[Texas_Dawg]

With 6.5% inflation over 40 years $2018 becomes $26974. To be 2.5x as bad, inflation will only have to creep up to 8.6% for the 1960 salary of $2k to be worth $54k.

But that's really mental masturbation over compound interest. The real world is a lot different.

True, but the inflation rate is a terrible way to measure that because it does not account for substitution. A better way is via the CPI. Using the CPI inflation calculator you can see that $1 in 1960 was the equivalent of $6.08 in 2002. So whereas per capita take-home income is 12 times higher today, the dollar has only lost 6 times its value. (Again, not to mention all the amazing technologies in education, travel, entertainment, etc. that we have today that we didn't have then.)

[Tokhtamish]

A Nintendo today does not compensate for vastly more affordable housing then. When you adjust for the fact that housing costs as percentage of income were doubtless vastly lower in 1965, for the fact that a blue collar worker could buy a house that would only be within the reach of a white collar professional today, it is easy to see how real purchasing power was much greater then.

AND ON ONE PAYCHECK.

[Myrddin]

Compare the cost of some common goods. My parents house cost $22,000 in 1962. It would sell for $370,000 today. A basic Volkswagen Beetle sold for $2000 in 1966. It sells for $16,525 MSRP today. Gold was $35 per ounce in 1973 before the dollar went off the gold standard. It closed at $361 today. The dollar today is less valuable by a factor of 8 to 16 times compared to the late 60's and early 70's. If we just take the gold reference, our money is worth 10X less today. Gasoline was 29 cents/gallon for premium when I was in college. It is over $2.00 per gallon in my old neighborhood this week.

Take home income might be 12X higher by your figures, but is is nominally 10X less valuable depending on the specific item being purchased. For durable stuff like cars and homes, we haven't really changed much in the last 35 years.

[Myrddin]

Take your CPI calculator and plug in $2000 for a VW Beetle in 1966. The calculator claims equivalent buying power in 2003 would be just over $11,000. The car dealer isn't going to let you take that $16,525 2003 VW Beetle home for $11,000. The CPI calculator is pie in the sky BS.