Mark Twain has a great chapter on the inflation of wages being ofset by increasing cost of living, in his classic book "Connecticut Yankee in King Arthur's Court".
For those unfamiliar with the book, the basic storyline follows a modern day man who wakes up in medieval times and has to deal with the boorish mentality and the backward practices, and he works to combat the injustices and improve life for people then. In a chapter called "Sixth Century Political Economy", the protagonist engages is a debate with a local fool who is convinced that his townspeople are much luckier because their wages are much higher than people elsewhere. The protagonist tries to portray that his cost of living is much higher, but the foolish man couldn't comprehend.
Here's an excerpt. It's worth reading the whole thing, but I know that most people today don't have the patience to read a full chapter of Twain's writing.
From Twain:
“…Now I reckon you understand that 'high wages' and 'low wages' are phrases that don't mean anything in the world until you find out which of them will buy the most!”
It was a crusher.
But, alas! it didn’t crush. No, I had to give it up.
What those people valued was high wages; it didn’t seem to be a matter of any consequence to them whether the high wages would buy anything or not. They stood for “protection,” and swore by it, which was reasonable enough, because interested parties had gulled them into the notion that it was protection which had created their high wages. I proved to them that in a quarter of a century their wages had advanced but thirty percent, while the cost of living had gone up one hundred; and that with us, in a shorter time, wages had advanced forty percent, while the cost of living had gone steadily down. But it didn’t do any good. Nothing could unseat their strange beliefs.
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