In 1913, how long did the average worker stay with the plant? What was the average tenure of a worker? Assume the one-millionth vehicle was produced in 1916 at a cost of $8084 (in 2013 US$). By how much did Ford reduce his cost with each doubling of cumulative output from 1916 to 1927?

In October 1908, just prior to the launch of his Model T, Henry Ford proclaimed, “I will build a motor car for the great multitude.” During the next 19 years, Ford built 15 million vehicles of this model. The success of the Model T was made possible through Ford’s development of the moving assembly line, where thousands of workers assembled the cars under harsh conditions. Unskilled labor was cheap. Workers initially received $2.30 for a 9-hour shift. 

Given the rough conditions at the factory, absenteeism was a major problem. From the 13,000 workers at the plant, typically 1000 of them did not show up for work. Moreover, the employee turnover was a remarkable 370 percent at Ford’s Highland Park plant. Workers were becoming increasingly difficult to hire, and because most workers were immigrants, the plant was plagued by communications problems reflecting poor English language skills. 

To respond to this challenge, in January 1914, wages were doubled to $5 per day and shifts were limited to 8-hour durations. In addition to the pay raise, Ford also requested that his workers learn English, take care of their health, and start saving for a home. 

Many experts in the industry thought that Ford’s move was insane and he would not be able to afford the higher labor costs. But Ford proved them wrong. In the fall of 1908, a new Model T cost $850 (this corresponds to $20,763 in 2013). By 1927, Ford was producing a new Model T every 27 seconds and each cost $260 (this corresponds to $3372 in 2013). 

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