Today's College Student Has More Purchasing Power
October 2, 2000
To illustrate how material abundance increases for each generation under capitalism, W. Michael Cox, chief economist with the Federal Reserve Bank of Dallas, has compared the purchases three generations of entering college freshmen could make from earnings for a typical summer job.
- The college-bound summer-worker of 1950, earning the minimum wage, would accumulate just $282 -- enough to purchase a black-and-white television, a record player, a clock radio and a Brownie camera.
- By 1970, the minimum-wage-earning teen would wind up with $618 after 10 weeks of summer work -- sufficient to purchase a black-and-white TV, a stereo, an electronic adding machine, a used typewriter and a clock radio.
Now jump ahead to the year 2000 and a similar earner ends the summer with $2,000 -- and only a small tax bite. Here are the items that $2,000 would buy to furnish a dorm room:
- A personal computer at $509, a 19" color TV, a VCR with remote, a DVD player, a cordless telephone and a fax machine.
- Also throw in a stereo system, a small microwave oven and refrigerator, a toaster oven, a coffee/cappuccino maker, a blender, ironing board and iron, a hand-held vacuum, a table lamp and an alarm clock.
- And there would still be money left over for an electric toothbrush, a seat massager, a digital camera and a Palm IIIx -- with $10 remaining.
That is just from working at the minimum wage. Actually, 71 percent of America's youths ages 15-17 earn an hourly wage above the $5.15 federal minimum, according to Labor Department data.
Source: W. Michael Cox (Federal Reserve Bank of Dallas), "Capitalism's Many Benefits Create 'Luckiest Generation,'" Investor's Business Daily, October 2, 2000.
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