Are Kids Worse Off Today? Interesting Economics of What the Minimum Wage Will Buy
Folks are often surprised when I tell them that today’s young people have a really bright future. It turns out that they also have a really bright present. Mark Perry at the fabulous Carpe Diem blog has put together this comparison, based on earlier work by W. Michael Cox. (If you’re not reading Mark’s blog regularly, add to your list.)
In 1952, the minimum wage was $0.75 per hour (equivalent to $6.39 in today’s dollars), and a full-time summer job at 40 hours per week for 12 weeks would have generated $360 in total summer earnings (ignoring taxes). Using retail prices from a 1952 Sears Christmas Catalog, I found that a teenager then would have only been able to purchase the following 3 items with his or her entire pre-tax summer earnings of $360 working at the minimum wage (with $15 borrowed from the parents to cover the full $375 cost):
| Items Purchased in 1952 with Summer Wages @ $0.75 hour | |
|---|---|
| Royal Deluxe Portable Typewriter | $120 |
| Silvertone Portable Phonograph | $65 |
| Silvertone 17-inch TV | $190 |
| Total | $375 |
Now compare that to the items in the table below that could be purchased by a teenager or college student this year with his or her summer earnings of $3,480 (ignoring taxes) at the current minimum wage of $7.25 per hour:
| Items Purchased in 2011 with Summer Wages @ $7.25 hour | |
|---|---|
| Dell Inspiron Laptop | $450 |
| Apple iPod Touch | $210 |
| Apple iPhone 4G | $200 |
| Garmin GPS | $100 |
| Canon 14.1 Megapixel Digital Camera | $120 |
| HP Officejet Wireless Printer | $100 |
| Westinghouse 32 inch LCD HDTV | $330 |
| Sharp 3D Wi-Fi Ready Blu-Ray Player | $200 |
| Samsung 5.1-Channel Blu-ray Home Theater System | $260 |
| Sonicare Rechargable Power Toothbrush | $110 |
| Sony PlayStation 3 | $400 |
| Sony Clock Radio with Apple iPhone and iPod Dock | $40 |
| TiVo Premiere HD DVR – 45 hours | $149 |
| XM OnyX Sirius XM Satellite Radio Tuner | $47 |
| De’Longhi EC702 Espresso Machine | $150 |
| Kindle | $114 |
| Apple iPad | $500 |
| Total |
$3,480 |
www.businomics.com
“Dr. Bill Conerly is the consultant who connects the dots between the economy and business decisions. He holds a Ph.D. in economics from Duke University and was formerly Senior Vice President at First Interstate Bank.
Dr. Conerly is author of Businomics: From the Headlines to Your Bottomline—How to Profit in Any Economic Cycle (http://www.businomics.com/), which provides business leaders with a framework for understanding current economic news. He is co-author of Thinking Economics, a multi-media high school economics curriculum used in 24 states.”
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