Inflation, effect on wages

[PismoPam]

Check out the graphic in this article. Average worker's weekly wages are lower than in 1964, before Nixon closed the gold window! $600 a week now is the same as $300 in 1982! No wonder we feel poor.
I wrote the writer and thanked him for a good job.


http://www.latimes.com/business/la-fi-why9mar09,1,2301744.story

(I've checked the link to the graphic twice - if it doesn't show up, here it is
( http://www.latimes.com/business/la-030908-fi-why-g,1,6579894.graphic )

 

[Kludge]

o.0 LA Times has NWO in one of their articles, that's an MSM no-no.

^^Cited Image^^

 

[Acala]

Worse than shown

I'll bet that chart is based on the government's falsified inflation data. The real decline has been greater. But then I am a glass half empty kind of guy when it comes to the US economy.

 

[Paulitician]

Austrians understand that's why there is such a disparity of wealth between the middle class and the rich. They understand that inflation ultimately erodes the middle class and gives us just two, giant poor and rich classes. And they also understand that's why it took two people (the father and mother) to work starting from the 70s just to make ends meet. Everyone else thinks it's great:

http://www.youtube.com/watch?v=LfascZSTU4o

BTW: that graphic is a little deceptive because they use the phony government statistics. It's actually much worse than it seems.

 

[theseus51]

Well, the only reason we have been able to maintain an increase in real household income is because it used to be just 1 person would have to work, now 2 per household work. I'm guessing the next logical step is that people have to get 2 jobs.

 

[AceNZ]

Check out the graphic in this article. Average worker's weekly wages are lower than in 1964, before Nixon closed the gold window! $600 a week now is the same as $300 in 1982! No wonder we feel poor.
I wrote the writer and thanked him for a good job.

Using the calculator at http://www.shadowstats.com/inflation_calculator I can get pretty close to duplicating their numbers...

Using the BLS (government) inflation stats:
$589.78 in Dec 2007 was worth $274.11 in Dec 1982 (vs. 281.85 in the article)
$97.41 in Dec 1964 was worth $304.72 in Dec 1982 (vs. 302.52)

However, using inflation stats that are calculated the same way as they were in 1980 (much more realistic):
$589.78 in Dec 2007 was worth $102.18 in Dec 1982,
$97.41 in Dec 1964 was worth $305.34 in Dec 1982.

So while the article would have you believe that wages are only about 7% less today than they were in 1964, the reality is that they down by a whopping 67%! $600/week now is actually the same as $100/week in 1982!

 

[Zippyjuan]

You are only looking at pricing effects AceNZ. Since 1964 prices are up by 67%. Your number does not look at wage changes during that time which the Times article does. You can see that in the graph that the Times includes that wages went from $97.41 to $589.78. Using the calculator you link to, prices went from $97.41 (using the same base) to $655.64. Real purchasing power fell by $65.86 or 11% if my math is close.

 

[AceNZ]

You are only looking at pricing effects AceNZ.

The calculator I referenced uses two flavors of the CPI, which is pricing oriented. The question I addressed is how much does the average wage buy in 2007 vs. 1964. That question can only be answered in terms of price changes.

Since 1964 prices are up by 67%.

How did you come up with prices going up by 67% since 1964? Using the calculator I referenced earlier, using BLS numbers, I get a 570% increase ($100 in 1964 would be worth $670 today). Using the more accurate CPI, it works out to $1809, or a 1700% increase.

Your number does not look at wage changes during that time which the Times article does.

My analysis used the article's wage numbers, so it does look at wage changes during that time.

You can see that in the graph that the Times includes that wages went from $97.41 to $589.78. Using the calculator you link to, prices went from $97.41 (using the same base) to $655.64.

I didn't adjust wages from 1964 to 2007 like you did, since that's not what they did in the article. I adjusted the wages they gave for 1964 and 2007 to 1982 dollars, like they did.

To support the fact that I followed the same process they did, notice that the numbers I showed that were based on the BLS-provided CPI very closely match the ones they calculated for the article.

Real purchasing power fell by $65.86 or 11% if my math is close.

Your math is way off.

 

[Zippyjuan]

Thank you for correcting me on how much inflation was up since 1964. You are right- wages went from an index of 97.41 to 589.78 is [589.78 minus 97.41= increase of 491.59 or a increase of 505%] increased nearly five fold.
Meanwhile prices (accoridng to the calculator) went from the base of 97.41 to 655.64 or an increase there of 558.23 or up 573%. Not sure what I was thinking.