paying his employees a truly living wage is not only a matter of common decency, it can also be highly profitable. The way Henry Ford figured it out a century ago.