When Ford made the five-day, 40-hour workweek permanent, he didn’t reduce worker compensation, which was nearly double the industry average. But Ford didn’t reduce working hours and increase employee compensation for altruistic reasons, or as a concession to his workforce. He saw it as a competitive advantage.
At the time, automobiles were a luxury good, and the Ford Motor Company had already sold a car to just about anyone with enough money to afford one. By increasing wages and reducing working hours, Ford expanded the market for his product from the upper classes to the masses.
“The industrial value of leisure as a promoter of the consumption of goods, and thus as a stimulant to business, have been proved,” Ford wrote in 1926. “We find that the men come back after a two-day holiday so fresh and keen that they are able to put their minds as well as their hands to work.”
Ford knew that reducing working hours would spur economic activity, boost recruitment and retention, and improve worker morale and wellbeing, all of which positively contributed to the company’s bottom line.
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