Automaker Henry Ford famously paid high wages to his workers. In 1914, he offered $5 a day (about $107 today) for assembly line work.. The offer resulted in long lines for Ford jobs, little worker turnover, and high-quality workers. Paying above-market wages may improve profits better than piece rate incentives if:

Question

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Paying above-market wages can lead to increased intrinsic motivation among workers, which can result in higher productivity, better quality work, and lower turnover. This ultimately improves profitability for the company. However, if product quality is a concern, paying above-market wages alone may not be sufficient, and additional quality control measures may be necessary. Additionally, if there are significant environmental risks associated with the work, paying higher wages may not be enough to attract workers to the job. Finally, if worker effort is difficult to observe, piece-rate incentives may be a more effective way to improve productivity.

Automaker Henry Ford Famously Paid High Wages to His Workers