Q: While watching a 1970 sitcom, I listened to three people discussing salaries. When one of the characters said he made $30,000, his new girlfriend was ecstatic! I thought to myself, 1970 wasn’t that long ago and that doesn’t strike me as a great salary, even for that time period. So I went online to an inflation calculator website and it said that $30,000 in 1970 would be equivalent to $192,000 in today’s dollars! Wow, is the rate of inflation that great or is that an error? If so, how long before we’re pushing around wheelbarrows of cash, similar to post-WWI Germany just to buy a loaf of bread?
C.B., of Edwardsville
A: Trust me, I would have been dancing on the ceiling had I started at the BND in 1974 with a $30,000 salary. So, there’s no mistake. In fact, the calculator you found may have been a bit too conservative.
I hunted down a table that listed the Bureau of Labor Statistics’ annual inflation rates. Then, just for fun, I started with $1 and multiplied it by each of those rates through 2016. The result? For every dollar you earned in January 1970, you would have to earn $6.52 today just to keep pace. That means a $30,000 salary in 1970 would be equivalent to just under $196,000 today, according to this particular table.
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You sound stunned, but you really shouldn’t be, because I think you’re forgetting two key points:
First, you’re probably trying hard to forget those horrible years of hyperinflation during Jimmy Carter’s administration. People saw prices skyrocket as inflation hit 11.3 percent in 1979, peaked at 13.5 percent in 1980 and then eased down to 10.3 percent as Ronald Reagan took over in 1981. If I remember correctly, I was able to invest in money markets that were paying 12 percent and more, but, as you can see, I still was barely holding my own. So coupled with the 11 percent inflation in 1974 and 9 percent in ’75, you can see where much of the jump came from.
The other thing you have to remember is that magical mathematical process known as compounding. That’s how your bank CDs could add up so quickly (well, at least in the days when they were earning more than a fraction of a percent). You not only earn money on the principal, but also on the ever-increasing pile of interest (presuming, of course, that you don’t withdraw it).
But what is a good thing for savings winds up as a bad thing for inflation. For example, in 1970, I multiplied the $1 by 5.7 percent to arrive at $1.057. But in 1971, I had to multiply not the dollar but the full $1.057 by the 4.4-percent inflation rate that year to give me a true picture of how much my 1970 dollar had been devalued after two years. You see where this is going? Even by 1984, I was already up to near $3.
Fortunately, since 1992, we’ve never experienced annual inflation at 4 percent or more. In fact, during the lousy economy in 2009, prices dipped four-tenths of a percent. So while prices and wages likely will continue to rise, we will not (barring a catastrophe) experience the same special circumstances that saw the German mark’s value vis-à-vis the dollar shoot from about 10 during the Great War to 4.2 trillion by November 1923. However, if you want to see what it’s like, you can find pictures of 50-trillion (billion in German nomenclature) mark bills on the “Hyperinflation in the Weimar Republic” Wikipedia page.
The good doctor: Many thanks for the outpouring of responses I received to my recent column on Dr. Kilian Fritsch, who had battled through a childhood case of polio to become one of the most respected orthopedic surgeons in the bistate area. From the heartfelt calls and emails, I can only imagine the number of families he touched and lives he enhanced.
John Catlett, of Granite City, for example, remembers the day the good doctor literally used a pair of pliers to pull out a stainless steel rod that had been inserted to fuse a joint in the fourth-grader’s big toe.
“The most excruciating pain followed and, in defense, I put my foot into this little man’s stomach and shoved him into the wall,” Catlett wrote. “As soon as the pain subsided, I began to apologize profusely, but not one time did he get angry. Because of him, I was able to play sports and enjoy those times. He was the best of us.”
Likewise, Abner Norman, of Lebanon, recalled when six tons of steel “fell in my lap” while working in Fort Worth, Texas, during the late ’60s.
“I spent about nine months flat on my back down in Texas,” he wrote. “My mother had me transported back here, and Dr. Fritsch told me that I would be out of bed in one day. True to his word, I was. I will be forever grateful to Dr. Fritsch.”
Perhaps Lisa Roth summed it up best.
“I was a patient of his when I was a young girl. He was kind, gentle and such a happy and upbeat man. I believe he always put my parents at ease. Thank you for shedding light on such a great man!”
The Bayer aspirin folks once owned the trademark for what is today one of the most common and addictive illegal drugs in the world. What was it?
Answer to Friday’s trivia: On Oct. 10, 1910, newspaper magnate William Randolph Hearst offered a challenge to all those magnificent men in their flying machines: He would give $50,000 (that’s equivalent to $1.3 million today) to the first person who could fly coast to coast in less than 30 days.
Pittsburgh native Calbraith Perry “C.P.” Rodgers took on the dare. Persuading J. Ogden Armour, the meatpacking tycoon, to sponsor him, the 32-year-old Rodgers took off from Sheepshead Bay, N.Y., on Sept. 17, 1911, in a Wright Model EX named the Vin Fiz (for Armour’s grape soda). He landed in Chicago, the only required stop, on Oct. 8.
To avoid the Rocky Mountains, Rodgers then headed south, finally landing in Tournament Park in Pasadena, Calif., on Nov. 5 before a crowd of 20,000. He had missed the prize deadline by 19 days, but he had put his name in the history books as the first man known to have completed a transcontinental flight.
Two postscripts: Rodgers had little time to enjoy his notoriety: He was killed five months later when, on an exhibition flight over Long Beach, he flew into a flock of birds and crashed into the Pacific Ocean. In the meantime, Hearst’s prize of $50,000 had expired in November 1911 without a winner.