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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

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.

eru 7y ago
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.
bencoder 7y ago
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-inflation-rate-it-would-crash-the-economy-2016-8?r=US&IR=T https://www.businessinsider.com/if-people-knew-the-actual-in...
- eru 7y ago
  Serious economists mostly suspect that the CPI overstates inflation. See eg https://www.schroders.com/en/sysglobalassets/digital/insights/pdfs/2016/ih5_is-inflation-overstated.pdf 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.)
luckylion 7y ago
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.
- oblio 7y ago
  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.
  - luckylion 7y ago
    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.
sarbaz 7y ago
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.

eru 7y ago

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.

bencoder 7y ago

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-inflation-rate-it-would-crash-the-economy-2016-8?r=US&IR=T https://www.businessinsider.com/if-people-knew-the-actual-in...

eru 7y ago
Serious economists mostly suspect that the CPI overstates inflation. See eg https://www.schroders.com/en/sysglobalassets/digital/insights/pdfs/2016/ih5_is-inflation-overstated.pdf 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.)

luckylion 7y ago

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.

oblio 7y ago
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.
- luckylion 7y ago
  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.

sarbaz 7y ago

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.