The point wasn't that paying employees more leads to sells.
Its more of a remark about the overall world. Your employees are somebody's customers, your customers are somebody's employees, You are somebody's customer. If nobody in the world makes enough to be a consumer, nobody consumes, and thus you have no customers.
Exactly this. I've spent the last year or so studying Ford. His whole point was that if people didn't have the money to buy his product or time to use it (he reduced work hours as well) then your business will never survive. He wasn't banking on employee sales, he was looking at employees as a snapshot of a wider market.
Great example is fast food as well. If you are offering the "lowest cost" food option, and providing the minimum wage, you've got product/purchasing power that are both at the bottom of the food chain. And if employees can't afford to buy your food... then who is going to? Your product doesn't match the market you'd supposedly be selling to.
This is why Ford is considered the creator of the middle class. He took automation and used it as a way to set a different standard for society, one that inherently helped his own product succeed in the long run.
Why is Bezos doing this? Because Amazon succeeds when people have more disposable income. And it starts with his company. sure he might get regulated to do it anyways, but now he is pushing the needle. Regulators might push an overall minimum wage hike to $15 because "if amazon can do it, why cant you?" The merits of that hike aside, know who stands to benefit from people having more money to spend? Amazon.
For a profitable company where wages are a major expense, it seems like lower prices with higher wages can only be achieved with higher productivity. I think an economist would attribute this more to Ford's assembly line?
But sure, a high-productivity business can lead the way on wage increases. Other businesses might have to raise prices to keep up.
I'd like to read more about Ford's effect on wages outside Detroit. This "creator of the middle class" sounds like it might be exaggerated?
> For a profitable company where wages are a major expense, it seems like lower prices with higher wages can only be achieved with higher productivity. I think an economist would attribute this more to Ford's assembly line?
FWIW productivity has literally exploded in the last few decades.
>For a profitable company where wages are a major expense, it seems like lower prices with higher wages can only be achieved with higher productivity.
Productivity vs hourly pay has pretty famously stagnated since the 1970s[1] after being closely correlated for years before. The issue is simply that people aren't being paid enough for the value they add to companies.
That first chart totally misses the hourly compensation upside that's observed abroad. Globalization really kicked in during the late 20th century so that's to be expected.
That makes a lot of sense. I wonder why I've never before heard the part about Ford triggering an overall wage increase across the country as part of the often repeated story of him paying his employees more so they could afford to buy his cars. It doesn't make sense without that addition.
Its more of a remark about the overall world. Your employees are somebody's customers, your customers are somebody's employees, You are somebody's customer. If nobody in the world makes enough to be a consumer, nobody consumes, and thus you have no customers.