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The Price of Inflation Adjusted For Time

Friday, March 24, 2006

Have you ever marveled at those old newspaper ads that pop up every now and then displaying the price of milk at ten cents per gallon or loaf of bread selling for 5 cents? It always seemed to me that "stuff" was so cheap back then. For fun, here is a site that carries copies of some old advertisements.
This morning, I was thinking about this again and thought to myself, "I wonder what my hourly wage would be equivalent to in 1913 dollars?" Well, I've got good news... and bad news. The good news is that it's actually pretty easy to figure out; the bad news is that the amount I came up with was pretty disgusting. After calculating the amount of money I would be earning for an hours worth of work, I now understand why prices "seemed" so low. They were reflective of what the market would bare for eggs, milk, and bread at that time.
While I'd like to share with you what I make so you can feel my pain, I'm not going to do that. I will use the average hourly wage for the State of Washington which I believe is around fourteen dollars per hour (unchecked amount--don't quote me on this figure). The website to do all this calculating is found here hosted by the U.S. Department of Labor, Bureau of Labor Statistics. It's a pretty simple calculator to operate. The top box allows you to plug in a dollar amount, the drop-down box below this allows you to select a base year, and the lowest drop-down box allows you to select a comparison year. When you hit the 'Calculate' button, it will display a dollar value that has been adjusted for inflation.
Let's run through it with our fourteen dollar an hour wage. We plug in '14.00' for our dollar amount, select '2006' for the base year, and then '1913' for the comparison year. After hitting the 'Calculate' button we see we're making a whopping 70 cents an hour! See, I told you it would put those ancient prices in perspective. If you're making 70 cents an hour, you're living on $28.00 a week, assuming a forty hour work week.
We've come so far to have moved so little. Amazing!


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