Christopher Saikes
Here is a challenge, “Would You Be Better Off In 1970?” The debate over minimum wage is contentious, to say the least. Some economists argue that the minimum wage should be $16 an hour, but is that really true? A lot of numbers get tossed around, but what do they represent? How can the average person make an informed decision when the numbers we are to compare are so far apart?
I didn’t choose 1970 by mistake, I chose that year because you can divide 2013 economic numbers by ten and get a result that is close to 1970 numbers. So my challenge is this; “Would you be better off in 1970 or in 2013?” Lets start with the median income in 1970, it was $7,559.00 Doesn’t seem like much, does it? In 2012, the median income was $51,017, (the 2013 numbers haven’t been published yet.) The economic experts will throw percentages at us, but that is meaningless out of context. So here is how I approached this problem.
The average house in 1970 cost about $27,000.00, the one my family lived in cost $8,000.00 in 1970. The average home in 2013 was about $270,000.00. Do you see why I chose 1970? Divide by ten and you have a price equivalency… Why did I do it this way? Inflation numbers are useless if you can’t see the real costs of living. Another parallel to 1970 is the price of gas. In 1970 that was about $0.36 a gallon and in 2013, about $3.49 a gallon. How about that car that get’s you to work? In 1970 that would set you back a whopping $3,500.00, while in 2013 sets you back $31,252.00. We are talking average, not the least expensive but the average costs, so you can see that at our chosen date, cars are a little cheaper. Before you cheer, did you notice that salary?
Now we can really compare our real life purchasing power, not with milk and eggs but what is most important to all of us, House, Car, and the Gas to get to work:
1970
Minimum Wage: $1.60hr = $3,328.00yr
Median Income: $3.64hr = $7,559.00yr
Average Savings Balance: $970.00 [abt. 12%]
Interest On Savings: ~10%
Return On Savings: ~ $97.00
Car: $3,500.00
Gas: $0.36
New home: $26,600.00
Federal debt: $380.9 billion
Dow-Jones: High: 842
2013
Minimum Wage: $7.25hr = $15,080yr
Median Income: $24.52 hr = $51,000.00yr
Average Savings Balance: $5,900.00
Interest On Savings: ~ 0.050%
Return On Savings: ~ $2.95
Car: $31,252.00
Gas: $3.49
New home: $270,000.00
Federal debt: $17,000 billion
Dow-Jones. High: 16,429
Divide 2013 by Ten
Minimum Wage: $0.73hr = $1,518yr
Median Income: $2.45hr = $5,100.00yr
Average Savings Balance: $590.00
Interest On Savings: 0.0150%
Return On Savings: ~ $0.30
Car: $3,125.00
Gas: $0.35
New home: $27,000.00
Federal debt: $1,700 billion
Dow-Jones. High: 1,643
1970 2013
Income: $7,559.00 yr $5,100.00 yr
Home: $26,600.00 $27,000.00
Car: $3,500.00 $3,100.00
So, how well off are you? Would You Be Better Off In 1970? If you earned the average salary, bought the average house, drove the average car, then here is how you stand:
1970 2013
Income: $7,559.00 yr $5,100.00 yr
Home: $26,600.00 $27,000.00
Car: $3,500.00 $3,100.00
Savings: $970.00 $590.00
Interest: $97.00 $0.30
Now, last question. “What party did you say that you vote for?” “You say that you’re against unions?” “You also believe the GOP that minimum wages shouldn’t be raised?” “Really?”
Our economy runs off of consumer spending. The more money that working people have to spend, the more money there is in the economy. Higher demands for products = higher corporate profits = greater need for workers to make and sell more products = more people with jobs = more money in the economy….. In other words; “Trickle Up” Economics… However, if you vote GOP you vote for “Trickle Down” economics and as I just demonstrated, that model doesn’t work and I have history to back me up.
Cheers! And Please Vote For The Party That Supports REAL Jobs, not the GOP, they only support Corporate Tax Breaks.
Sources:
http://www.davemanuel.com/median-household-income.php
http://www.1970sflashback.com/1970/economy.asp
http://money.cnn.com/2013/09/17/news/economy/poverty-income/
http://www.usatoday.com/story/money/cars/2013/09/04/record-price-new-car-august/2761341/
http://en.wikipedia.org/wiki/Interest_rate