Thursday, February 10, 2011

One Man's Penny is Another Man's Fortune

Today, I was thinking about how the value of money is different for each person. While things that people buy stay the same in actual dollar value, their costs change according to each person's earnings. Meaning, a gallon of gas to the average Joe costs a lot more than it does for a wealthy person.

The Federal minimum wage is currently $7.25/hr. If you have a job, figure out how your hourly earnings compare with this. Say for instance, that you make $14.50/hr. Now go about your day but anytime that you have to buy anything, multiply the cost by two. Want to go to a movie? $20.00. Want a five dollar footlong? $10.00. Pay a $1500.00 mortgage? Now it's $3,000. Gallon of gas? $6.00

If you make $21.75/hr, multiply everything by three. Movie? $30.00. Five dollar footlong? $15.00. Mortgage $4,500. Gas? $9.00.

It's an interesting perspective.

Likewise, if you currently are making minimum wage, you can figure out other wage rates and divide those to see things from someone else's perspective. If you know someone who makes five times more than you then to them a five dollar footlong costs one of your dollars. See?

Now let's take someone who makes $250,000 per year. That was the cut-off for proposed taxation changes, yes? Well, a full-time minimum wage worker makes $16,640 per year. Roughly 15 times less.

So to "Joe Joe 250 Grand" a five dollar footlong costs 33 cents in "Louise Minimum Wage" dollars. A gallon of gas? 20 cents. Pretty nice.

Let's look at some extremes:

President Barak Obama: $5,505,509 in 2009 (330 times minimum wage)
Five dollar footlong = $0.015 in minimum wage money.
Gallon of gas = $0.009 in minimum wage money.

Glenn Beck: $32,000,000 in 2009 (1923 times minimum wage)
Five dollar footlong = $0.0026 in minimum wage money.
Gallon of gas = $0.0015 in minimum wage money.

Oprah Winfrey: $315,000,000 in 2009 (18,930 times minimum wage)
Five dollar footlong = $0.00026 in minimum wage money.
Gallon of gas = $0.00015 in minimum wage money.
$1500 Mortgage = $.079 in minimum wage money.
$300,000 House = $15.84 in minimum wage money.

Wouldn't it be easy to get around if a gallon of gas cost for a tenthousandth of a penny?
And a car cost a dollar fifty?

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