Friday, 8 August 2014

How many miles can you drive on one hour's wages?

The graph below comes from Ed Dolan's blog, Ed Dolan's Econ Blog.

And a few details on the calculations,
I was able to put together 50 years of pretty consistent data for the key variables, with only a little stitching together to make the starting points and end points fit. The series I used were:

  • Nominal wage in dollars per hour for production and nonsupervisory workers.
  • Average fuel economy of cars on the road, old and new, based on a series from the Department of Transportation for 1980 to 2012 and estimates from various sources to fill in the earlier years.
  • Average gasoline prices from the Bureau of Labor Statistics and Department of Energy.

For years before 1964, data are harder to come by. Instead of trying to put together a complete series, I decided to go with spot estimates for three iconic cars of yore: A 1919 Model T (About 17 MPG), a 1935 Ford V-8 (about 15 MPG), and a larger 1950 Ford V-8, about 14 MPG.

To calculate the miles that you could drive per hour worked (MPHW), just divide your wage by the price you pay for gasoline and multiply by your car’s fuel efficiency in miles per gallon.

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