Yesterday I put up a list of things that were different 100 years ago. Reader M. M. sent me a link to a USA Today article about how money and costs looked that long ago. Here’s an excerpt.
Take-home pay in 2015 vs. 1915. Census Bureau data show that the median household income, measured from 2009 to 2013 (the most recent data available), is $53,046. Back in 1915, two years after income tax came on the scene, you were doing about average if you were making $687 a year, according to the Census. That is, if you were a man. If you were a woman, cut that number by about half. Today, that $687 would be comparable to earning $16,063 a year, according to an inflation calculator on the Bureau of Labor Statistics’ website. So Americans’ buying power has improved considerably in the last century.
Buying a house in 2015 vs. 1915. Today, the median home value in the U.S. is $177,600, according to the Zillow Home Value Index. In 1915, purchasing a house would have typically set you back $3,200, according to Census records.
Buying a car in 2015 vs. 1915. If you buy a car today, expect to pay $31,252 on average, according to August 2014 data from TrueCar.com, a car dealership. In 1915, the journal Motor Age indicated that a typical car’s sticker price was $2,005 ($46,879 today).
Filling up your car in 2015 vs. 1915. As of late December, the average price for a regular unleaded gallon of gas was $2.29, according to AAA. In 1915, you would have paid somewhere around 15 cents a gallon. As is the case today, what you paid to fill up depended on your location. For instance, according to a 1917 report by the Federal Trade Commission, if you lived in Massachusetts, you were paying 15 cents a gallon in January 1915 but 23 cents a gallon by December 1915. In California, the rates remained steady, starting off the year at 12 cents a gallon and ending at 14 cents.
There’s more at the link.
I suspect the conversion to allow for inflation isn’t quite right. I think the article doesn’t provide a realistic correlation between prices then and prices now, certainly not when I compare it to resources such as ‘The Value of a Dollar‘ (which I have in my reference shelves). Nevertheless, it’s a usable comparison. Also, it can’t take into account the added functionality of modern products for which we pay extra. A vehicle in 1915 would have no power assisted steering or brakes, no air-conditioning, no radio (let alone a CD player, MP3 compatibility, or a Bluetooth link to your smartphone), be a lot less comfortable and a lot less safe, and so on. There’s no way to factor that into a direct price comparison.
Such comparisons are meaningless to day. You can't buy 1915 products and services with 2015 money. Nor can you buy 2015 products and services with 1915 money. The BLS inflation factors only work for about 5 years. After that, they are useless for making economic comparisons. As my Econ professor once told me, A dollar I can spend this year is worth twice a dollar I can spend next year. Next year's dollars are not real. Last year's money can not be spend again differently than it was spent. In 1915, paved roads were rare. Electricity was only available in a few places. Indoor plumbing was a novelty.
Using the $1070 FRN's/troy oz gold from my previous comments, that $687 works out to $35,597 instead of the heavily .gov manipulated 'inflation rate' calculation of $16,063.
You also need to factor in the .gov theft-from-pay that WASN'T happening back then as well. $53K FRN's places you solidly in the 25% fed bracket. Let's tack on another 55 for state and/or local rates* for an average of 30% shall we?
$53,000 x .3 = 15,900 'tax' load. Subtract that 15,900 from the initial 53,000 for a net 'take-home' of 37,100FRN's. Pretty darned close to that 'Gold Standard Dollar' wage from 1915. And this doesn't even include the other 'payroll taxes' that cut even deeper.
*Some places will be higher, and some lower…5% seems like a nice average as well as making the math easier.
When comparing different eras is helpful to speak about relative buying power during those times. Using the date it took 2.9 years of our salary to buy a car in 1915 versus 0.58 years of your salary today. Looking at homes it would 4.6 years of your salary to buy versus 3.3 years today.
Overall we are better off now without even considering the significant upgrade in quality and features that we enjoy today.
That cannot be correct. They are trying to say that half of this nation makes more than $53K a year? Not according to the IRS. Here is the link for the IRS filings through 2003:
According to the above IRS figures, there were 102,087,623 returns filed in 2003, representing a total of $2,524,124,000,000 in income. How do they get $53K as a median income? They assume that all households have two incomes. The median income in the US is $26,989.
Where it took one wage earner in 1915 to make a living, it now takes two.
Seems to me that's apples/apples. But even there it depends on the "where", doesn't it? We're in Phoenix visiting our son. With LOTS of dairy farms in the vicinity I wish we had a Star Trek transporter so our son could send us milk from here. Gas… Aren't taxes the biggest factor there?
The easiest way to determine how wealthy a person is to figure out what percentage of the GDP that had as wages or in wealth
By that measure, American workers are much less rich than as they were in 1973 with the effects masked by improvements in technology.
Its also apparently at an all time low. http://www.globalbusinessviews.com/?p=6898 in fact
Basically its been extracted as corporate profits by wage arbitrage.
This is also indirectly responsible for the growth of the state, logically if one can't get ahead in the private sector or by work because of economic conditions (mostly efficiency) than the rational thing to do is to vote for redistribution.
In fact I'd go so far as to say that if the Democratic party wasn't entirely anti-White and anti-Christian and was populist, the Republicans would not have had a majority since Reagan.
And note all the anti redistribution bleating in the world won't help. A functioning society must be paid for and priorities made. If Hauser's Law is true
and no matter how much taxes are, the Feds can't get more than 20% of GDP in revenue, you are in a bad situation
The minarchy that so many on the Right favor doesn't work with technology and a super frugal save everything forever society will starve from lack of demand or implode to do poverty. We are already getting there and its giving the US a D grade infrastructure more suited to the 3rd world. Oh and sub-replacement fertility bolstered with immigration from low trust and often low IQ countries
The only working low state option is Social Conservatism with Economic Nationalism and i don't see anyone in government at least in the US pushing for that
When dear ol' Henry paid >minimum< wage of $5/day to his workers, it was (or could be) paid with a $5 1/4 oz gold coin per day and no income taxes were subtracted. That 1/4 oz gold is now worth about $250-$300 at what are considered low gold prices ($1050-$1100/oz now). I believe it was a 6-day, 10-hr work week, but let's assume 5 coins per week tax free. 50 weeks would be about 62.5 oz gold per yr or roughly $68.8K per year income with no income taxes.
I'm sure other factors would tweak these numbers (and Henry paid high), but overall quality of life was improving then – I don't see that in today's America. For that matter, in 1964, minimum wage was $1.25/hour … or 5 90% silver quarters worth about $2.50 each melt value at today's prices or about $12.50/hr … even at today's "lower" silver prices.
Memory gets fuzzy after so many decades, but I suspect the country was better off at the time Nixon pulled us off what little gold standard remained in 1972 than we are now. Seems prices of stuff that hasn't changed (foodstuffs, energy, housing) are about 10x greater now than 1972 with wages being only about 5-7x greater.
It's interesting watching 1960s/1970s TV shows that show street scenes (for example, LA street scenes show gas stations with prices, some show grocery stores with signs in windows, other such items)
What's scary is these may be "the good old days" pretty soon