Michael Moore points out in HuffPo that in adjusted dollars Henry Ford way exceeded $10.10 an hour in 1914.
One hundred years ago this month Henry Ford began paying his workers a minimum of $15 an hour! (It was $5 for an eight hour day – which would be worth $116.48 now.) That’s right – in a much poorer America, one without TV, radio, phones or House of Cards on demand, Ford could afford it. In fact, Ford later said, he couldn’t afford not to: “The owner, the employees, and the buying public are all one and the same, and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers. One’s own employees ought to be one’s own best customers.”
CNNFortune explains Why income inequality should matter to corporate America.
In the U.S., the gap between rich and poor is wider than it has been since the 1920s. The top 1% own 42% of the nation’s wealth and on average made $717,000 per year from 2008-2012 compared to $53,046 for everyone else. While the financial crisis of 2008 may have hurt all of us somewhat, the 1% reaped 95% of all income gains since that time.
These statistics are pretty depressing, and yet they still don’t capture the wider implications that income inequality could have on U.S. businesses and the broader economy. Those who earn less typically spend less. That’s obvious, but less talked about is how the growing gap between rich and poor could dampen the motivation of workers and therefore lead them to produce less.
Obviously when people’s choices are limited to choosing between McDonalds, Walmart or some other extremely low wage situation, that is discouraging. We’ve seen this with the fast food and Walmart workers increasingly willing to risk their jobs and go out on strike to paid a more livable wage. If the American Dream just seems like a come on for suckers then business is going to find itself struggling to find motivated workers.
Costco gets that. Henry Ford got it 100 years ago.