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  • Perpetual Dickensian Poverty?

    December 21st, 2021
    history, money  [html]
    Several of my friends have been sharing screenshots of this Twitter post:

    Time for your annual reminder that, according to A Christmas Carol, Bob Cratchit makes 15 shillings a week. Adjusted for inflation, that's $530.27/wk, $27,574/yr, or $13.50/hr.

    Most Americans on minimum wage earn less than a Dickensian allegory for destitution.

      —Chris Thompson

    It's wrong, but it's wrong in an interesting way!

    A Christmas Carol came out in 1843. The Bank of England Inflation Calculator, which incredibly goes back to 1209, estimates £1 in 1843 is equivalent to £130 in 2020. Since there were 20 shillings to the pound, 15s/wk in 1843 makes £98/wk in 2020. Cratchit would have been working six days a week at perhaps ten hours a day, so we get £1.63/hr or $2.15/hr. The post gave $13.50/hr; where's the factor of six coming from?

    There are multiple ways to figure inflation. The most common one, and the one I use above, is purchasing power: what can you buy with your £? While I can't replicate Thompson's number exactly, I think he's instead using using labor value: how many hours of someone's time can you buy? 15s/wk in 1843 is, deflated by the cost of labor, £611/wk in 2020, or $807/wk. For a 60hr week that's $13.45/hr.

    The problem is, no matter how much richer we get, using the cost of labor to adjust worker pay for inflation will always show that workers are paid the same amount. It's saying "Cratchit was paid X% of a typical wage for 1843, which you can think of as if he were paid X% of a typical 2020 wage, which is $13.45/hr." This sort of adjustment makes sense if you're trying to understand the social position of the Cratchit family, but since what we care about here is their absolute level of poverty, purchasing power is the right measure.

    (Thanks to Marcus for pointing this out.)

    Comment via: facebook, lesswrong, hacker news

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