On January 5, 1914, Henry Ford announced a minimum five dollar salary for all elegible employees working eight-hour days. It was conceived as a profit-sharing plan which would motivate Ford employees to adopt efficient and productive habits at both the factory and the home.
The Ford Sociological Department was created to administer the plan by sending field agents into the community to visit workers at home to determine the quality of their home lives. It was believed that influencing the behavior of employees at home would turn them into better workers. All employees over 22 were eligible for the plan, which included a shortened work day from nine to eight hours in addition to the opportunity to earn five dollars per day. In order for a worker to be eligible to receive his share of the company's profits he "must show himself to be sober, saving, steady, industrious and must satisfy the...staff that his money will not be wasted in riotous living." Workers who didn't comply risked being payed half as much for performing the same work as their co-workers, and could eventually lose their jobs.
Ford's plan invoked a variety of responses. Workers viewed him as a friend, while many businessmen viewed Ford's idea as reckless. The Wall Street Journal called it blatant immorality-a misapplication of "Biblical principle" in a field "where they do not belong." Ford disregarded his criticisms because he knew the importance of acknowledging the human element in mass production. He believed that retaining more employees would both lower costs and lead to greater productivity. His beliefs proved his critics false, as the company's profits doubled from $30 million to $60 million between 1914 and 1916. "The payment of five dollars a day for an eight-hour day was one of the finest cost-cutting moves we ever made," Ford said.
Other benefits also resulted in the implementation of the Five Dollar Day. It dissolved the effort to unionize the Ford factory and also turned auto workers into autocustomers. Their purchases brought some of Ford's own money back to him which increased production and lowered per-car costs.
However, in addition to these benefits, The Five Dollar Day also created problems. Crowds flocked to the plant daily in search of jobs, and police repeatedly had to use force to disperse them since all positions were filled. The mob retaliated by throwing rocks at factory windows. Another problem with Ford's new plan was that many refused to work at any job for less than five dollars per day, which resulted in many unemployed men roaming Detroit's streets.
Despite these troubles, the Five Dollar Day was revolutionary in that it focused on worker morale to increase efficiency and productivity. The enlightened new labor rules, the five-dollar minimum, and the struggle of the sociological department to raise living standards was a model worthy of imitation for all manufacturing companys in that period. Unforutunately, however, many viewed Ford as a "mad socialist" because of his plan, which at the time was providing him with more money than anyone else in the country.