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What is the Average salary??

Discussion in 'Off Topic But Still Civil' started by voiceofstl, Sep 10, 2020.

  1. voiceofstl

    voiceofstl Well-Known Member

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    This is a important topic when it comes to buying cars. I think that bread & butter cars (mid&large) should be priced from 20 to 30 depending on options.
    With the crazy economic times for the past 25 years its hard to a real figure on the so called average salary,
    Lest take a look at Bill Gates house hold.
    Bill Gates and his 9 servants.
    Gates = 1 billion a year
    9 servants = they each get paid 50,000 a year.
    The average salary in the Gates houshold is $100,040,000 a year.

    See the problem trying to get a real number.
     
  2. valiant67

    valiant67 ...

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    You can't estimate the average salary of a population of 330 million from a sample of 10.
    The federal government has a vast array of income stats available and they know how to figure this based on surveys. For example (median is a better example than average):
    Jobs & Income - USAFacts (at https://usafacts.org/data/topics/economy/jobs-and-income/ )

    You can buy several vehicles in the $20k-30k range. You just have to watch adding on options.
     
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  3. DC-93

    DC-93 Well-Known Member

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    :)It’s optional to increase your knowledge, invent something that folks want and make more money for yourself.

    This has always been the American way.

    :);):cool:
     
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  4. Bob Lincoln

    Bob Lincoln "CHECK FAULT CODES"
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    You're better off in a simple comparison such as you suggest, to look at the price of a car in terms of the minimum federal hourly wage over time. It's more reflective of how purchasing power has eroded for the lower and middle classes over the decades. For instance, in 1968, the minimum wage was $1.60 per hour. With inflation, that should be $11.91. But it's only $7.25 per hour. So many workers have lost up to 39% of their purchasing power over the last 52 years.
    If we take a basic mid-size car that cost, say, $3,200 back in 1968, and apply inflation, it's $23,825 today. But that was the price of a Chrysler 200 back around 2012, not today. Today we're looking at more like $30,000.
    $3,200 back in 1968 was 2,000 hours of minimum wage.
    $30,000 today is 4,138 hours of minimum wage. Or 2,000 hours at a wage of $15 per hour.
    $15 per hour is 26% more than what the adjusted minimum wage should be today.

    So you could say that you need to earn at least 26% more than the average hourly worker did back in 1968, to afford the same type of car. Or work twice as many hours.
    The fact that most loans are 5-7 years now, bears that out.
     
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  5. Doug D

    Doug D Virginia Gentleman

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    Salary is not the only factor. One thing that can be hard to figure in is expenses. Most people tend to spend almost all (sometimes more) than they earn leaving very little for car purchasing (loan payments).

    Bob is correct. Salaries have not kept up with inflation over time and the collective purchasing power of most working people has declined.
     
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  6. DC-93

    DC-93 Well-Known Member

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    You’d have to compare cars with the same equipment.

    Strip all the stuff people need today!!

    And government requirements!!

    It would be more apples to apples.
     
  7. Bob Lincoln

    Bob Lincoln "CHECK FAULT CODES"
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    No, because you really can't buy stripped down cars these days. Not unless you special-order. It's appropriate to compare what's on the lot.
    And many of the extras and developments that add to cost are mandated by law, such as backup cameras, safety interlocks, crash protection.
     
  8. AllanC

    AllanC Well-Known Member

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    The social security administration develops a chart with annual average wage for all workers. It is used to adjust forward for inflation your actual wages earned in prior years and equates those wages to today's wages. Scroll to the average wage index.

    National Average Wage Index (at https://www.ssa.gov/oact/cola/AWI.html )

    Today's costs for certain items are much more disproportionately higher than 20 - 30 - 40 years ago. This would include housing, medical care, and child care. Energy costs are much higher today than in the past but not necessarily for the crude oil component of energy. Depending upon your viewing point in time, oil costs less than at previous times. Over time environmental costs / regulation have increased overall energy costs.

    Crude Oil Prices - 70 Year Historical Chart (at https://www.macrotrends.net/1369/crude-oil-price-history-chart )
     
  9. voiceofstl

    voiceofstl Well-Known Member

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    Baseing your math on minimum wage is not releasict . A minimum wage worker could not buy a new car in 1968, just like now.
     
  10. Ryan

    Staff Member Level III Supporter

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    A Dodge Charger Hellcat has 717 horsepower. A Dodge Charger Hellcat Redeye has 797 horsepower. Therefore, based on those two vehicles, the average horsepower for a Dodge is 757.

    See the problem in using small, unrepresentative samples?

    This may have some of the info you're looking for: https://www.thestreet.com/personal-finance/average-income-in-us-14852178
     
    #10 Ryan, Sep 10, 2020
    Last edited: Sep 10, 2020
  11. Bob Lincoln

    Bob Lincoln "CHECK FAULT CODES"
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    Well, that's really not true. As I said, it could take 2000 hours of labor back then (a full year's pay). Many people could buy a car and finance it back then on low wages. But as I calculated, it would take 4100 hours today to do the same. So dealers and banks finance the purchase out to 7 years.
     
  12. page2171

    page2171 Well-Known Member

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    The problem with basing it of the minimum wage is that a small percentage of the labor force actually gets paid minimum wage. Roughly 2% of hourly wage earners get paid minimum wage.
     
  13. Bob Lincoln

    Bob Lincoln "CHECK FAULT CODES"
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    And what percentage was it in 1968? If it was similar, it IS a fair comparison. It's 542,000 workers today.
    But if you prefer, we could look at CEO salaries and how many times more they are than the average worker, in 1968 and in 2020.
     
  14. Bob Lincoln

    Bob Lincoln "CHECK FAULT CODES"
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    "The percentage of hourly paid workers earning the prevailing federal minimum wage or less declined from 2.7 percent in 2016 to 2.3 percent in 2017. This remains well below the percentage of 13.4 recorded in 1979, when data were first collected on a regular basis."
    Characteristics of minimum wage workers, 2017 : BLS Reports: U.S. Bureau of Labor Statistics (at https://www.bls.gov/opub/reports/minimum-wage/2017/home.htm#:~:text=The%20percentage%20of%20hourly%20paid,collected%20on%20a%20regular%20basis ).

    Looks like it was significant in 1968.
     
  15. page2171

    page2171 Well-Known Member

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    Why look at the extremes? A small percentage of Americans falls into either the minimum wage earners category or the CEO category. The vast majority of Americans fall somewhere in between.
     
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  16. voiceofstl

    voiceofstl Well-Known Member

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    I looked at the government site for ave wages. Not as bad as I thought. in 1969/70 it was $6000 with a new car around 3 grand, roughly half of the yearly salary. In 2020 its $52,000 and a new mid size toughly is 25 grand about half the yearly salary just like in 1969.
     
  17. Doug D

    Doug D Virginia Gentleman

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    Not many businesses pay the federal minimum wage. At least around here. The local McDonald's starting wage is $9-$10/hour and Walmart typically starts new employees (depending on experience) at $11+/hour.

    My Dad worked for IBM as an thermal engineer back then. His salary when he left in the mid-70's was $13,000. In '78-'79 I started my first job at $2.65/hour working in the fields of a local nursery. Around that time I purchased my first car, a 1968 Camaro w/327 V8. It originally stickered for ~$2800 and in '79 I bought it for $1,000.
     
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  18. valiant67

    valiant67 ...

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    29 or so states have a minimum wage law which sets a minimum wage higher than the federal law.
     
  19. AC TC

    AC TC Well-Known Member

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    Its not so easy as to say how much a car costs vs vages.
    - the overall cost perspective is equally important as is the social security you feel.
    Cost of healthcare, school, housing, food and so all compete with the car and the will to spend is largerly tied to social security.
     
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  20. Bob Lincoln

    Bob Lincoln "CHECK FAULT CODES"
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    Because it's impossible to compare data from 1968 (non-existent) with 2020, as far as range and proportion of salaries in the population. As someone said, compare apples to apples.

    However, the most telling indicator is how many loans are now 5-7 years, vs the typical 3-4 years back then. It's more of a hardship to buy a new car now.
     

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