Great post by Mark Perry of "Carpe Diem." Consumers have to work much less time to buy many goods than in the past. Here it is:
"This was posted last year on CD,
and I haven’t had time to do an update for 2013, but thought I would
re-post it again for those who might have missed it last year.
One way to illustrate your good fortune of being a holiday shopper
today is to measure the cost of consumer goods by the number of hours it
takes working at the average hourly wage to earn enough income to
purchase typical consumer products at their retail prices, and then
compare the “time cost” of goods from the past to today’s “time cost”
for similar items. (Don Boudreaux has been featuring some similar
comparisons in a series on Café Hayek titled “Cataloging Our Progress,” which inspired this post.)
For example, the retail price of an automatic Kenmore two-slice toaster advertised in the 1958 Sears Christmas Catalog (available here online,
and pictured below on the left) was $12.95, or 6.54 hours of work at
the average hourly manufacturing wage of $1.98 in 1958 (wage data here). Today you can buy a comparable Kenmore two-slice toaster for $25.99,
and the “time cost” would be only 1.35 hours of work at the current
average hourly wage of $19.19, for a reduction of almost 80 percent
since 1958 in the amount of work hours required to earn the income
necessary to purchase a standard toaster. Additionally, the Sears website today features more than 100 different toasters, compared to the Sears catalog in 1958, which only featured a few different models.
Next,
consider television sets, a fairly common holiday gift. In 1958,
American holiday shoppers paid $269.95 for Sears’s “best 24-inch console
TV” (see photo above), or 136.34 hours of work at the average hourly
wage then. Today you can purchase a Sansui 26-inch LCD high-definition
TV (see picture above) on the Sears website for $249.98
(or choose from the several hundred other TVs available), which would
be a “time cost” today of only 13.03 hours of work at today’s hourly
wage of $19.19, for a 90 percent reduction in the cost of today’s HDTV
compared to the 1958 model.
Finally,
consider the equipment with the “best stereo sound” that Sears had to
offer in 1958, which was advertised for sale in its Christmas catalog
for $84.95 (see picture above), boasting that “You’ll be amazed at the
‘living sound’ you’ll hear on this newest development in portable
phonographs. Four tubes per rectifier. Hear every note, every shading of
tone.”
I don’t think anybody today would be too amazed at the sound quality
of that 1958 “state-of-the-art” stereo equipment playing 45 and LP
records of the day. And certainly nobody would trade his or her iPod for
that system, especially considering that the time cost of today’s iPod
is only 12.25 hours of work at today’s average hourly wage (to earn $234.99 for a classic iPod),
which is more than 71 percent cheaper in time cost than Sears’s best
stereo equipment in 1958 (42.9 hours of work at $1.98 per hour).
Putting it all together, a typical American consumer in 1958 would
have had to work for 185 hours (more than a month) at the average hourly
wage of $1.98 to earn enough pre-tax income ($368) to purchase a
toaster, a TV and a stereo system. Today’s consumer working at the
average wage of $19.19 would only have to work 26.6 hours (a little more
than three days) to earn enough income ($511) to purchase a toaster, TV
and iPod. In other words: 4.64 weeks of work in 1958 vs. less than 3.5 days
in 2012 for those three consumer products, and one could argue that
today’s products (especially the iPod) are far superior to their 1958
counterparts.
If you’re not convinced that today’s consumers are better off than at
any time in history, spend some time browsing the old Sears, Wards, and
J.C. Penney’s Christmas catalogs available here back to the 1930s, convert those old retail prices into their “time cost” equivalent using that year’s prevailing hourly wage,
and you’ll quickly see that there has never been a better time to be a
holiday shopper and consumer than right now. For that, you can thank the
“miracle of the marketplace,” which brings us better and cheaper
consumer goods all the time."
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