Hacker News Reader

Comment by drBonkers | Hacker News Reader

> They also found that, if inflation adjusted, you get could, in most categories, the same or better quality for the same price.

I argue you must evaluate against median purchasing power; it accounts for inflation and (lack of) wage increases.

Comments from your linked video:

> The problem with the “adjusted for inflation” argument is that it does not factor in buying power. The increase in wages has risen at out half the rate of inflation, so sure; $20 in 1975 would be $124 today, but the minimum wage in 1975 was $2.10 an hour as opposed to $7.25 today, giving you half the buying power you had 50 years ago.

> healthcare, housing, and education ... have increased by an insane margin leaving people with less money once that has been paid for (if at all).

> It's even worse when you consider that people are paying 45-55% of their monthly income on a house that cost 20x more than it would have in 1975. Your buying power is fucked from all sides.

View on HN

Purchasing power is probably a better metric in a vacuum, but it's hard to analyze accurately

For example, the comment you're citing is claiming that because minimum wage has increased only 3x over the same period of time in which inflation has eroded the relative value of a dollar by 6x, that wages overall have increased at half the rate of inflation. But minimum wage is a measurement of a minimum, while inflation is a measurement of /average/ price increase so they can't be compared 1:1 in this way.

The housing argument also seems odd. In New Zealand (where I'm from -- I'm not familiar with the US' housing market, so the commenter could be right about that geo!) house prices have increased by far more than 20x since the 70s, but the houses available are of substantially higher quality due to improved regulations (e.g. all newer homes are subject to healthy homes rules which mandate insulation) so just comparing inflation-adjusted home prices vs income doesn't tell the full story

(Aside from that, a whole heap of items like food, electronics, transportation are all both far cheaper AND higher quality today than in the 70s)

“Higher quality” isn’t an objective measurement though. And it certainly doesn’t matter if the end result is that people cannot afford to buy it.

What I’d be interested to understand is whether changes to materials (be that buildings or home appliances) has caused an increase in the cost to manufacturer.

I’d wager most things have gotten cheaper to produce these days because the same improvements in technology that can be integrated into the product also applies to technology used to reduce the cost to manufacturer. Plus if wages are below inflation then any labour costs would have declined (relatively speaking) in that time too.

Modern US houses are made of the cheapest, shittiest, flimsiest materials money can buy. I go out of my way not to live in US housing less than 50 years old.

This isn't true for median purchasing power. You're looking at the federal minimum wage, not the median. Only about 1% of hourly workers earn $7.25 or less.

Median earnings were $48,070 in 1975, measured in 2024 dollars, and $51,370 in 2024.

Median earnings in 1970 were closer to 56k in today's dollars. 1970-1980 was a recessionary period, followed by stagflation in the 80s. I hate when people use that time period as an anchor to show growth. It's like using 2009 as an anchor.

What start date would you prefer? https://fred.stlouisfed.org/series/LES1252881600Q

What data are you using? It is hard to get solid numbers pre 1975. I looked at SSA Wage index which has 1970 at $6,186. Adjust using PCE, that is only $42,808 in present dollars.

Census data, it goes back way farther, but conflates things pre-1975 along a lot of variables since that was barely post-segregation.

Not sure how you're getting 42k: https://www.minneapolisfed.org/about-us/monetary-policy/infl... spits out 51k for that number.

In either case, IMO, +-10% over 60 years should just be considered flat. Calling it flat is probably generous considering how inflation has affected durable goods vs necessities. We can buy more appliances now, but places to put them have never been more expensive relative to income.

I didn't choose 1975. That's the year the parent comment claimed median earnings have dropped from in comparison, so that's the year I have to use to refute the claim.

Still, real wages in 1975 were relatively high compared to previous decades. See table A-7 here: https://www2.census.gov/library/publications/2024/demo/p60-2...

Estimated median earnings for full-time male workers peaked in 1973 in the chart, until surpassing it in the 2010s. It's hard to find directly comparable data for earlier decades, but estimates put wages significantly lower. If you anchored to the 1920s, 30s, 40s or 50s instead, you'd just show even more growth in median wage. If you're saying we shouldn't compare to the 70s or 80s either, then what's left? Just years after 1990?

Median purchasing power has increased by 12% since 1979 (data doesn't go back to 1975) https://fred.stlouisfed.org/series/LES1252881600Q

Real wages were down ~15-20% from 1970 to 1979... so, not a good year to anchor on.

Where are you sourcing that data from? The graph I linked using data from the U.S. Bureau of Labor Statistics doesn't go back that far, so comparing to 1970 would not be possible.

US Census tracks income, its just harder to pull out since they don't provide nice charts like the fed.

Well there's this which goes back to 1967: https://www.census.gov/library/visualizations/2025/demo/p60-... I'm having trouble finding the raw data though. In any case I'm not seeing any big drop in the 1970s.

That's household income. You need to adjust for the change in households with multiple earners. That's why I said the census data is dirty and conflates things. The number of households with both parents working increased from 46% to 52%, so median household income staying flat means median income for individuals went down pretty significantly.

I'm really frustrated by inflation numbers because there doesn't seem to be a metric that makes sense.

CPI ignores the reality people feel (and swaps in cheaper items that aren't necessarily on par with the original to keep the number lower), gold isn't really a 1:1 with purchasing power...there must be some sort of useful composite metric that merges multiple data points over time like rental/house prices, CPI market basket, dollar vs hard assets like gold to come up with a more accurate number.

You're only going to hear from people who think that the CPI underestimates inflation. If the CPI overestimates inflation for an given individual, they have no reason to comment on it.

The CPI doesn’t arbitrarily “swap in” items. It changes based on consumer behavior. That’s why it now tracks streaming services but not VCRs. Similarly, if the price of Gala apples triples and everyone switches to Fuji, a fixed index would overstate the actual cost of living.

Insofar as gold impacts the cost of things people buy, it’s already included. Adding it directly to the CPI makes no more sense than adding Bitcoin or soybean futures.

The cost of housing is already is a massive component of the CPI.

But if you used to be able to afford steak and now all you can afford is ground turkey, readjusting the basket of goods for that shift in "preference" is just hiding the fact that nobody can afford steak anymore.

And similarly, the hedonic adjustments to smartphones sort of implicitly claim that the $100 cheap smartphone you can buy today is worth $8000 back in 2009 because of how much better processors and memory have gotten. But you can't buy an iPhone 1.0 for $1 to satisfy the need to have a phone that you can install apps onto (and the upgrade cost every few years as cheap phones can no longer run an O/S version that your banking app requires).

The assertion that the CPI simultaneously overlooks downward product substitution and prices in product improvements in order to paint an overly-rosy picture is belied by the fact that most stuff is cheaper than it’s ever been.

Thirty years ago, internet service was $2.95/hour (in 1996 dollars!), long-distance phone calls were 10 cents/minute, and a low-res 28” color TV with 5 channels cost a fortune.

I don't care about internet service, long distance phone calls, or TVs. I care about shelter, groceries, healthcare, and education. I can forego the former, I must buy the latter.

Shelter, groceries, healthcare, and education comprise 53.2% of the CPI bundle.

> a low-res 28” color TV with 5 channels cost a fortune.

Uh, back in 2000 (okay not quite 30 years ago, but getting close) I had a 36" Sony Wega which cost around $1500 with DirectTV and hundreds of channels. A 25" to 27" TV was more of a 1988 kind of thing (which is almost 40 years ago now). Being limited to 5 OTA channels was more of a 1980 thing.

But again you can't really buy that Sony Wega anymore, even though the CPI probably prices it at $20 these days.

Back 50 years ago, average household spend on the Internet was also $0, so it was very cheap, we weirdly didn't spend anything on it when I was growing up. Now I spend $80/month on it, and have trouble finding anything cheaper around here.

If you want to consider "communications spend", back in 1988, you might have spent $50/month on your landline, cable tv and newspaper subscription. Today households tend to spend $280/month on internet, wireless and streaming/cable services. That is actually double the CPI. They get lots more for that, but the cost of being an average middle class household has grown at double the CPI. And these days you need the internet in order to keep up with Joneses, it isn't really a choice.

US households faced much higher costs than you recall. According to the BLS, mean monthly expenditures were $44.75 on landline service, $13.50 on cable TV, and $12.33 on newspapers. That’s $70.33 in 1996 USD, or ~$193 in 2026 USD.

More households subscribe to services today, which inflates the "average expenditures" data cited below: 93% of 1988 households had a landline, 53% cable TV, and 63% newspaper. Compare with today's household services penetration: 98% mobile phone, 94% broadband, and 74% streaming media.

You’re right that this is less than the cost of internet + cell + streaming services today — these are ~50% higher than the 1988 bundle — but consider the differences: you can access almost any kind of content from almost anywhere. And you can consume it on a smart phone or TV that costs 75% less in real terms than that TV from 2000.

Meanwhile, real median household income grew from ~$65,130 in 1988 to $83,730 in 2024 — and furthermore, the tax burden on the middle class fell during this period.

Sources: https://www.bls.gov/cex/1988/Standard/cusize.pdf https://fred.stlouisfed.org/series/MEHOINUSA672N

I'd argue that "the reality people feel" isn't a good aspect of any metric other than one that measure sentiment itself.

Now do the same analysis but using median wage not minimum. YouTube comments are for entertainment purposes only.

Reply on news.ycombinator.com