by The Other Katherine Harris
The Other Katherine Harris’s blog
Feb. 14, 2008
The Economic Reality Check Machine
Remember what you paid for your first car, your first house, a year’s college tuition or whatever? At Measuring Worth, you can find out in a few seconds what it would cost you now by using their “Purchasing Power of Money in the United States from 1774 to 2007” calculator.
Prepare to be amazed by what you’ll learn. My 1969 Opel, $2,300 when new, would have cost almost exactly $10,000 more last year ($12,278.23). Fortunately, my parents could afford to buy it for me more easily than I realized, because their modest annual income (under $20,000) represented more than $100,000 in today’s dollars. Their purchasing power was already on the decline, though; it fell by an average of $5,000 dollars yearly between 1965 and 1970. Even with inflation jolting the budget dramatically, they remained comfortably in the middle class. I was even on the lower rungs of it, when I got my first “real” job in 1975. Pulling in $9,000 a year wasn’t bad then (especially for a young woman); in fact, it represented almost $35,000 in today’s money — and 10 years later, my $25,000 spent like today’s $48,000.
Through the ’70s and 80’s, money kept losing value steeply, but far worse was the fact that pay stagnation set in. And both trends have continued, with all meaningful gains from increased productivity going to the richest for the past 30 years and actual declines in compensation at the lowest end.
Of course you don’t need me to tell you there are plenty of young people (and others) working now for 1985 wages — and that a household with only one earner is barely scraping by — but the picture of what we’ve lost becomes much more vivid than the usual generalities, when you run calculations based on figures from the reality of your own life in the past. I recommend it.