Better Than the Good Old Days
By: John Shepler
My grandmother used to complain about paying 25 cents for an ice cream cone at the Union Dairy in Freeport. She distinctly remembered the price being 10 cents for exactly the same cone. Us kids didn't relate to that. As far back as we could recall it was a quarter, although we were 12, 10 and 8 at the time. But just a second. What about prices? Haven't they gone up tremendously in our lifetimes, not to mention what our parents and grandparents recall?
Well it certainly looks like we're being gouged compared with the good old days. You need folding money now to buy ice cream cones, bread, milk, gas for the car...forget the car. It's over a buck to fill that little plastic tank that supplies the lawn mower, the weed trimmer and the snow blower. That does seem outrageous. I used to top off my old Mustang in Milwaukee for a couple of quarters.
Somehow, though, I don't feel poor these days. We have a nice house in a decent neighborhood. There are two cars in the garage, both fairly new. Despite the relatively astronomical price of everything, there always seems to be a few extra dollars for ice cream any time we want it. So what gives?
The answer lies both in the changing value of money and the value received for the effort needed to make it. Yeah, everything was dirt cheap a century ago. Just read those old newspapers and marvel at what you could buy for the money you have in your pocket right now. Then consider that the average wage was something like 15 cents an hour in those "good old days." You might be carrying around a king's ransom of 1898 dollars in your wallet, but people back then weren't. In another hundred years, our descendants are going to laugh at the ridiculously low prices of cars and houses today.
Those of us who have been in the workforce for twenty or thirty years know darn well that we're being paid better than we were back then. Some of that is due to inflation of the dollar and some is due to the added value of our skills and experience. But how much better or worse off are we today?
A better measuring stick than price is to think in terms of how much of our labor it takes to buy various things. For instance, a 1908 Ford Model T cost most people about 2 years wages. A 1997 Taurus has an equivalent cost of 8 months. That's only one third as much. Plus, today you get air conditioning, power windows, tinted glass, anti-lock brakes and airbags. A '97 Taurus costs less in effort than a '55 Fairlane. Come to think of it, the cars I've been buying in the last 10 years take longer to develop rust and give more years on the road before they need major work in the shop.
But what about gasoline? Surely the oil crisis of the mid 70's and the continuing tensions in the Middle East have made cheap gas a luxury of the past. Not really. Those prices at the pump truly are less than a few years ago. Now get this. You worked 5.4 minutes to buy a gallon of gas in 1997. You worked 6.6 minutes to buy that same gallon in 1970, before the Arab oil embargo and about the time I remember handing quarters to the station attendants.
Think milk is expensive? A half-gallon took 39 minutes to earn in 1919, 16 minutes for our folks in 1950, 10 minutes in 1975 and it's down to 7 minutes for us today. Ground beef has followed a similar pattern, dropping from 30 minutes a pound in 1919 to 6 minutes in 1997. In fact a market basket of typical food items has slid from 9.5 hours work in 1919 to 3.5 hours in 1950 and is now only 1.6 hours.
We are better off than our parents and certainly better off than our grandparents in terms of buying power. We may think they had life easier back then, and they may tell us of better days, when life was grand like we see in the movies. If we're less happy, it's not in general because we have less. We work fewer hours in more comfortable surroundings for most everything we have. We just want more. We like our bigger houses, cars with more amenities, vacations, dining out, air conditioned everything, large screen televisions, computer games and educational opportunities.
College education is one thing that has gone up, not down. Average tuition at a private college was 537 hours of work in 1966. Today it is 1, 295 hours. Public Universities jumped almost as much, from 133 to 260 hours over 30 years. Education is more of an investment than a cost, though. The money is paid back in higher earnings over the years.
Consider also that many of our technology breakthroughs actually fall in price or give much more performance with each model, right before our eyes. Examples are personal computers, televisions, VCRs and just about everything else that is based on electronics. We take instant worldwide communications for granted. Our parents has no such concept. Indeed, if we are feeling pinched these days, it may be coming more from the cost of living high than the high cost of living.
Also visit these related sites:
Federal Reserve Bank of Dallas - Offers many interesting features and links about money, plus links to all the federal reserve banks around the country. Many of the interesting facts in the article above come from this bank's 1997 Annual Report.
What did a home cost way back when? - Find out how much people made and what things cost for any year from 1900 through 1999. Look up your birthday or any other interesting day to get the prices and headlines from the dMarie Time Capsule.
U.S. Inflation Calculator - An online calculator to help compare prices then and now. Enter a dollar value. Then select the year it relates to. The calculator will tell you what the equivalent monetary value is in today's dollars, hence the name.
Vintage Family Budget Poster - Family with Different Ideas of How to Use Money in Piggy Bank as an art print. Get a copy for yourself now or see related artwork on sale.
Copyright 1998 - 2017 by John E. Shepler. Contact me at: John (at) JohnShepler.com
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First Published: May 31, 1998 as part of A Positive Light