On Thursday Frugal Scholar expressed awe at the extent to which consumer prices have soared over a typical Boomer’s lifetime. And how! I can remember when you could buy a week’s worth of groceries for ten dollars.
She reproduces part of a Faux News squib showing how prices have (apparently) risen over the past thirty years.
Well…hmmm…. Basically all this says is that the relative value of currency changes over time.
My father once said that when he was a young man—that would have been in the mid-1930s—he earned $30 a month and lived well on it. The $1.41 FS cites would have been worth 9 cents in 1935. Depending on how you look at it, 1935’s $1.41 would be worth anything from $22.40 (consumer price index) to $282 (relative share of GDP) today.
Our problem today is that while prices are rising, income remains stagnant or even continues to fall through furloughing, pay cuts, and unemployment. Rising prices are not the issue. Employment is the issue.
Check out the site that produced these figures: it has some fun tools.
I am old enough to remember watching my dad purchase gasoline for 79 cents per gallon. I remember buying a soda out of the machine for a quarter. You are right that income has not kept pace with the rate of inflation. Even though the official CPI says one thing, my experience says something totally different. I think that part of the issue is globalization and the ability of goods to easily move across borders. The higher cost manufacturing base has been shipped to China leaving no work for many or lower paying work. The average wage has gone down and owners of companies and the management has gotten rich. The income gap has widened.
I think my awe was at how little food prices have risen! Now as for higher ed and, especially, healthcare–another story.
@ frugalscholar: Yeah, relative to things like gasoline, it is surprising… You’d think that food prices would rise in lock-step with the cost of harvesting and transporting the food. It must have something to do with government price supports…otherwise wholesalers and retailers would surely have to raise prices more, relative to the price of fuel.
In another realm, it seems to me that clothing prices have actually dropped over the decades, certainly compared to what they were — again, I mean relative to what workers earn. I remember spending $40 on a dress and thinking that was a FORTUNE. My heart was broken when I spilled nail polish on it and ruined it when the polish remover melted the fake fabric. Using the CPI to figure the relative value, that $40 would equate to $261 today. But today I could easily buy something comparable — nicer, really — for 70 or 80 of today’s dollars. That is, I could buy a dress that would look much like that one, only better made with higher-quality fabric (linen or silk), for a third of what that $40 would translate to in 2011 currency.
But this is attributable, as cashflowmantra remarks, to globalization and the offshoring of textile and clothing manufacture to places where people feel happy to earn two bucks a day. And those lower clothing prices have as a side effect higher unemployment and lower wages in this country.
It’s amazing how the cost of living has changed since I was a little Kid.
Growing up we had a house in town and a summer cottage (winterized) on a local lake with a speedboat for fun and water skiing. Dad was a private pilot and owned his own Piper Cub. We were the first ones in town to have a Ski-Doo for winter fun.
My dad was an inspector in a machine shop and made $150 a week back then.
I’ve never been able to have any of those toys except for a couple small sailboats when we lived in Bermuda.
Currently the Mrs. and I each make about $250 a week and since I retired early the $1386 a month I get from SS is a great bonus.
Oh I forgot to mention the $.25 a gallon gas when I was filling up my ($1600) VW Bug in 1966. You got a Coke for a nickle out of the machine and a loaf of bread was a quarter and a 16″ pizza was $5 and beer was $.65 a quart.
In 1968 I bought a new CF Martin D12-28 guitar for $400. I was the sweetest acoustic 12 string around. I pawned it for $200 when I was out of a job in 1980.
A new one today $3000+, my original in perfect condition $10,000
You can still get a cheep Chinese 12 string for $400 today, but it’s like comparing Jack Daniels sipping whiskey to some rot gut brand.
Inflation creeps every day. 1980 was when US jobs started going over seas and the H1-B program was really ramping up. The government has killed the USA one law at a time. At my last layoff in 1990 I was declared a displaced worker and the unemployment office wanted to send me to a truck drivers school. I started my own business instead.
Why would a software guy want to drive an 18 wheeler?
Because I was replaced by a (dot in head) Indian?
@ George: Truck driver school? Great galloping ZOT!
What do these people think, or do they think at all? Truck driving’s great if you’re a young fella (or woman) in good physical condition. If you were a grown man in 1968 and still kicking in 1990, the last thing you needed to do is treat your aching back (and kidneys) to a 12-hour road pounding every day.
Back when your dad was earning $150 a week, that was a good salary. I’ll bet that was back when a recent college graduate figured that if he ever, in his ENTIRE LIFE, reached the point where he was earning 12 grand a year, he would have it made. Really, truly, fully made.
It seems like an awful lot of Americans now figure their best bet is to start a business. Trouble is, some unholy percentage of small businesses fail in their first year; still more fail shortly after that. Not everyone is cut out to be an entrepreneur, and as a practical matter there are powerful advantages to working as an employee for an established organization.
LOL! In the 25-cent-a-gallon department, I can remember my mother, a loyal John Bircher, remarking one day during the 1960s that when gasoline reached a dollar a gallon, that’s when the U.S. would be a SOOOOCIALIST country. She’d probably figure we had sold out to the Soviet Union if she could see the $3.45 price. 😀