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But Ford’s experiment in paying a livable wage worked. He later described the pay hike as the best cost-cutting move he ever made. Turnover shrank, slashing training costs, and absenteeism decreased as productivity increased—the expectation from managers was that the increased wages deserved increased speed on the line. Wall Street investors and fellow automakers initially excoriated Ford for his wage scheme, but other carmakers eventually followed suit, propelled by Ford’s massive leaps in production while reducing his per-unit costs. A Model T that cost $850 in 1908, on par with cars sold by the new Cadillac company, dropped to $290 by 1920, helping make Ford one of the world’s wealthiest men. And the high wages made Detroit a magnet. Nondecennial surveys by the Census Bureau chart the impact. In 1909, Detroit had 81,000 wage earners who made $43 million working for 2,036 establishments that cranked out $253 million worth of products. In 1914, after Ford’s $5 day began, the same number of establishments employed nearly 100,000 people who made $69 million while producing $400 million worth of goods. In 1919, with World War I raging and the $5 day in full force across the automotive industry, 2,176 establishments were employing 167,000 people, who made $245 million as they produced $1.2 billion worth of goods. In short, the ranks of industrial workers more than doubled, and their wages and the value of the products they made nearly quintupled. Detroit’s ancillary businesses, from clothing stores to restaurants, thrived.
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