Economics of Organizations: Take Home Exam - Case Study Example

At that time, $5 per day was an extremely high wage to pay manual workers in factories such as the Ford facilities. It was hard enough to even have a job in the first place at the time Ford made this major move, so it was indeed a shock. The economy was really in a shaky situation, as it is today. Having a job at all at that time was considered to be very good luck. People who did have jobs worked very hard much harder than many manual laborers do today. They did not expect handouts from the government, as many of the unemployed in today's world find themselves doing, whether they are in a situation where they can help it or not.

Workers back then were tough, and they certainly weren't freeloaders. Back in ancient Rome, welfare ruined the city and actually led to its failure. The government handed out money to a few greedy companies, those companies went under, and the rest of the city went under with them. This is definitely not a scenario one wants to see happen again. It is also possible that, at that time, Ford had a monopoly on the automobile industry and his altruistic nature guided him to share his excess profits with his employees.

The root of the $5-a-day Workday was the success of the moving as. According to the work at History.com (2009 p. 1), "After the success of the moving assembly line, Henry Ford had another transformative idea: in January 1914, he startled the world by announcing that Ford Motor Company would pay $5 a day to its workers. The pay increase would also be accompanied by a shorter workday (from nine to eight hours). While this rate didn't automatically apply to every worker, it more than doubled the average autoworker's wage.

While Henry's primary objective was to reduce worker attrition-labor turnover from monotonous assembly line work was high-newspapers from all over the world reported the story as an extraordinary gesture of goodwill." The new wage made thousands of manual laborers flock to Ford's manufacturing facilities. People came all the way from all over the United States to Ford's Detroit plant, and they even came from Europe. Employee turnover, of course, practically vanished. According to History (2009, p. 1), "Henry Ford had reasoned that since it was now possible to build inexpensive cars in volume, more of them could be sold if employees could afford to buy them.