Your Aug. 29 editorial says that, “adjusted for inflation, today’s high gasoline prices remain below those of a quarter-century ago.” This often-repeated statement is misleading for two reasons.
First, your statement is based on a worst-case reading of history. A quarter-century ago (1980), the U.S. was reeling from the impact of OPEC’s second oil embargo, which drove gasoline prices up almost overnight from about 75 cents a gallon to about $1.25 a gallon. Today, this amounts to a cost of approximately $3 per gallon when adjusted for inflation. Outside of that anomaly, the inflation-adjusted price for a gallon of gasoline remained, generally speaking, in the $1.25 to $1.75 range during the period 1986-2002. If we base our observations upon this longer period of time, we can see that oil is considerably more expensive today.
Second, the minimum hourly wage in 1980 was $3.10, which today is equivalent to $7.49 when adjusted for inflation. (I base my calculations upon an average yearly inflation rate of 3.59 percent, according to the Consumer Price Index.) This is above today’s $5.15 minimum hourly wage. The buying power of today’s minimum-wage worker is considerably less than it was in 1980, particularly when it comes to the price of gasoline. I suspect most people in our society have experienced a similar decline in their buying power.
