It is not related to either the lump of labor fallacy, nor how Henry Ford payed his workers. It’s simply the laws of supply and demand. If you increase the supply of something, the equilibrium prices decreases. This is true in basically all cases, except where there are highly unique confounding factors.

If your argument is based on the premise that the laws of supply and demand are wrong, then you can pretty much guarantee that it’s actually your argument that’s wrong every single time.

They aren’t useful for analyzing labor as if it’s an inanimate object. Labor is what produces demand in the first place, so you get partial equilibrium results if you don’t acknowledge that.

It’s very common to do it wrong, it’s one of the most common excuses people have for saying immigrants take your jobs. Strangely, they don’t say having children takes your jobs.

> Strangely, they don’t say having children takes your jobs.

Because if you have children, you have about 20 years to progress far enough in your career that a brand new hire isn't going to take your job. Also, as a society, somebody needs to be working after the old people retire.

Immigration is more complicated, but it is possible for immigration to depress pay or even deprive people of jobs, if you had enough immigrants with all the same qualifications. In the early years of Israel, for instance, Israel had far more physicians per capita than they actually required and many of them had to take other jobs.

> In the early years of Israel, for instance, Israel had far more physicians per capita than they actually required and many of them had to take other jobs.

That'd be a good problem for the US - we don't have enough of them because we restrict immigration and licensing so strictly. But yes, some of them do end up taking other jobs and starting businesses and it works out in the end. More people = more economy.

Of course, adding more of some inanimate objects can increase demand for them because of things like network effects, and there's nothing surprising about that. A phone or a gold bar isn't very valuable if there's only one of them in the world; nobody's going to want it.

> That'd be a good problem for the US - we don't have enough of them because we restrict immigration and licensing so strictly.

As a consequence of regulatory capture by the AMA, who don't want their pay to go down. Which furthers my point that their pay would go down, assuming that the AMA aren't total idiots ;)

> afford to buy the cars

Maybe that is a red herring and what Ford got from higher wage was workers that cared about the work they did and made sure the quality was good, as the workers would otherwise end up in a lower-paying job.

When you make "revolutions" such as the first good assembly line, workers that care make a big difference. Faults on assemble lines can be much more expensive than high wage.

Paying your own employees enough for them to buy your product is the perpetual motion machine of business models in the sense that it doesn't actually work. You need other sources of revenue to survive.

Cars used to be luxury goods and the idea of common people like factory workers driving cars absolutely blew people's minds, even if they were the best paid factory workers. The majority of Ford's innovation here was in reducing the cost of manufacturing rather than by paying his workers more. Another point is that assembly line work can be alienating, and being able to own the finished product is probably a decent remedy for that type of alienation.

What Ford got from his well paid people is they didn't quit. Even though assembly lines are easy to train, he still was losing a lot of people because working the same station for months is boring, and so he was constantly having to recruit and train people.

Don't let the above take away from the other factors you mention. The total situation is complex.