Most businesses are lamenting the slow economy.

They have done all the cost-cutting possible and are still whining (through sky-high profits) that people aren’t buying.

I find this extremely funny (in a sickly way), since the reason people aren’t spending is that those same companies have slashed wages to the point they have no disposable income or they just aren’t hiring.

“The real reason businesses aren’t hiring is they’re not seeing consumer demand for their goods and services increase,” she said. “We need greater demand for goods and services. It is clearly true that if people receive higher incomes, that will help the economy.” —Heidi Shierholz, economist at the Economic Policy Institute

Even more revolting is the prevalent attitude that workers don’t deserve better pay, since they are strictly a “cost of doing business” and costs should be kept ultra-low.

That level of stupidity is breathtaking, although not terribly surprising.

Corporate America still hasn’t figured out that without people there is no company, but you would think they had noticed the connection between what people earn and what they spend.

That isn’t exactly rocket science thinking.

Henry Ford figured it out way back in the early 1900s when he raised his workers wages to a then-unheard-of level.

Ford was a pioneer of “welfare capitalism”, designed to improve the lot of his workers and especially to reduce the heavy turnover that had many departments hiring 300 men per year to fill 100 slots. Efficiency meant hiring and keeping the best workers.

Ford astonished the world in 1914 by offering a $5 per day wage ($110 today), which more than doubled the rate of most of his workers. (…) The move proved extremely profitable; instead of constant turnover of employees, the best mechanics in Detroit flocked to Ford, bringing their human capital and expertise, raising productivity, and lowering training costs.

Ford wasn’t being kind; he understood that if he wanted to sell cars people needed enough disposable income to buy them.

Ford’s policy proved, however, that paying people more would enable Ford workers to afford the cars they were producing and be good for the economy.

But Ford’s attitudes towards business, bosses and people don’t fly well in the 21^st Century world.

If anyone of significance today said, “A business that makes nothing but money is a poor business,” Wall Street would poop its collective pants.

(Hat tip to KG Charles Harris for sending the article.)

Flickr image credit: {Guerrilla Futures | Jason…

This entry was posted on Wednesday, August 7th, 2013 at 1:15 am and is filed under Business info, Compensation, Hiring. You can follow any responses to this entry through the RSS 2.0 feed.
Tags: corporate culture, stupidity, valuable employees
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