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« Sometimes, the best part of buying something... | Main | You're right! »

Henry Ford and the source of our fear

Henry Ford left us much more than cars and the highway system we built for them. He changed the world’s expectations for work. While Ford gets credit for “inventing the assembly line,” his great insight was that he understood the power of productivity.

Ford was a pioneer in highly leveraged, repetitive work, done by relatively untrained workers. A farmer, with little training, could walk into Ford’s factory and become extraordinarily productive in a day or two.   

This is the cornerstone of our way of life. The backbone of our economy is not brain surgeons and master violinists. It’s in fairly average people doing fairly average work.

The focus on productivity wouldn’t be relevant to this discussion except for the second thing Ford did. He decided to pay his workers based on productivity, not replacement value.  This was an astonishing breakthrough. When Ford announced the $5 day (more than double the typical salary paid for this level of skill), more than 10,000 people applied for work at Ford the very next day.

Instead of paying people the lowest amount he’d need to find enough competent workers to fill the plant, he paid them more than he needed to because his systems made them so productive. He challenged his workers to be more productive so that they’d get paid more.

It meant that nearly every factory worker at Ford was dramatically overpaid!   When there’s a line out the door of people waiting to take your job, weird things happen to your head. The combination of repetitive factory work plus high pay for standardized performance led to a very obedient factory floor. People were conditioned to do as they were told, and traded autonomy and craftsmanship for high pay and stability.

All of a sudden, we got used to being paid based on our output . We came, over time, to expect to get paid more and more, regardless of how long the line of people eager to take our job was. If productivity went up, profits went up. And the productive workers expected (and got) higher pay, even if there were plenty of replacement workers, eager to work for less.

This is the central conceit of our economy. People in productive industries get paid a lot even though they could likely be replaced by someone else working for less money.

This is why we’re insecure.

Obedience works fine on the well-organized, standardized factory floor. But what happens when we start using our heads, not our hands, when our collars change from blue to white?

(Excerpted from Free Prize Inside)

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« Sometimes, the best part of buying something... | Main | You're right! »