What we could learn from Henry Ford -- Dec. 31, 2013 column

By MARSHA MERCER

As Congress begins the struggle over raising the federal minimum wage, we can gain some historical perspective from an event 100 years ago this week.

On Jan. 5, 1914, Henry Ford did something extraordinary, even for him.

The man who developed the Model T and the moving assembly line called a news conference in Detroit and stunned the world by announcing that workers in his factory would make $5 per day, more than doubling the average worker’s wages.

“Even the boy who sweeps up the floors will get that much,” the New York Times reporter marveled.

Every schoolchild knows that when Ford hiked wages, his employees were able to buy the cars they built, which had the salubrious business effect of increasing company sales.

The government didn’t order Ford to raise his wages, of course, but proponents of raising the federal minimum wage say doing so is a matter of fairness. Someone working full time should not live in poverty. A full-time minimum wage worker makes $15,000 a year. If she has a child, her income falls below the poverty level of $15,510 for a family of two in 2013.

Besides, and here’s where Ford’s example comes in handy, increasing the buying power of low-wage workers helps boost the economy. When people on the margin get more money, they spend it.

Thirteen states and several cities are wishing workers a Happy New Year by raising minimum wage rates in 2014. In all, 21 states will have higher hourly rates than the federal $7.25 an hour. Eleven other states and the District of Columbia are expected to follow in the coming year.

Democrats on Capitol Hill want to raise the rate to $10.10 in three steps over two years and index future increases to inflation. President Barack Obama supports the move.  

Even though polls show most Americans favor raising the wage floor, it’s a no-go in the House, where Republicans say doing so is a job-killer because employers won’t hire as many young, inexperienced workers if individual wages are higher. Economists disagree about this, but most say adverse effects of raising the wage rate are small.

In Ford’s case, there was another, more practical reason for raising workers’ pay. His primary objective was to reduce attrition, according to a corporate history. Worker turnover on the monotonous assembly lines was high. At the same time he raised pay, he cut the workday from nine hours to eight and said he’d share profit with men workers (but not boys or women unless they were supporting families. It was 1914, remember.)

Ford had innovative ways of treating employees. No one would be fired unless for “unfaithfulness or irremediable inefficiency.” If layoffs were necessary due to decreased demand, he would try to time them with the harvest season so that men wouldn’t “lie idle and dissipate their savings."

Ford’s treasurer,  James Couzens, said, “It is our belief that social justice begins at home...believing as we do, that a division of our earnings between capital and labor is unequal, we have sought a plan of relief suitable for our business.”

Newspapers hailed Ford’s generosity and humanity. Critics wondered if he was a socialist. The Wall Street Journal complained that he had brought “biblical or spiritual principles into a field where they do not belong.”

But Ford’s ploy worked as he intended. Thousands of job-seekers flocked to the Ford Motor Company employment office from the American South as well as Europe.  Turnover in the factory declined, and with an eight-hour day, Ford could run three shifts instead of two, increasing productivity. Ford Motor Company’s profits doubled from 1914 to 1916.

Today, the public is focusing on the plight of low-wage earners. Fast-food workers in at least a hundred cities have staged walkouts to call for pay of $15 an hour, and the right to form unions.

The coming struggle over raising the federal minimum wage may be mostly political theatrics in an election year, but it raises questions about work and its rewards.  It can’t be healthy to see every policy question as a game with winners and losers: If workers win, employers have to lose. Why?

As Ford showed 100 years ago, sometimes doing the right thing can make everyone a winner. The $5-a-day wage helped create the American middle class.

© 2013 Marsha Mercer. All rights reserved.

Moving on, a president hits the campaign trail -- again -- Dec. 5, 2013 column

By MARSHA MERCER

As I listened the other day to a politician talk about ways to strengthen the economy, a thought flitted across my mind: “This guy has ideas. Maybe he should run for president.”

Ha! OK, I knew the speaker was President Barack Obama. But after nearly five years in the Oval Office, he still manages to sound like an outsider who could do great things if only he had the chance.

And that’s why -- with a job approval rating of only about 40 percent, his signature legislative achievement still under fire and his agenda in jeopardy -- the president hit the campaign trail. He launched a three-week push ostensibly to persuade people to sign up for health care online but also to remind voters why they re-elected him just a year ago. 

Naturally, like many another political outsider, Obama has discovered that middle class frustrations “are at an all-time high.”

The botched rollout of the online health insurance exchanges didn’t instill confidence in him or the federal government, he concedes, but he insists that the law will stand and eventually will work just fine. Even so, that alone won’t cure the middle class malaise that started decades ago, he says. Malaise, by the way, is my word, not his.

   

“Their frustration is rooted in their own daily battles – to make ends meet, to pay for college, buy a home, save for retirement. It’s rooted in the nagging sense that no matter how hard they work, the deck is stacked against them. And it’s rooted in the fear that their kids won’t be better off than they were,” he said.

Candidates of both parties cozy up to the middle class, of course, but the question is how. Republicans want government to stand aside. Obama and Democrats believe government has a role in ensuring equal opportunity.

   

“A dangerous and growing inequality and lack of upward mobility…has jeopardized middle-class America’s basic bargain -- that if you work hard, you have a chance to get ahead,” Obama said Wednesday at an event sponsored by the Center for American Progress, a left-leaning think tank that has provided several Obama administration insiders.

He revived a host of ideas: increase the federal minimum wage, now $7.25 an hour; strengthen collective bargaining; end the wage disparity between men and women; tighten the tax code and use the additional revenue to rebuild roads and bridges, extend preschool to every child, and repeal the across-the-board spending cuts called the sequester. 

“I believe this is the defining challenge of our time: Making sure our economy works for every working American…And I know I’ve raised this issue before, and some will ask why I raise the issue again right now,” he said.

His critics say it’s no mystery, that he’s trying to change the subject from the health care mess and trying to give Democrats ground to stand on in next year’s midterm congressional elections. So what? 

Obama and everyone around him have apologized, and the marketplace system finally is running more smoothly. The elections in 11 months could make or break his last two years as president. He acknowledged he’s putting out his ideas as a marker.

“I realize we are not going to resolve all of our political debates over the best ways to reduce inequality and increase upward mobility this year, or next year, or in the next five years,” he says.

What’s important is “that we have a serious debate about these issues. For the longer that current trends are allowed to continue, the more it will feed the cynicism and fear that many Americans are feeling right now.”

Obama says he’s willing to work with Republicans. “If Republicans have concrete plans that will actually reduce inequality, build the middle class, provide more ladders of opportunity to the poor, let’s hear them…” And so on. “You owe it to the American people to tell us what you are for, not just what you’re against.”

But can the battle-scarred Democratic president find common ground with battle-scarred Republican lawmakers?

House Speaker John A. Boehner, R-Ohio, complains that the House has passed nearly 150 bills that he claims would help the economy, but all have died in the Senate, which is controlled by Democrats. They include multiple attempts at repealing the health law.

“When will they start listening to the American people?” Boehner asks.

It’s hard to listen when both sides have turned a deaf ear to the other.

 © 2013 Marsha Mercer. All rights reserved.

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