In early 1914, against a backdrop of widespread unemployment and increasing labor unrest, Ford announced that it would pay its male factory workers a minimum wage of $5 per eight-hour day, upped from a previous rate of $2.34 for nine hours (the policy was adopted for female workers in 1916). The news shocked many in the industry--at the time, $5 per day was nearly double what the average auto worker made. He also shaved an hour off the workday.

http://www.youtube.com/watch?v=lpTecAeYvGU#t=425s

It wasn't, as has been argued, because he wanted to establish a solid-middle class to buy his product. Nor was it an act of charity. In the magnate's own words, it was "one of the finest cost-cutting moves we ever made."

Henry Ford was acting in his company's best interests. His factories had been plagued with very high turnover rates and excessive absenteeism. This was to be expected. Almost all jobs (at least the ones I've had) are monotonous, but assembly line work, performing the same procedure over and over all day long, must be extraordinarily tedious. Many employees looked for, and found, better alternatives.

Hiring replacement workers and training them were too expensive. Something needed to be done.

The higher wage Ford offered made the jobs much more attractive. Morale shot up, employee turnover sharply dropped, and, most important from management's perspective, productivity surged. Henry Ford was on his way to being a billionaire.