Ford doubled wages not out of generosity but because 370% of his workforce quit every year.
On January 5, 1914, the Ford Motor Company announced it would pay five dollars for an eight-hour day, more than doubling the previous rate of $2.34 for a nine-hour day.1 The announcement made Henry Ford the most famous industrialist in the United States overnight. The Wall Street Journal called him a class traitor.2
The decision was driven by a crisis. By late 1913, labor turnover at Ford's Highland Park plant had reached 370 percent. To maintain a workforce of 14,000, the company had been forced to hire 52,000 different workers in a single year.3
The assembly line, fully implemented at Highland Park in 1913, had made work faster but also monotonous and physically punishing. Investigators counted more than 200 severed fingers and 75,000 burns, cuts, and puncture wounds in one year.2 Workers walked off the job mid-shift, shutting down the entire line.
On January 12, when the plan took effect, 12,000 job seekers showed up at the Highland Park gates in a blizzard. Company security turned fire hoses on the crowd in sub-zero weather. The applicants changed into dry clothes and came back.2
The five dollars was not a straight wage. Workers received $2.34 in base pay and an additional $2.66 as "profit sharing," conditional on meeting Ford's standards for personal conduct. The company created a Sociological Department that sent investigators into workers' homes to inspect their living conditions, drinking habits, and savings accounts.4 Workers who did not meet the department's standards received only the base wage and were given six months to comply. Those who still failed were fired.
Turnover dropped from 370 percent to 16 percent by 1915.5 In 1915, Ford distributed nearly eight million dollars in profits to about 19,000 workers while the Sociological Department cost $18,000 to operate.