Henry Ford was a revolutionary industrialist, who transformed global society through affordable cars. He achieved this through technological innovation and the relentless pursuit of efficiency. He was the first automobile maker to implement the moving assembly line, which reduced the production time of the Model T from 12 hours down to 90 minutes. This allowed him to raise wages from ＄2.34 for a 9 hour work day to ＄5 for an 8 hour work day. All of this efficiency reduced the price of the car from ＄700 to ＄350, while also building a middle class who could afford to purchase the cars.
For simplicity, suppose that the price reduction from ＄700 to ＄350 was entirely due to the effect of reducing labor costs. Also, suppose that in the new system, labor represented only somewhere between 5–25% of the ＄350 price tag. In other words, Ford could pay his workers better, while keeping cars affordable and still keeping a huge percentage of the money for himself. A win-win for all! Which of these could be the ratio of the total number of man-hours required to build a car before Ford’s innovations, versus after?
