Question

Your grandmother tells you that she earned $3.15 an hour at her summer job as a freight handler in 1964. Since then prices have risen 490%. In order to keep her purchasing power constant, what would her wage rate be today?

Answer 1

To maintain the purchasing power of a $3.15 wage from 1964 with prices having risen 490%, the current wage would need to be $18.59 per hour.

Step-by-step explanation:

The question at hand is a mathematics problem that involves understanding the effects of inflation on wages. Specifically, it asks for the calculation of a wage rate adjustment to maintain purchasing power given a specific increase in prices over time.

To find the wage rate today that would have the same purchasing power as $3.15 in 1964, given that prices have risen 490%, we would use the formula: Adjusted Wage = Original Wage × (1 + Percentage Increase). Hence, the adjusted wage rate would be $3.15 × (1 + 4.90) = $3.15 × 5.90 = $18.585. Therefore, to maintain the same purchasing power as $3.15 had in 1964, the wage rate today would need to be $18.59 per hour, when rounded to the nearest cent.