Liberty in America
columnist: rtbohan

Topic: Economics
Low Paying Jobs and Worthless Money

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It is ridiculous for politicians to talk about bringing bacl high-paying jobs if the wages are paid in worthless money.

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by rtbohan
(Libertarian)
Thursday, March 6, 2008

In the summer of 1961, after my junior year in college, I took a summer job in Washington, D.C. on the legislative staff of a U.S. Senator. The job carried a salary of $50 per week, which, for a forty hour week, was 25% above minimum wage.

I found a room to rent in a private house next to George Washington University.  I no longer remember the rent, but since I paid it every week without grumbling or regret, I assume it was about 20-25% of my salary.  I used to walk (or occasionally take the bus) up Pennsylvania Avenue to capitol hill.  I did not have a car, a television or a computer at the time (the Senator did not have a computer in his office or at his house, either) but I had an AM radio for entertainment and information, and I bought several paperback books (at 25-50 cents each.  I also ate all my meals out, not at McDonald's or burger king, and occasionally at upscale restaurants.  I went to the movies at least once a week, and more than once a week I went to a neighborhood bar to watch television and drink beer (at 35  cents a bottle.  I also fed my cigarette habit  at 50 cents a pack.  I did grumble about the cigarettes, since they were 35 cents a pack in my home state.  At the end of the summer, I rode back to my University, sharing gasoline expenses with a classmate who lived in the D.C. area.  After twelve weeks in Washington, I had saved about two weeks of my salary, and used part of this to pay my fall semester tuition ($84 for a twelve credit hour schedule) at a major midwestern university.

I do not tell this true story out of  desire to relive my past or nostalgia for the 1960s.  I do that to raise a serious point about stabilizing the money supply

I visited a site on the history of the minimum wage and real wages ([link edited for length]) and found that the 1961 dollar had a purchasing power equivalent to $ 7.00 in 2007.  This means that, in order to have the same purchasing power today that I had in 1961, I would have to have a salary of $350 a week.  What is more, if we regard my salary as being 25% above minimum wage rather than the actual amount I was paid, I would be receiving only $260 a week. Another way of stating this is that the nominal minimum wage of $5.25 is actually 25% lower in purchasing power than the $1.00 wage of 1961.

What would that mean?  For one thing, we would have to deduct from my paycheck a much larger percentage for social security, and deduct the medicare premium, which did not exist in 1961.  I could probably find a room near GWU which I could rent for 20-25% of my gross pay, but I probably would not be able to rent it on a week to week basis as I did then.  Cigarettes in the D.C. would probably be about $5.00 a pack, and beer is about $1.00 a bottle in the grocery in a twelve pack, so I will not venture a guess as to what I would pay for my trips to the bar.  Paperback books are now about $3.00 at the cheapest.  All of this I could manage of $350 a week.  I might be a bit squeezed buying gas on the way home.  But the university I attended now has a minimum tuition of $3918 a semester, which means I would have to save my gross pay for more than eleven weeks to return to school. Even walking to work and eating only five meals a week (all in the subsidized Semate dining room) I don't think I could do that.

The lowered purchasing power of the dollar is, of course, partly due to population growth:  increased demand leads to higher prices, as do changes in products and in the economy as a whole. But the money system needs to be stabilized.  We must bring government spending and taxation under control and we must have a stable basis for our currency.  Otherwise real wages will continue to decline and we face a real danger to the economy.  People complain about government soaking the rich, the declining inflation of the currency and the decline of real wages is the government's way of soaking the poor.

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2008 rtbohan, all rights reserved.
Published: Thursday, March 6, 2008
Last modified: Tuesday, March 18, 2008

The views expressed in this article are those of rtbohan only and do not represent the views of Nolan Chart, LLC or its affiliates. rtbohan is solely responsible for the contents of this article and is not an employee or otherwise affiliated with Nolan Chart, LLC in his/her role as a columnist.

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