Ford’s modern wage strategy echoes Henry Ford’s legacy to revitalise American manufacturing

Ford CEO Jim Farley draws inspiration from Henry Ford’s historic wage increase, implementing new measures to address low wages, labour shortages, and skills gaps in the US manufacturing sector, amid calls for vocational training and industry reform.

More than a century after Henry Ford famously doubled factory wages in 1914, Ford Motor Company’s CEO Jim Farley is drawing inspiration from the same playbook to address modern workforce challenges in the American ma...

nufacturing sector. Farley acknowledges that, despite a century of progress, many of Ford’s younger employees are still struggling to get by on low wages, forcing them to juggle multiple jobs and suffer from chronic fatigue.

In a candid interview at the Aspen Ideas Festival earlier this year, Farley revealed insights gained during union contract negotiations, where veteran employees shared the struggles faced by younger workers. Many young factory employees reportedly worked multiple jobs, sometimes clocking shifts at Amazon or elsewhere before arriving at Ford’s factory, and often got only three or four hours of sleep each night due to financial stress. At a Ford Pro Accelerate event in September, Farley noted some entry-level workers were managing up to three jobs simultaneously just to make ends meet.

In response, Ford has taken tangible steps to improve conditions for its workforce. The automaker transitioned many temporary workers into full-time employees, making them eligible for better wages, profit-sharing, and superior healthcare benefits. This shift, negotiated in 2019 with the United Auto Workers (UAW), also shortened the time required for temporary workers to gain full-time status. Farley called the changes expensive and difficult but necessary, describing them as part of a broader imperative to support the country’s working population.

The parallel to Henry Ford’s original wage hike, which helped catalyse the American middle class, is clear. Farley underscored that his predecessor’s motivation was not purely altruistic, but strategic: by paying workers enough to afford Ford cars, Henry Ford created a self-sustaining economic model that benefited both employees and the company. Farley believes a similar rationale underpins the current wage reforms, reflecting a modern understanding that a stable, well-paid workforce can drive the company’s success and broader economic health.

However, wage concerns represent only part of the challenge. Farley highlighted a significant shortage of skilled trade workers critical to manufacturing’s future. Despite offering salaries of up to $120,000, Ford has over 5,000 open mechanic positions that remain unfilled. This shortage extends beyond automotive to trades such as plumbing, electricity, and construction. Farley called for serious investment in vocational education and trade schools, citing Germany’s apprenticeship system as a model, where factory workers begin training in junior high school and receive eight years of hands-on experience.

The complexity of attracting younger generations to manufacturing roles is underscored by shifting career preferences. While some young people shy away from college degrees in favour of trade schools, records show that manufacturing jobs still tend to have wages below the average American salary, making the sector less attractive. Studies indicate that Gen Z workers frequently reject factory work due to low pay levels, contributing to the labour shortfall. The 2023 UAW strike involving thousands of Ford employees, especially the 16,600 workers striking for better pay and benefits, exemplified ongoing tensions around wages despite the company’s reforms.

Farley has openly called the 2023 strike “completely unnecessary” from management’s viewpoint but insists improving wages and conditions will not fall on Ford alone. He urged greater collaboration with government and other stakeholders to tackle these systemic issues.

Moreover, Farley has addressed the looming impact of technology on the workforce. He spoke about artificial intelligence potentially displacing many office jobs, while skilled trades will remain essential and in demand. For this reason, he advocates for a national strategy focused on vocational training, apprenticeships, and policies supporting the “essential economy”, the sectors underpinning the nation’s economic resilience.

In sum, Ford’s efforts to tackle wage stagnation, labour shortages, and skills gaps reflect a broader recognition that revitalising American manufacturing requires a multifaceted approach. By adapting historic lessons to contemporary challenges, Farley hopes to ensure that manufacturing remains a viable and rewarding career path for future generations, even as the economic and technological landscape continues to evolve. The lessons from Henry Ford’s era, investing in workers to build stable demand, remain powerfully relevant in today’s quest to rejuvenate the American workforce.

Source: Noah Wire Services