In 1926, Henry Ford, one of the most powerful capitalists of his day, announced that workers in Ford Motor Company factories would begin a 40-hour-per-week, Monday through Friday work week. Better yet, they would work these decreased hours with no pay cut.
Read How: The automobile manufacturer in this interview tells Mr. Crowther why he reduced the working week in Ford plants all over the world to forty hours with no cut in pay*
Prescience Partners returned 6.75% for the second quarter, underperforming the S&P 500's 8.55% return but coming out ahead of the Barclay Equity Long/ Short Index's 2.62% return. However, for the first six months of the year, Prescience is up 30.66%, doubling the S&P's 15.25% return and smashing the Barclay Equity Long/ Short Index's 9.27% return. Read More
“We have,” he said, “decided upon and at once put into effect through all the branches of our industries the five day week. Hereafter there will be no more work with us on Saturdays and Sundays. These will be free days, but the men, according to merit, will receive the same pay equivalent as for a full six day week. A day will continue to be eight hours, with no overtime.
“For the present this will not apply to the railroad, and of course it cannot apply to watchmen or the men on certain jobs where the processes must be continuous. Some of these men will have to work Saturdays and Sundays, but they constitute less than one per cent. of our working force, and each of them will have two consecutive days off some time during the week. In short, we have changed our calendar and now count a week as five days or forty hours.
“The actual work week of the factories as distinguished from the work week of the men will also be cut to five days. For of course an eight hour man day is not the same as an eight hour factory day. In order to make the full use of our plants we shall as before work the men in shifts. We found long ago, however, that it does not pay to put men at work, excepting in continuous operations, from midnight until morning. As a part of low cost production — and only low cost production can pay high wages — one must have a big investment in machinery and power plants. Expensive tools cannot remain idle. They ought to work twenty-four hours a day, but here the human element comes in, for although many men like to work all night and have part of their day free, they do not work so well and hence it is not economical, or at least that is our experience, to go through the full twenty-four hours. But a modern factory has to work more than eight hours a day. It cannot be idle two thirds of the time, else it will be costly.
“This decision to put into effect the short work week is not sudden. We have been going toward it for three or four years. We have been feeling our way. We have during much of this time operated on a five day basis. But we have paid only for five days and not for six. And whenever a department was especially rushed it went back to six days — to forty-eight hours. Now we know from our experience in changing from six to five days and back again that we can get at least as great production in five days as we can in six, and we shall probably get a greater, for the pressure will bring better methods. A full week’s wage for a short week’s work will pay.”
“Does this mean,” I asked, “that your present minimum wage of six dollars a day will become a fraction over seven dollars a day that is, the minimum for five days’ work will still be thirty-six dollars, just as it was for six days?”
“We are now working out the wage schedules,” answered Mr. Ford. ” We have stopped thinking in terms of a minimum wage. That belongs to yesterday, before we quite knew what paying high wages meant. Now so few people get the minimum wage that we do not bother about it at all. We try to pay a man what he is worth and we are not inclined to keep a man who is not worth more than the minimum wage.
“The country is ready for the five day week. It is bound to come through all industry. In adopting it ourselves, we are putting it into effect in about fifty industries, for we are coal miners, iron miners, lumbermen, and so on. The short week is bound to come, because without it the country will not be able to absorb its production and stay prosperous.
“The harder we crowd business for time, the more efficient it becomes. The more well-paid leisure workmen get, the greater become their wants. These wants soon become needs. Well-managed business pays high wages and sells at low prices. Its workmen have the leisure to enjoy life and the wherewithal with which to finance that enjoyment.
“The industry of this country could not long exist if factories generally went back to the ten hour day, because the people would not have the time to consume the goods produced. For instance, a workman would have little use for an automobile if he had to be in the shops from dawn until dusk. And that would react in countless directions, for the automobile, by enabling people to get about quickly and easily, gives them a chance to find out what is going on in the world-which leads them to a larger life that requires more food, more and better goods, more books, more music — more of everything. The benefits of travel are not confined to those who can take an expensive foreign trip. There is more to learn in this country than there is abroad.
“Just as the eight hour day opened our way to prosperity, so the five day week will open our way to a still greater prosperity.
“Of course, there is a humanitarian side to the shorter day and the shorter week, but dwelling on that side is likely to get one into trouble, for then leisure may be put before work instead of after work — where it belongs. Twenty years ago, introducing the eight hour day generally would have made for poverty and not for wealth. Five years ago, introducing the five day week would have had the same result. The hours of labor are regulated by the organization of work and by nothing else. It is the rise of the great corporation with its ability to use power, to use accurately designed machinery, and generally to lessen the wastes in time, material, and human energy that made it possible to bring in the eight hour day. Then, also, there is the saving through accurate workmanship. Unless parts are a made accurately, the benefits of quantity production will be lost-for the parts will not fit together and the economy of making will be lost in the assembling. Further progress along the same lines has made it possible to bring in the five day week. The progression has been a natural one.
“The eight hour day law to-day only confirms what industry had already discovered, If it were otherwise, then the law would make for poverty instead of for wealth. A man cannot be paid a wage in excess of his production. In the old days, before we had management and power, a man had to work through a long day in order to get a bare living. Now the long day would retard both production and consumption. At the present time the fixing by law of a an five day week would be unwise, because industry is not ready for it, but a great part of industry is ready, and within a comparatively short time I believe the practice will be so general in industry that it be made universal,
“It is high time to rid ourselves of the notion that leisure for workmen is either ‘lost time’ or a class privilege.
“Nature fixed the first limits of labor, need the next, man’s inhumanity to man had something to do with it for a long time, but now we may say that economic law will finish the job.
“Old-fashioned employers used to object to the number of holidays in this country. They said that people only abused leisure and would be better off without so much of it.
“Only lately a French professor accounted for the increased consumption of alcohol by pointing to the eight hour day, which he denounced as a device which gives workingmen more time to drink.
“It will be generally granted that if men are to drink their families into poverty and themselves into degeneracy, the less spare time they have to devote to it the better. But this does not hold for the United States. We are ready for leisure. The prohibition law, through the greater part of the country, has made it possible for men and their families really to enjoy leisure. A day off is no longer a day drunk. And also a day off is not something so rare that it has to be celebrated.
“This is not to say that leisure may not be dangerous. Everything that is good is also dangerous — when mishandled. When we put our five dollar minimum wage for an eight hour day into effect some years ago, we had to watch many of our men to see what use they made of their spare time and money. We found a few men taking on extra jobs — some worked the day shift with us and the night shift in another factory. Some of the men drank their extra pay. Others banked the surplus money and went on-living just as they had lived before. But in a few years all adjusted themselves and we withdrew most of our supervision as unnecessary.
“It is not necessary to bring in sentiment at all in this whole question of leisure for workers. Sentiment has no place in industry. In the olden days those who thought that leisure was harmful usually had an interest in the products of industry. The mill-owner seldom saw the benefit of leisure time for his employees, unless he could work up his emotions. Now we can look at leisure as a cold business fact.
“It is not easy so to look at leisure, for age-old custom viewed leisure as ‘lost time’ -time taken out of production. It was a suspension of the proper business of the world. The thought about leisure usually went no further than that here were hard-driven working people who should have a little surcease from their labors. The motive was purely humane. There was nothing practical about it. The leisure was a loss — which a good employer might take from his profits.
“That the Devil finds work for idle hands to do is probably true. But there is a profound difference between leisure and idleness. We must not confound leisure with shiftlessness. Our people are perfectly capable of using to good advantage the time that they have off — after work. That has already been demonstrated to us by our experiments during the last several years. We find that the men come back after a two day holiday so fresh and keen that they are able to put their minds as well as their hands into their work.
“Perhaps they do not use their spare time to the best advantage. That is not for us to say, provided their work is better than it was when they did not have spare time. We are not of those who claim to be able to tell people how to use their time out of the shops. We have faith that the average man will find his own best way — even though that way may not exactly fit with the programs of the social reformers. We do know that many of the men have been building houses for themselves, and to meet their demand for good and cheap lumber we have established a lumber yard where they can buy wood from our own forests. The men help each other out in this building and thus are meeting for themselves one of the problems in the high cost of living.
“We think that, given the chance, people will become more and more expert in the effective use of leisure. And we are giving the chance.
“But it is the influence of leisure on consumption which makes the short day and, the short week so necessary. The people who consume the bulk of goods are the people who make them. That is a fact we must never forget — that is the secret of our prosperity.
“The economic value of leisure has not found its way into the thought of industrial leaders to any great extent. While the old idea of ‘lost time’ has departed, and it is no longer believed that the reduction of the labor day from twelve hours to eight hours has decreased production, still the positive industrial value — the dollars and cents value — of leisure, is not understood.
“The hours of the labor day were increased in Germany under the delusion that thus the production might be increased. It is quite possibly being decreased. With the decrease of the length of the working day in the United States an increase of production has come, because better methods of disposing of men’s time have been accompanied by better methods of disposing of their energy. And thus one good thing has brought on another.
“These angles are quite familiar. There is another angle, however, which we must largely reckon with — the positive industrial value of leisure, because it increases consumption.
“Where people work longest and with least leisure, they buy the fewest goods. No towns were so poor as those of England where the people, from children up, worked fifteen and sixteen hours a day. They were poor because these overworked people soon wore out — they became less and less valuable as workers. Therefore, they earned less and less and could buy less and less.
“Business is the exchange of goods. Goods are bought only as they meet needs. Needs are filled only as they are felt. They make themselves felt largely in leisure hours. The man who worked fifteen and sixteen hours a day desired only a comer to be in and a hunk of food. He had no time to cultivate new needs. No industry could ever be built up by filling his needs, because he had none but the most primitive.
“Think how restricted business is in those lands where both men and women still work all day long! They have no time to let the needs of their lives be felt. They have no leisure to buy. They do not expand.
“When, in American industry, women were released from the necessity of factory work and became the buyers for the family, business began to expand. The American wife, as household purchasing agent, has both leisure and money, and the first has been just as important as the second in the development of American business.
“The five day week simply carries this thought farther.
“The people with a five day week will consume more goods than the people with a six day week. People who have more leisure must have more clothes. They must have a greater variety of food. They must have more transportation facilities. They naturally must have more service of various kinds.
“This increased consumption will require greater production than we now have. Instead of business being slowed up because the people are ‘off work,’ it will be speeded up, because the people consume more in their leisure than in their working time. This will lead to more work. And this to more profits. And this to more wages. The result of more leisure will be the exact opposite of what most people might suppose it to be.
“Management must keep pace with this new demand — and it will. It is the intersection of power and machinery in the hands of management which has made the shorter day and the shorter week possible. That is a fact which it is well not to forget.
“Naturally, services cannot go on the five day basis. Some must be continuous and others are not yet so organized that they can arrange for five days a week. But if the task is set of getting more done in five days than we now do in six, then management will find the way.
“The five day week is not the ultimate, and neither is the eight hour day. It is enough to manage what we are equipped to manage and to let the future take care of itself. It will anyway. That is its habit. But probably the next move will be in the direction of shortening the day rather than the week.”