alt Hacker News> They also found that, if inflation adjusted, you get could, in most categories, the same or better quality for the same price.
I argue you must evaluate against median purchasing power; it accounts for inflation and (lack of) wage increases.
Comments from your linked video:
> The problem with the “adjusted for inflation” argument is that it does not factor in buying power. The increase in wages has risen at out half the rate of inflation, so sure; $20 in 1975 would be $124 today, but the minimum wage in 1975 was $2.10 an hour as opposed to $7.25 today, giving you half the buying power you had 50 years ago.
> healthcare, housing, and education ... have increased by an insane margin leaving people with less money once that has been paid for (if at all).
> It's even worse when you consider that people are paying 45-55% of their monthly income on a house that cost 20x more than it would have in 1975. Your buying power is fucked from all sides.
Replies
Median purchasing power has increased by 12% since 1979 (data doesn't go back to 1975) https://fred.stlouisfed.org/series/LES1252881600Q
This isn't true for median purchasing power. You're looking at the federal minimum wage, not the median. Only about 1% of hourly workers earn $7.25 or less.
Median earnings were $48,070 in 1975, measured in 2024 dollars, and $51,370 in 2024.
I'm really frustrated by inflation numbers because there doesn't seem to be a metric that makes sense.
CPI ignores the reality people feel (and swaps in cheaper items that aren't necessarily on par with the original to keep the number lower), gold isn't really a 1:1 with purchasing power...there must be some sort of useful composite metric that merges multiple data points over time like rental/house prices, CPI market basket, dollar vs hard assets like gold to come up with a more accurate number.
Purchasing power is probably a better metric in a vacuum, but it's hard to analyze accurately
For example, the comment you're citing is claiming that because minimum wage has increased only 3x over the same period of time in which inflation has eroded the relative value of a dollar by 6x, that wages overall have increased at half the rate of inflation. But minimum wage is a measurement of a minimum, while inflation is a measurement of /average/ price increase so they can't be compared 1:1 in this way.
The housing argument also seems odd. In New Zealand (where I'm from -- I'm not familiar with the US' housing market, so the commenter could be right about that geo!) house prices have increased by far more than 20x since the 70s, but the houses available are of substantially higher quality due to improved regulations (e.g. all newer homes are subject to healthy homes rules which mandate insulation) so just comparing inflation-adjusted home prices vs income doesn't tell the full story
(Aside from that, a whole heap of items like food, electronics, transportation are all both far cheaper AND higher quality today than in the 70s)