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> In such a world, a full-time minimum wage worker would be earning $48,000 a year in the United States. I find it interesting to compare wages in terms of the

> In such a world, a full-time minimum wage worker would be earning $48,000 a year in the United States. I find it interesting to compare wages in terms of their value in gold. Gold has been used as money for millennia, so it lets us go back even further than we typically do with inflation data. Everyone always references Henry Ford's $5 a day wage in these discussions. $5 during that time was worth 1/4 oz of gold, so at 260 days a year, they were pulling in the US dollar value of 65 ounces of gold a year. You would need over $120,000 today to buy 65 ounces of gold. Sure beats the heck out of $48,000. If you buy the notion that wages should track productivity, it makes you wonder what they were doing in 1913 that made everybody so darn productive.

murderfs 6y ago
Why not try this with other commodities? Silver was used as currency for longer than gold, and was still legal tender in the time of Henry Ford. Let's see what happens if you do the same analysis with silver instead. Silver was 1/20 the price of gold back then and 1/80 of the price of gold today, so your $120,000 turns into $30,000. Whoops. Aluminum? $433. It turns out that comparing wages over time with an arbitrary natural resource is a terrible idea.
- tboyd47 6y ago
  Gold is obviously not just an "arbitrary natural resource." There's a reason why we say "gold standard" and not "silver standard," "aluminum standard," or even "dollar standard." Nevertheless, it was only a fun thought experiment (which is what most economic arguments boil down to).
  - murderfs 6y ago
    The "gold standard" just happened to be the last one to be abolished: it was only really predominant around the 1800s. Silver was by far the most prevalent metal used in currency for millenia, to the point where almost every single modern currency is named after a silver coin.

murderfs 6y ago

Why not try this with other commodities? Silver was used as currency for longer than gold, and was still legal tender in the time of Henry Ford. Let's see what happens if you do the same analysis with silver instead. Silver was 1/20 the price of gold back then and 1/80 of the price of gold today, so your $120,000 turns into $30,000. Whoops. Aluminum? $433. It turns out that comparing wages over time with an arbitrary natural resource is a terrible idea.

tboyd47 6y ago
Gold is obviously not just an "arbitrary natural resource." There's a reason why we say "gold standard" and not "silver standard," "aluminum standard," or even "dollar standard." Nevertheless, it was only a fun thought experiment (which is what most economic arguments boil down to).
- murderfs 6y ago
  The "gold standard" just happened to be the last one to be abolished: it was only really predominant around the 1800s. Silver was by far the most prevalent metal used in currency for millenia, to the point where almost every single modern currency is named after a silver coin.