Drawing on the success Model T creator Henry Ford enjoyed when he doubled his factory workers' pay to $5 a day in 1914, a Harvard Business Review contributing editor is recommending that American companies do the same today.
Well, maybe not double workers' pay, but at least share with them some of the record-breaking profits companies have enjoyed as they downsized millions of American during the Great Recession.
"This is relevant now because we're dealing with a new crisis in consumer demand," John Landry writes in an HBR blog post titled "Time for a New Five-Dollar Day. "As many have pointed out, average pay in the United States has been stagnant or declining for decades." And now, "from households to governments, everyone has big debts to pay off, so it's going to be hard to emerge from the recession.
"Everyone, that is, except companies. The flip side of stagnant worker pay has been above-average corporate profits. All the talk about highly competitive markets has hidden the fact that most companies have done quite well in the past two decades."
Landry said the recent election of more Republicans will mean even less regulation and fewer taxes for businesses, another reason they should share their largesse. Because the problem isn't with businesses, "It's with consumers" who are hurting so badly financially that they can't buy many companies' products, Landry concludes.
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