Samuel S. Marquis was the minister at St Paul’s Episcopal Church in Detroit back in the day and Henry Ford was one of his parishioners. The two became friends and eventually Marquis went to work for Ford in the much maligned (often unfairly) Sociological Department.
Like just about everyone else who got close to Ford, the two men ultimately had a falling out and Marquis left the company. Marquis’ book, “Henry Ford: An Interpretation” has been very difficult to find until it was recently republished because of Ford’s efforts to kill it. It is regarded as perhaps the best insight into Ford as a whole person, and makes for a quick and interesting read.
The often heated debate over the idea of a living wage is hardly a new controversy. The book includes the following interesting passage:
“I asked him why he had fixed upon five dollars as the minimum pay for unskilled labor. His reply was, “Because that is about the least a man with a family can live on in these days. We have been looking into the housing and home conditions of our employees and we find that the skilled man is able to provide for his family, not only the necessities, but some of the luxuries of life. He is able to educate his children, to rear them in a decent home in a desirable neighborhood. But with the unskilled man it is different. He’s not getting enough. He isn’t getting all that’s coming to him. And we must not forget that he is just as necessary to industry as the skilled man. Take the sweeper out of the shop and it would become in a short time an unfit place in which to work. We can’t get along without him. And we have no right to take advantage of him because he must sell his labor in an open market. We must not pay him a wage on which he cannot possibly maintain himself and his family under proper physical and moral conditions just because he is not in a position to demand more.”
Basically he says, ‘Just because we can pay someone very little that doesn’t mean we should’. Excellent point but nothing particularly new about it. That is the crux of the argument for those urging substantial hikes to the minimum wage.
It gets juicy, however, when he goes on:
“But suppose the earnings of a business are so small that it cannot afford to pay that which, in your opinion, is a living wage; what then?” I asked. “Then there is something wrong with the man who is trying to run the business. He may be honest. He may mean to do the square thing. But clearly he isn’t competent to conduct a business for himself, for a man who cannot make a business pay a living wage to his employees has no right to be in business. He should be working for some one who knows how to do things. On the other hand, a man who can pay a living wage and refuses to do so is simply storing up trouble for himself and others. By underpaying men we are bringing on a generation of children undernourished and underdeveloped morally as well as physically; we are breeding a generation of workingmen weak in body and in mind, and for that reason bound to prove inefficient when they come to take their places in industry. Industry will, therefore, pay the bill in the end. In my opinion it is better to pay as we go along and save the interest on the bill, to say nothing of being human in our industrial relations.””
In a nutshell, according to Ford if you think you can’t afford to pay high wages – the level needed for your employees to live a comfortable life – it is proof that you are a lousy manager.
That might be a bit harsh – an uninformed manager might be a better way to say it. Regardless, how else other than inferior management, can we explain that In-N-Out Burger pays its employees better than $13 an hour and makes a lot of money while McDonalds gets increasingly disappointing results while paying its folks minimum wage?
How else besides management incompetence might we explain Costco’s highly profitable business and employee pay of close to $20 an hour compared to Walmart’s shrinking business paying people less than half of that?
Those opposed to paying a living wage argue that increasing wages will decrease the number of jobs. Ford had something to say about that too. The fundamental question is exactly what the purpose of the business is if not to make the lives of the people associated with it better?
Ford said, “The money I have gathered together is not mine to do with altogether as I please. I do not own it. It is mine to control simply as the steward of it. The men who have worked with me have helped to create it. After they have had their wages and a share of the profits, it is my duty to take what remains and put it back into industry in order to create more work for more men at higher pay.”
Seems like the folks who can’t pay decent wages are pretty much aligned with the ‘maximize shareholder value’ ideal of business, while those who see themselves like Ford – merely the stewards of the wealth – take a different view. And the real irony is that the shareholders of the stewardship model business are quite often making more than the folks who own stock in the ‘maximize their wealth’ model businesses.