My Dad loves to save money and to tell stories. One way he combines these loves is to reminisce about the low prices in “the good old days.” He is realistic, however. When he talks about buying ice cream cones for ten cents each, he rarely fails to add, “But I made a $1.00 a day back then.”
At times it’s hard not to fall into financial nostalgia. When we go to the movies, I remember my first dates with my husband, not so long ago, when evening (full-price) movies cost $5.25. Now the matinees in our area have exceeded that price and later shows are more than double what we once paid. A few days ago, when my husband talked about avoiding vending machines at his work, where a can of soda costs $0.55 (reasonable by most standards), we both said, “I remember when they cost a quarter!”
For certain items, price increases have outpaced earnings, but financial nostalgia, as with any nostalgia, often paints a rosier picture than reality. Few people are like my dad – they’ll remember ten-cent ice cream cones, but not concurrent one-dollar daily wages.
The Bureau of Labor Statistics maintains a consumer price index, tables of average prices for a variety of common consumer items, used to determine cost of living changes in the United States. I looked up prices for a gallon of regular unleaded gasoline, a pound of white bread, a pound of fresh whole chicken, and a dozen eggs for December 1980 (the earliest year available online) and December 2006. The average price of a gallon of gas increased from $1.26 to $2.33, the bread from $0.52 to $1.14, the chicken from $0.76 to $1.06, and the eggs from $1.03 to $1.54.
Meanwhile, the mean income for the middle third of households in the United States (the most “average” income I could find on the census website) increased from $17,701 in 1980 to $48,223 in 2006. Breaking that down into weekly income, that’s $340.40 and $927.37 respectively. So, if I was an “average” person going to buy a pound of chicken, a dozen eggs, and a pound of bread for my family to eat last December, and on the way, I bought eight gallons of gas, it would have cost me $22.38, or 2.41% of my weekly salary. If I were that same “average” person in 1980, I would have spent $12.39, 3.64% of my weekly salary, for the same goods.
I am simplifying my argument, of course, as I am not taking into account all economic conditions – unemployment, tax rates, etc. – nor individual expenses that vary greatly from person to person, such as housing and medical expenses, but it seems to me that it is human nature to complain about rising prices while ignoring rising income. Sure, I would love to find gas for $1.26 a gallon today, but I wouldn’t want to cut my family’s income by nearly two thirds to get it.
Image courtesy of Clover_1