Nostalgia Isn’t What It Used To Be

The other day I read an editorial/article talking about the good old days of the early 1960s, where the author reminisced about how the middle class family could make it easily on wages of $10 an hour. At that point, I lost all patience, because no one in what I’d call the middle class was making $10 an hour back then.

In 1962, the minimum wage was $1.15/hour, equivalent to roughly $10/hour today, but a $10 an hour wage back then meant an annual income of $20,000 – equivalent to an annual income of $168,000 today. That summer, after my first year of college, I’d managed to get a job as a lifeguard at a commercial pool that paid $1.75 an hour, equivalent to $15.00 an hour in today’s dollars, in order to earn money for the next year of college expenses, and I knew I had a great summer job. I also worked every extra hour I could get, because there were no benefits, and no limits on overtime and no additional pay for overtime. Federal overtime regulations were phased in during the mid-1960s

In 1962, the average factory worker made around $2.50 an hour ($22 in 2019 dollars) or about $5,000 annually, equivalent to $42,000 today, not including any benefits. Auto workers made more, on average somewhere over $3.00 an hour for an annual wage of $6,000 – $51,000 or more in today’s dollars. And they had generous benefits in addition.

By 1965, I was an ensign in the U.S. Navy, married and making about $5,800 a year with quarters and subsistence allowances on top of basic pay. We lived in a rented one bedroom apartment in Chula Vista, California, and had one car. We didn’t go into debt, but we certainly didn’t save anything, nor did we splurge on luxuries, and we certainly didn’t eat out much. Now… today, to get the purchasing power of that $5,800, you’d have to make $46,000, and a great many costs of living have gone up more than the inflation rate. We paid $110 a month in rent, equivalent to $900 now, but the cost of renting a one bedroom apartment in the San Diego area now averages just under $2,000 a month.

The reason why I’m “reminiscing” isn’t because the good old days were good or bad. As is the case now, times were good for some people and not so good for an even larger number. But I also wanted to point out to those who haven’t really thought about it that a dollar doesn’t go near as far as it used to, and my calculations understate that inflation, because the CPI has been tweaked so that it doesn’t reflect the full costs of inflation, particularly in the costs of housing, medicine, and higher education… and too many older people who point out how little they made tend to forget just how much more one of those old-time dollars bought.

7 thoughts on “Nostalgia Isn’t What It Used To Be”

  1. Tom says:

    Very droll title.

    I could work and go to school in the 1950’s and not end up in debt nor depend heavily on my parents. That is not possible for college/university students today.

    Perhaps the reason the Fed has not raised the interest rates is that they realize that the CPI does not reflect the real inflation rate?

  2. Dave says:

    I remember those days well. A comic, a candy bar, an ice cream, and a cola all cost just 10 cents each and a paperback was usually 50 cents. I still have most of the ones I bought. I remember also working summer jobs in factories and warehouses for between $1.20 and $1.50 an hour to help pay for university. Money did seem to go much further back then than it does now.

  3. robert rehcra says:

    The title of this post is meta in the most hilarious of fashions and would make a nice t-shirt. Well done!

    -rehcra

  4. DArcherd says:

    I’m pretty sure I have seen that as a T-shirt. The original quote is attributed to the humorous writer Peter DeVries. [https://quoteinvestigator.com/2013/07/06/nostalgia-is-not/]

  5. Wine Guy says:

    It’s a good thing that CEO salaries have improved so much – they might have not been able to survive the inflation:

    Bloomberg, 2013:
    “Today Fortune 500 CEOs make 204 times regular workers on average, Bloomberg found. The ratio is up from 120-to-1 in 2000, 42-to-1 in 1980 and 20-to-1 in 1950. ”

    Meanwhile, rank and file workers eke out a different existence…

    Per US Census Data available at https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-people.html)

    1970 per capital yearly income in 2018 adjusted dollars was 18,386.

    2018 per capital yearly income was 36,080.

    A rise of 2x.

  6. John Prigent says:

    When I started work as a bank clerk in 1958 I was told that if I did well I might eventually become a branch manager on £1,000 a year. That was only three times my starting salary. Is it inflation in the modern managerial world, or simply greed?

    1. By definition… anything paid above an inflation-adjusted compensation has to be the result of something else, either a reward for superior performance, greed, or extortion… or possibly components of all three.

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