How can I take my current yearly wage of 28k and adjust it to say, the 1600's? (Or any time for that matter?) How rich was rich in today's dollars?

by spacedogg
sowser

There are a few ways we can adjust modern sums of money to estimate their value - back to a certain point in history, anyway. The most common and straight-forward of these is determining what your salary is worth in terms of its buying power; how much would you need to earn back then to afford the same things you buy today?

Your salary of $28,000 USD today would have the equivalent worth of about $1,060 in 1790 - that's based on the estimated inflation in the cost of essential goods since that time. So every $1 of income in 1790 is the equivalent to about $26.41 today, as a rough estimate, in terms of what you can buy with that money.

But determining how 'rich' you are is a bit more complicated than making a straightforward comparison like that - the economy of 1790 is very different to the economy of 1890, never-mind the economy of 2014. Although the relative worth of $1,060 is $28,000 today in terms of purchasing power, its social value is about the same as someone earning $1,260,000 (edit: $1.17million, not $1.26) today.

So earning your equivalent salary in 1790 would make you significantly richer in terms of your relative affluence than it does today, due to the difference in the quantity and distribution of wealth in the economy. In 1790, your salary would see you earning about 20 times as much as the average person's share of GDP (the value of everything the economy produces in one year); in contrast, today your salary is only worth about half the average person's share of GDP.

That also means that in terms of your relative wealth, your salary today is actually worth something closer to $25 in 1790 - quite a bit lower than $1,060! Someone earning $1,060 in 1790 is earning about the same amount of money as you today, but changes in the economy mean that someone earning $25 in 1790 is about as well-off as you are today, relative to the total value of the economy.

This website is an extremely useful resource, maintained by a panel of historians and economists, that allows you to roughly convert modern money into 'old' money on measures like this (some data sets only start at 1790).