by Charles Hugh-Smith
What does it say about our “prosperity” if we are able to’t even afford to equal the buying energy of the minimal wage paid 50 years in the past? It says the 1% acquired the mine and the underside 90% acquired the shaft.
Given the rising prosperity we maintain listening to about, shouldn’t we be capable of present minimal wage employees the identical buying energy they loved 50 years in the past in 1970? This can be a quite simple proposition: both can present minimal wage employees the identical buying energy they loved 50 years in the past or we are able to’t, and if we are able to’t, then all of the claims about “rising prosperity” are revealed as false.
Since I used to be a minimal wage earner in 1970 at age 16, I’ve first-hand expertise of the buying energy of minimal wages within the 1970-1974 period. Let’s maintain it easy: what number of hours of minimal wage labor did it take to purchase a brand new economic system automobile, a brand new home and hire a studio house in one of the crucial costly cities within the U.S.?
To maintain it easy, let’s put aside taxes and simply use the fundamental minimal wage, not the web wage.
By no means thoughts all the flowery statistical footwork of hedonics, substitution and weighting which might be deployed to arbitrarily decrease the speed of client value inflation. In the actual world, wage earners purchased no matter automobiles and homes have been obtainable on the time, and rented no matter residences have been obtainable on the time.
The one correct strategy to measure the buying energy of labor is to ask: what number of hours of labor did it require to pay the hire, purchase a brand new automobile or purchase a brand new home? Another measure is simply sleight of hand meant to obscure the collapse of wages’ buying energy.
In 1970, I earned $1.65 an hour. A brand new economic system automobile (Ford Maverick or VW beetle) was $2,000, so it took about 1,200 hours of labor to purchase a brand new economic system automobile.
A brand new home price on common about $26,000 in 1970, so it took 15,750 hours of minimal wage labor to purchase a brand new home.
At as we speak’s federal minimal wage of $7.25/hour, it takes 3,000 hours to purchase a primary 2021 Honda Civic or equal which prices $22,000. To purchase a brand new economic system automobile as we speak with 1,200 hours of minimal wage labor, the minimal wage would have to be $18.30 /hour: 1,200 time $18.30 = $21,960.
At as we speak’s federal minimal wage of $7.25/hour, it takes 56,000 hours to purchase the common priced home which now prices $408,000. Let’s say there are homes obtainable for $300,000, so it takes 41,380 hours of minimal wage labor to purchase a home.
To purchase a brand new home for $408,000 with 15,750 hours of labor, the wage would have to be $25.90/hour. To purchase a $300,000 residence with 15,750 hours of labor, the wage would have to be $19/hour.
Shifting ahead just a few years to 1974, the minimal wage elevated to $2/hour, and I rented a small studio house in Honolulu, one of the crucial costly cities within the U.S. for $120/month. Thus it took 60 hours of minimal wage labor to pay the hire.
Studio residences in Honolulu at the moment are round $1,100/month hire, so to pay the hire with 60 hours of minimal wage labor, the minimal wage would have to be $18.30/hour.
In 1974, I paid $89.25 in tuition and $27 pupil charges per semester to attend the College of Hawaii at Manoa. (These numbers stick in your head if you’re paying for them in money earned at low-paying jobs whilst you’re carrying a full 5 programs a semester.) That’s $233 per 12 months. At a wage of $2/hour, it took 116 hours of labor to pay the annual tuition and charges.
The present price of tuition and charges on the College of Hawaii at Manoa is $12,186 per 12 months. To pay the schooling and charges with 116 hours of labor, the hourly wage would have to be $105/hour. If America will get any extra “affluent,” I received’t know whether or not to puke or go blind.
To equal the buying energy of minimal wages in 1970-1074, the minimal wage must be no less than $18/hour. Something much less doesn’t equal the buying energy of the minimal wage paid 50 years in the past, and no quantity of statistical trickery can erase this actuality.
What does it say about our “prosperity” if we are able to’t even afford to equal the buying energy of the minimal wage paid 50 years in the past? It says the 1% acquired the mine and the underside 90% acquired the shaft.
sources:
www.dol.gov/companies/whd/minimum-wage/historical past/chart
www.bls.gov/information/inflation_calculator.htm
www.1970sflashback.com/1970/economic system.asp
www.thepeoplehistory.com/70scars.html
www.statista.com/statistics/240991/average-sales-prices-of-new-homes-sold-in-the-us/
information.eric.ed.gov/fulltext/ED086037.pdf
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