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Factory Work Paid Well

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On a cold day in January 1914, an estimated 10,000 people lined up outside of Ford Motor Company's employment office desperate to be hired.8 Henry Ford had announced an extraordinary offer to job candidates: he was willing to pay $5/day. That was more than twice the average factory wage at the time. Ford set a precedent that was followed by other companies over time: pay your workers well, and turnover and absenteeism will go down. After this wage increase, the Ford Motor Company doubled its profits in less than two years.

Ford's move to raise wages also gave birth to the U.S. industrial middle class. A salary of five dollars a day allowed workers to enjoy a standard of living the likes of which had never been seen by working-class people. There's a sign outside the abandoned Model-T plant in Highland Park, Michigan, that says, “Mass production soon moved from here to all phases of American industry, and set a pattern of abundance for 20th-century living.”9

Workers knew (and were often reminded by managers on the floor) that if they didn't want to do the work, there were five other people outside who'd be ready to jump at a moment's notice. The golden handcuffs of high wages kept most people obedient in the command-and-control system.

Cracking the Leadership Code

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