Skip to content
Subscriber Only
Megan McArdle

Employees Are Not Your Customers

You cannot make money by enabling your workers to spend more money at your store. You make money by selling stuff to the people who don’t work for you.
Don't worry, Ford made plenty of money.
Don't worry, Ford made plenty of money.

The other day, I noted in passing that it is arithmetically impossible, except in some bizarre situation with little bearing on the real world, to make money by paying your employees more and thus enabling them to afford your products.

Someone asked me to show my work. So let’s run a simple model based on Henry Ford’s legendary $5-a-day wage, introduced in 1914, which more than doubled the $2.25 workers were being paid.