Today I read an old interview transcript from Henry Ford and was struck by a sentence in the first paragraph
At that time (1914) a good wage was two dollars and a half for a day of ten hours.
I looked up what $2.50 was in 2015 dollars using the BLS inflation calculator and it came to $59.66 or $5.96/hr for a 10 hour day. Calculating that out for an entire year of 260 working days yields a yearly income of $15,551 which is below the US poverty line for a 2 person household. A little bit of research yields an NBER report (PDF) on manufacturing wages from 1890-1914 which show the average daily wage in 1914 was just over $2, which confirms the assertion that $2.50/day was a good wage.
My question is how can this be true? Is it true that a 'good wage' a century ago was less than minimum wage today? Is the inflation calculator inaccurate? Is there something else that I haven't thought of?
Poverty is a relative concept, and what counts for poverty in rich country might be considered a good living in developing country. And USA wasn't a very rich country 100 years ago by today's standard.
According to Maddison Project data, USA in 1913 had GDP per capita of $5,300 (in 1990 dollars, adjusted for purchasing power parity(PPP)). It's what Albania, Sri Lanka and Dominican Republic had in 2010. Continuing with Albania example: according to Wikipedia, it has average yearly wage of around $4,800. With World Bank PPP conversion rate we can express this wage in US equivalent as just $12,000. So the answer is yes, for the level of economic development USA had in 1914, daily wage of $2.50 could be a very good wage.