We’ve all heard of the “profit motive” as the spark plug of our free-enterprise economy. But what about the “wage motive” or the “salary motive”?

In the mantras of capitalism, no phrase is more piously and fervently intoned than “the profit motive”.

We are told, “Unleash entrepreneurs and job creators so they can have the incentive to (generate the profits needed) to keep things running!” Ever hear any mention of the glorious contribution the wage motive or salary motive makes to our prosperity and economic growth, in tandem with or instead of the vaunted and sacred profit motive?  How about merely the idea of a “wage motive” or “salary motive” as even just a dry academic economic concept?

Speaking of dusty, well-worn academic concepts, if profits and competition are the fingers of Adam Smith’s “invisible hand”, are the wage and salary motives to be regarded as unimportant, even more invisible stubby toes that, at best, can only trip us up?

Henry Ford’s “Wage Motive”

The most prominent among the scant references to “wage motive” found in a Google search are mostly in connection with Henry Ford, since he advanced that concept in his clumsily titled 1926 book, Great Today and Greater Future (which failed to survive in the form of “Have a great today!” as a McDonald’s-cashier sign-off).

Ford said, “We have heard a great deal about the profit motive being wrong. We have heard nothing at all about the wage motive.” (Indeed, we mostly haven’t, ever since he didn’t.) To this, he stunningly and heretically added, “That is the only motive of any importance….” (Italics mine.)

Even more surprising is that Ford identified the wage motive as being as much, if not more, in the self-interest of the entrepreneur, manager and the owner, as in the interest of the rank-and-file worker:

  • “The right kind of wage increase comes as a result of management(‘s) having the wage motive.” (Italics mine.)
  • “The wage motive requires that the highest wages be paid, for not otherwise will the cycle of purchasing power be started.”
  • “Wages (as an issue) is more of a question for business than it is for labour. It is more important to business than it is to labour.”
  • “Low wages will break business far more quickly than it will (break) labour.”

Talk about “the Wage Motive”: Now Rarer Than a Model-T

This is a very peculiar contemporary conceptual and conversational omission, since without the wage and salary motives of workers, profits would be impossible and a profit motive pointless (unless all pay were to be in the form of profit sharing, stock options and the like). After all, profits are usually earned through the efforts of salaried or hourly human workers—even profits made by the click of a mouse completing an online stock trade or real estate sale, since self-replicating machines are not yet automating all trades and deals.

You would think that factors as important as wages and salaries would, especially in these tough times, get at least a passing, yet explicit nod from TV talking heads, professors, college text books, free-market analysts,  socialist newsletters, pamphleteers, Michael Moore, bloggers or someone else—anyone with something to say about economics and the economy.

Think again: Googling “’profit motive’” yields 1,420,000 postings. However, “’wage motive’” fares atrociously in a Google search-based comparison: only 3,290 returns. “Salary motive” creates an even smaller cyber-blip—a measly 594 search results, far fewer than the number of Model-T’s still on the road in the U.S., reportedly officially estimated by the R.L.Polk insurance company as 49,869—in 1948 and the then-48 states, utterly dwarfed by the 13,700,000 Google returns for “’Model-T’” (demonstrating that some of Henry Ford’s original cars have proven to be more durable than some of his original ideas).

The omission of any reference to wage and salary motives from the arena of public and academic chatter about the economy and what to do about it is doubly peculiar—not only because of the huge and important role wages and salaries play in driving the economy, but also because they and their growth rates are not what they used to be. Human nature being what is it, when something is very wrong, we tend to talk about it….and talk about it. So, where’s all the talk about “wage motive” in this, the Year of Our Ford 2012?

When corporations suffer from a profit squeeze—for any reason, e.g., crushing tax loads, choking regulations, foreign competition, they will almost certain squawk about it and intone pious clichés about the profit motive as the engine of our survival now and success in the past and (post-recovery) future, with the obligatory Oscar-night misty-eyed tip of the cap(italist) to the profit motive and the workers without whom “none of this would have been possible”.

But an economic Oscar for the wage or salary motive?

I’d sooner bet on another gospel Grammy for Elvis.

 

Image: MORE DURABLE THAN MANY IDEAS (1908 Model-T Ford)/Photo (modified): Wikipedia

(Part II will explore the reasons for this stupendous modern silence about the wage (and salary) motive.)



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