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Comment by travbrack | Hacker News Reader

Huh? Inflation calculator says 70k in 1950 is worth 754k today.

Edit: I did the calculation backwards. Thanks to everyone who pointed that out.

By the other interpretation of $6500 dollars in 1950 (roughly equivalent to 70k today), it would be much higher than the average family income of 1950 of $3,300 and put you in the top 10-20% of earners, which is probably not as far as 70k gets you today.

GP's point wasn't about inflation but about growth. So for a rough estimate you should be looking at the rate of GDP growth rather than the rate of inflation. Since GDP per capita grew 30x since 1950, you should be comparing the 70k wage to a family income of approx 100k.

If you look at inflation only, that is equivalent to saying that workers should have gained absolutely nothing from technology and efficiency gains made in the past 70 years. But obviously we know that workers are far more productive today than they were in the 50s, and the extra productivity per worker is reflected in GDP.

Comparing family income 1950 with a single income in 2020 though. Have two incomes of that size in a family, and you'll be at 140k, which will put you in in that range.

I'd agree with you, but. In 1950 the average family was very likely to live on a single income, the husband would be the earner and the wife a housewife.

I'd be curious to see the numbers for my assumption, though.

Yeah, from what I understand, inflation-adjusted family income has remained largely stable for the lower 80% despite significantly more families having more than one income, which sounds plausible, given that more supply should decrease the price of labor.

Of course, fewer people were middle class back then..

But yeah, the original comment we are replying to doesn't have much going for it.

The true inflation rate is probably a lot higher than CPI which is what most calculators use. Somewhere between 7-13% [0] (for example)

[0] https://www.businessinsider.com/if-people-knew-the-actual-in...

Serious economists mostly suspect that the CPI overstates inflation. See eg https://www.schroders.com/en/sysglobalassets/digital/insight... or do some Google searches.

In any case, I agree that inflation (or more precisely, the price level) is a finicky statistic to agree on. So if you are making an argument, it's better if you can avoid inflation.

Eg people like to argue whether median real income has stagnated or not. And that crucially hinges on inflation. But what they actually want to talk about seems to be whether workers get 'exploited' more. So we can instead look at the labour share of GDP over time. No inflation adjustment necessary.

The article you linked to is somewhat hilarious. It suggests eg China is cooperating with the US in massaging American inflation numbers. (See point 2 in their list.)

I think you'd need to do the opposite: take 70k today, and figure out what the inflation calculator suggests about it's value in 1950 dollars. Just using your numbers, that would be about 6.5k.

Now compare with median annual incomes in 1950. Asking Google about '1950 median american income' gives 'Average family income in 1950 was $3,300.' Not quite what I wanted to know, but close enough. (We are looking at per worker income, and would probably be more interested in median than average.)

I found this link[0] that tells us that the median income - adjusted for inflation - seems to be rising since 1967.

https://www.davemanuel.com/median-household-income.php

This is measuring household income, not individual income. Real household income isn't increasing because wages are rising, it's increasing because more people in a household are working.

On the other hand, household sizes have decreased.

(Though not sure about workers per household.)

> [...] it's increasing because more people in a household are working.

More people are working outside the house and participating in the market economy. Women worked before, domestic chores don't show up in these statistics.

Presumably they produce a lot more working outside the house: to estimate a monetary value of what they did before compare with the prevailing wages for nannies and housekeepers.

You have it the wrong way around. You should calculate what historical wage would be 70k today.

GP is probably also relating to what you can buy using 70k.

Wouldn't you instead want to see what 70k today is equivalent to back then, then check how that pay compares to the average?

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