Inflation — or rather some of the effects of inflation, like rising prices — is a common theme among gold and silver enthusiasts.
We often point to data and trends that show an increase in prices as a reason to invest in one or both metals.
If you took a minute to go through our blog archives, you would come across several stories comparing the purchasing power of currency from the mid-1960s to today. (We included some links at the bottom of the page.)
What About Wages?
The decline in worker wages over the years is a serious issue facing contemporary America.
There’s no disputing the dollar has lost purchasing power and wages have not kept up — a major dilemma for the vast majority of working American families, and even more affluent professionals.
In a recent piece in Forbes written by Keith Weiner, president of the Gold Standard Institute, he points out that, if we look at the story of wages and prices in terms of the dollar, it isn’t pretty.
According to data on prices and wages from the Bureau of Labor Statistics, minimum wage earners have to work 12 percent longer to afford a gallon of milk today than they did in 1965. And a higher-paid senior engineer (or other professional) has to work twice as long to buy a gallon of gas.
Gains in productivity and efficiency have lowered production costs in many cases, but everyone from the local 7-Eleven clerk to the accountant down the street has to work longer to buy the same things.
The Plot Thickens: Comparing Prices and Wages to Gold
Since an ounce of gold today is the same ounce of gold it was in 1965, it’s possible to measure prices and wages on an absolute scale.
In fact, it’s simple to convert the price of something into gold: If a plane ticket to Hawaii costs $1000, and the price of 1 oz of gold costs roughly $1350, we divide the price of the ticket by the price of gold to arrive at 0.741 — or roughly ¾ of an ounce of gold for one plane ticket.
Taking the minimum wage from 1965 and converting it into the price of gold at the time, we find that an average minimum wage worker earned 71 ounces of gold per year.
Yet today, the skilled professional (a Senior Engineer in Weiner’s example) earns an average of 63 ounces of gold per year.
Go ahead. Wipe your eyes and take a second look. You read that right. Priced in gold, today’s Senior Engineer makes less than a minimum wage worker did in 1965.
When we get down to brass tacks, compared to gold, wages fell an eye-popping 87 percent between 1965 and 2011!
Put in another way, the average worker today makes only 10 percent of what the same worker earned in 1965, when calculated in gold.
(Of course, sometimes we barely seem to notice, thanks to lower costs for items like refrigerators, TVs and other goods. But when we factor in staples like housing, food, energy and healthcare, any savings are virtually wiped out.)
We think Keith Weiner’s comparison sheds light on why investing in gold bullion is so important — and why you should start investing today.
What Do You Think?
In the last 10 years, have your wages kept up with rising prices?
Join the conversation. Leave us a comment below, or visit us on Facebook and Twitter today.
Other Posts You Might Like:
Can I Really Drive from Atlanta to Orlando for 2-Ounces of Silver?
The Amazing Purchasing Power of Silver – 1964 vs. Today
Oregon Gas Station Accepting 90% Junk Silver as Payment
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