The Good Ol’ Days Weren’t: Memes are for Morons

Consider this meme. What does it mean?

What it actually shows is things were actually MORE expensive in 1971 which is not how nostalgia driven folk tend to take it. After all it was “the good ol’ days.” These little comparisons never take inflation and income changes into account and lead to faulty economic conclusions. The real measure is never a price for price comparison. To do it accurately you have take the average hourly wage and figure out how many hours per day did the average person have to work in order to earn those items.

Take the eggs as an example. In 1971 the average national wage was $6947, according to Social Security records. The claim it is over $10000 is not footnoted so I can’t tell where they got their figure. Hourly wages then were about $3.34 per hour. The eggs in ‘71 took 8.1 minutes of labor for the average worker to buy. The current average wage is $50,321 or $24.19 per hour. I buy eggs regularly and I typically buy 18 for $1.89 when I get two containers at a time. That’s about $1.20 per dozen. In current terms it means the average person has to now work about 3 minutes to earn a dozen eggs which makes them substantially cheaper than in 1971.

I have regularly looked up these facts to compare with these nostalgia prices and whether it was cars, gasoline, food, housing, etc. the price today are generally much cheaper in terms of labor expended. And that doesn’t take into account how the items in question are often better. TVs today are a much higher quality than in the 70s and cheaper. Cars today get much better mileage so on the basis of miles travelled (the purpose of a car) things have become much cheaper. When I compared miles travelled in 1953 to what it was today it is 45% cheaper today.

OUR MISS BROOKS

Consider a 1953 episode of the old TV show Our Miss Brooks starring Eve Arden, it showed some of the progress we made. Brooks, a teacher, borrows the principal’s car and has to reimburse him for the gas. He says she drove 36 miles, the car got 12 miles per gallon and gas totalled 87¢ or 27¢ per gallon.

According to the AAA the current national average for premium gasoline is $2.758 or about 10 times what the price would have been in 1953 — when the show was filmed. According to the U.S. Bureau of Labor Statistics, a .27¢ price in 1953, adjusted for inflation, would be worth about $2.44 in current dollars. In other words, there was a slight increase in price in real terms—but only if you ignore how far you travel per gallon.

What you are buying with gasoline is not a gallon of gas but mileage traveled. You purchase the gas to operate your car so you can travel. Remember Miss Brooks spent her money on gas to travel 36 miles. In today’s terms she spent $7.32, or the equivalent of 20.3¢ per mile.

As of 2015 the average miles per gallon for U.S. cars was 25.5. To travel the same 36 miles of Miss Brooks one would consume 1.41 gallons of gas, not the 3 gallons Miss Brooks used. The cost for that gas would be $3.89 in today’s dollars, as opposed to the equivalent of $7.32 Miss Brooks paid.

Another way of looking at it is to compare how long Miss Brooks would work to earn the 3 gallons of gasoline she used. Average wages in 1953 were $3,139.44. That’s about $1.51 per hour. That would be 33 minutes of her working day to purchase 36 miles of travel. The average wage earner today earns $50,321 or about $24.19 per hour. At today’s average mpg they would buy $3.88 of gasoline to go 36 miles. That would be just under 10 minutes of the working day in 2016.

In terms of gasoline alone there is a slight increase between the 1953 example and today. In terms of miles traveled, which are what is important, there is a drop in cost of about 45%. But, in terms of hours worked to earn that amount of travel, costs have dropped by about 66%.

Houses by Sears

This kit from Sears, in 1918, allowed you to build your own home. The cost was $1,050 for the kit. Land and assembly was extra, of course.

A friend commented, “ I only wish I could find a house like this for that money.” Well, the good news is you can, but if you do pay that amount, you’ll be paying more than most other people for the same thing.

The floorplan is a bit hard to hard to read but the house is a living room, dining room, bedroom and kitchen and is just over 400 sq ft if I’m reading it right.

The best way to compare prices across time is to see how many labor hours it would take to purchase the product for the average worker. Clearly if X cost 10 hours of labor in 1920 and 2 hours of labor in 1930 then the cost has dropped significantly over the decade.

This brings us to The Brookside from Sears, purchased in 1918 for $1,050. According to the Fed the average hourly wage in manufacturing in 1918 was .53¢ per hour. To purchase the kit for The Brookside would take 1,981 hours of labor.

You can buy housing kits today, of course, which do the same thing as the Sear’s one did. Again, the land and assembly are extra.

I looked at one company selling housing kits for todays market. Consider this Hall Fork Log Cabin home kit which I’ve found online for sale at $30,133. It’s a three bedroom house, unlike the one bedroom kit from 1918 and in total size is about 3 times larger, 1,296 sq ft versus 400. That is a lot more than the cost of The Brookside, but it doesn’t take wages into account. Instead of earning .53¢ today’s worker has an average hourly wage, according to federal statistic, of $24.19 per hour.

In terms of hours of labor expended at today’s average hourly wage it would take 1,246 hours to earn this house versus 1,981 hours in 1918 for the “cheaper” kit. In terms of hours of labor expended todays kit is already 37% less, but it is also three times larger. In terms of labor expended per square foot it took 4 hours and 50 minutes of labor in 1918. In comparison today’s example takes 59 minutes per square foot. In terms of labor per square foot of housing the 1918 examples is fives times the cost of todays example.

The reality is things are not getting worse. In general we are wealthier, the products we buy are of better quality, the amount of time we work for what we consume has declined. On top of that we lived longer. I know it’s chic on both the Left and the Right to claims things are getting worse. But don’t you believe it.

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