Compound Inflation Is Probably Higher Than You Think


Atrios wants the older generation to get it through their heads that kids today don’t exactly lead cushy lives:

I increasingly do think nominal illusion is part of it, as, say, $50,000 sounds like A LOT OF MONEY for a starting job for the older generation, but in 2014 it isn’t that much money.

Yes, yes, yes. If you’re my age, that sounds like a pretty good income for someone a few years out of college. But it’s nothing special. It’s the equivalent of $18,000 in 1980 dollars. If you’re part of an even older generation, think of it as the equivalent of about $6,000 in 1960 dollars.

This isn’t a poverty-level income or anything. But it’s not nearly as much as it sounds like if you’re just vaguely comparing it to what you made in your first job. What’s more, it’s not as if every 20-something college grad makes $50,000 either. Plenty of them make $35,000 or so, and that’s the equivalent of $12,000 in 1980 bucks. That’s what I made in my first job out of college, and although I was never in danger of starving or anything, I wasn’t exactly living like a king in the room I rented out from some friends.

People don’t always have a good sense of just how much inflation compounds to. But as a quick rule of thumb, prices have gone up 3x since 1980 and about 10x since 1950. Keep that in mind whenever you’re mentally comparing current prices and incomes with those from your early adulthood.

FACT:

Mother Jones was founded as a nonprofit in 1976 because we knew corporations and the wealthy wouldn't fund the type of hard-hitting journalism we set out to do.

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2019 demands.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate