Working from seven to eleven every night

Really makes life a drag:

On the one hand there’s a good chance this is just the standard conscious right wing bullshit. On the other, we really do have a problem in this culture with people — even sometimes highly educated, intellectually sophisticated people — being unable to make the necessary mental adjustments when dealing with the significance of nominal dollar amounts over long periods of time.

One reason for this, historically speaking, is that until about 70 years ago, periods of inflation alternated with bouts of deflation, so that, for example, the nominal cost of a loaf of bread in George Washington’s time was about the same as the nominal cost when FDR was president. (Obviously there are all sorts of problems comparing prices over long periods of time, among which fluctuation in nominal prices is only one).

Only in the 1950s did continual long term inflation, unaffected by deflation, become a feature of developed economies, as central banks and other policy makers made it an imperative to avoid deflation at all costs. (Piketty talks about some of the cultural as well as economic consequences of this in Capital in the 21st Century).

Even though the 1950s were a long time ago now, the culture hasn’t fully adjusted to the fact that, under modern conditions, nominal prices become increasingly deceptive over time.

For example, when I pointed out a few days ago that Harry Truman was in fact absolutely loaded when he was wheedling munificent pension benefits out of Congress by poor mouthing his supposedly difficult financial circumstances, one commentator here cited Truman’s tax returns to argue that Truman wasn’t actually making that much money in the years after he left the White House, when he was lobbying Congress to help a brother out. (Truman was president until January 1953, and the Former Presidents Act became law in August of 1958).

In fact those returns show Truman made millions of dollars over these same years when you merely adjust the figures in them for inflation — and Truman was making much more when those figures are adjusted for relative incomes at the time.

This problem is compounded because of selective memory as well: somehow people manage to remember they were making “only” six dollars per hour, but they don’t remember that in-state tuition at the time was $800 per year.

Another related problem is that pundits quote minimum wage figures in the context of this kind of analysis:

A $6 an hour wage in 1978, adjusted to modern inflation rates, would equal $24.07 an hour in 2021. A person making $24.07 an hour, working 40 hours a week and 52 weeks a year would earn over $50,000 annually before taxes.

A person working the same hours and earning the Democratic-proposed wage of $15 an hour would earn just over $31,200 a year, before taxes. A person working the same hours and earning the current national minimum wage of $7.25 an hour would earn just over $15,080 a year, before taxes. The Department of Health and Human Services lists the poverty line for a single-person household in the contiguous 48 states and District of Columbia is $12,880 per year.

This actually understates the problem massively, because the working assumption here — a very common one — is that a low-wage worker can just just “choose” to rack up 2000 hours of wages in a calendar year, when the whole point of just in time staffing policies and the like is to make it difficult to impossible for workers to do this, so that employers can dodge the costs associated with providing full-time employment.

I remember a few years ago, when I was pointing out how insane the cost of going to law school had become, I quoted what I paid to go to the University of Michigan Law School in the mid-late 1980s in inflation-adjusted terms, and an especially thoughtful and perceptive LGM commenter — this isn’t sarcasm, he really is — corrected me, pointing out that surely I was citing nominal rather than inflation-adjusted dollar figures. That’s how quite literally unbelievable the cost increase in higher education has become. (The most notable fact in this standard-issue NYT moral panic piece about Kids Today at Smith College is that the non-discounted annual cost of attendance is $78,000).

I don’t know what a good solution to this problem is, but it certainly exists, and it often gets in the way of rational policy discussion.