Why Inflation Matters
January 29, 2022 | by V. Henry Astarjian | Posted in Blog
A 1950s American musical may seem an odd place to look for clues about inflation and its effects on purchasing power, yet this pop culture comparison shows how dramatically things have changed in less than a lifetime, and why having investments that stay ahead of inflation matters.
In the iconic 1957 movie, The Pajama Game, unionized workers on strike at a pajama factory are offered a 7½ cent an hour pay increase to settle their labor dispute with management. At first the workers scoff at the deal, complaining that “7½ cents doesn’t buy a heck of a lot! 7½ cents doesn’t mean a thing!”
But when union leaders point out that the accumulated wealth from a few pennies per hour can eventually allow workers to afford some of the middle class luxuries of the day, their scoffing turns to jubilation.
The leaders highlight that after 5 years, those hourly 7½ cents, with overtime, grow to $852.74, allowing workers to afford an automatic washing machine, carpeting for the living room, a year’s supply of gasoline, a vacuum cleaner, and a 40 inch television set. And after 10 years, their ac-cumulated $1,705.48 allows each worker to buy a trip to France “across the seas”, a foreign car, a motor boat, water skis, and a ping pong set with paddles made of gold.
At a time when the average hourly wage in America was just $0.75, a 7½ cent pay rise could have made all of that possible.
If the learners fail to fulfill these two pre-requisites, visit for more cialis 5 mg then they have to wait till they reach 17 years of age for their registered drivers’ license. Online purchases of such products do not require a prescription by a certified chemist, thus enabling a fast and discover my cute-n-tiny.com viagra prescription easy ordering process. Cheap Kamagra 100mg with discount doses changes can be done as cialis samples Check This Out considering the present health of the person. The reason why order generic cialis cute-n-tiny.com endometriosis can lead to infertility is the kind of food that people are eating nowadays.Today, only a fraction of those 1950s middle class “luxuries” can be bought with those 5 and 10 year sums. Since 1957 inflation has eroded purchasing power by a total of 889%, or an average of approximately 3.5% per year, meaning that the same worker today would need to earn about $7.50 per hour to have the same purchasing power. By contrast, in the last year alone purchasing power has declined by 7% year-over-year, or double the average rate of the past 64 years.
Keeping up with inflation is a worthy investment goal, but outpacing it over time is a better one. A portfolio of well selected common stocks can be up to the task. Ultimately, investing to exceed inflation allows us to better afford the things we value most in our future, perhaps a comfortable retirement, a new home, education for our children, charitable giving, cultural projects, and even that grand trip to France across the seas!