Despite Current Economic Slowdown, Consumers Have Never Had It So Good. Ever. Anywhere.
I have been purchasing some old Sears and Montgomery Wards catalogs on Ebay to have accurate, historical retail price data on typical consumer goods in various years, and then be able to compare the prices consumers pay today for various household goods to prices in previous periods, measured in the number of minutes or hours worked at the average wage to earn enough money to purchase the items. Here is the first in a series of CD posts comparing today's prices to a previous year:
Pictured below is a 9.2 cubic foot Sears Coldspot Spacemaster Refrigerator, available on sale in the 1949 Sears catalog for $224.75:
The average hourly manufacturing wage in 1949 was $1.26, meaning that the average worker had to work for 178.4 hours (22.3 days or 4.5 weeks) in 1949 to earn enough money (before tax) to purchase the refrigerator.Pictured below is a current Sears model 9.5 cubic feet refrigerator, available on sale for $339.99. At the current average hourly manufacturing wage of $18.03, the average worker would have to work today for only 18.9 hours (only 2.4 days) to purchase the refrigerator.
The difference in hours worked to purchase a 9 cu. foot (approx.) Sears refrigerator in the two years is displayed graphically below: 
Bottom Line: We hear a lot of comparisons of today's economic conditions to the 1930s and the Great Depression, as if we're about to slip back to the living conditions of the 1930s and enter Great Depression II. Hopefully some of these comparisons will serve as an antidote to all of the daily gloom and doom. A comparison of the price of a typical household appliance in 1949 (178.4 hours of work to purchase a refrigerator) to the price today (only 18.9 hours of work) is just one of hundreds of examples that demonstrate the significant increase in the average American's standard of living over time.
If consumers were paying the same price for a refrigerator today as consumers did in 1949 (178.4 hours of work at the average wage), the retail price today would be about $3,200 for a basic 9.5 cubic feet refrigerator (178.4 hours X $18.03 per hour). For a more deluxe Sears model refrigerator (retail price of $1,757 or 5.2 times more expensive than the basic model), the cost today would be about $17,000.
Despite the current economic slowdown, consumers have never had it so good. Ever. Anywhere.
59 Comments:
Straw-man alert! The comparisons to the Depression are not on an absolute basis. No one claims we are going back to buggy's and carts. The comparison is in the collapse of credit, and the relative reduction in employment and wealth creation.
If you use real unemployment rather than the government's phoney baloney numbers, we're already near 15% unemployment. We're already in depression territory.
Of course for those employed in nice academic sinecures, it may not feel so bad as it does for the unemployed home builder in California, or the laid off steel worker in Pennsylvania, or the soon-to-be unemployed car worker in your home state.
Here's a question - how much do those vintage Sears catalogs cost to buy on e-Bay? And how might that compare to what Sears paid to produce each catalog in the year they were printed?
I ask, because a vintage copy of Adam Smith's Wealth of Nations was recently sold for the equivalent of £95,682.30 UK Pounds. The original price in 1776 was £1.16s. Could Sears catalogs have the same kind of appreciation?
Ironman: The 1949 Sears Catalog was only $7.50 on Ebay, and it is in good condition. I have paid mostly between $10 and $30 for catalogs from the 1940s through the 1980s. They seem to be pretty plentiful and relatively cheap.
How much were Acme anvils (yes, THE Acme anvils)? I've seen references to the anvils being sold in early 1900s Sears catalogs, but I've never seen a price for them.
Alas, I suspect Sears and anvils had parted ways by the 1940s.
Do your calculations include the tax rate differences? How much of that hourly salary is actually take-home and how does that change the results? Without taking that into account, I think we're comparing apples to oranges.
The fridge purchased in 1949 probably last 25 years too. Versus the crappy appliances manufactured today that only last 8 years!
The refrigerator in my art studio is a 62 year old Philco (the 1947 model). It features the original gaskets and has had no maintenance other than replacing the electrical cord and plug - because my dog thought it would make a fun chew toy when she was a puppy.
The cost to operate the refrigerator (i.e., the impact to my electric bill) seemed to be about the same as my 1996 model did at home for which I paid around $1,400. Unfortunately, the 1996 refrigerator failed and needed to be replaced with a new one.
That seems to be the trend: most people I know (family, friends, etc) now replace their refrigerators every 10 years or so.
Therefore, there is a quality difference not being accounted for in the comparison. It might very well cost $17,000 in current dollars to purchase a refrigerator that was designed and produced to last 65 years without repair, maintenance, or replacement.
BTW, the cost TODAY to purchase an unrestored 1947 Philco refrigerator is $3,500 which was around $249 back then. Over 62 years, that price is pacing average inflation (a 4.355% increase year over year). Not sure how you came up with $17,000.
http://www.classicrefrigerator.com/html/1947philco.html
so why does it cost me $90 dollars for a muffler for an 8HP engine that costs $350 to begin with.
Or $200 for a carbureator for the same engine?
Or how about $300 for a door gasket for a refrigerator that cost $1200 to begin with?
Why do I feel that the consumer is being ripped off more?
Mom tells the story of calling Sears to order a case of toilert paper, and they asked for the catalog number.
Well, she said, If I had the catalog I wouldn't need the toilet paper.
That last story sounds apocryphal.
anon @ 12:06 AM throws us another one his patented 'straw man alerts'...
Note the following baloney by anon: "The comparison is in the collapse of credit, and the relative reduction in employment and wealth creation"...
Hardly... Its about what things cost today (or % income spent for the same item) as what they used to cost...
Regarding the supposed credit problems, note the following from Marginal Revolution: Where is the Credit Crunch? III
The myths
Bank lending to nonfinancial corporations and individuals has declined sharply.
Interbank lending is essentially nonexistent.
Commercial paper issuance by nonfinancial corporations has declined sharply and rates have risen to unprecedented levels.
Banks play a large role in channeling funds from savers to borrowers.
"If you use real unemployment rather than the government's phoney baloney numbers, we're already near 15% unemployment"...
ROFLMAO! Prove it...
"it may not feel so bad as it does for the unemployed home builder in California, or the laid off steel worker in Pennsylvania, or the soon-to-be unemployed car worker in your home state"....
Well of course none of these groups priced themselves out of a job right?
idean asks a great question I think: "Do your calculations include the tax rate differences?"...
Where would one find that sort of data?
Which taxes should we include? Sales tax? State income tax? Federal income tax? FICA?
There are several channels of extortion of the productive citizen by the government to consider...
Trends as a Guide to Tax Reform
Thanks for the interesting price comparisons especially enjoyed the VCR. Don't expect the doom & gloom to abate, however.
The fact that poverty in the U.S. has dropped from 50% of the population in 1900 to between 10-15% today seems to be a secret known only to economists. (Source: Spin Free Economics - you can even read the endless pages of footnotes and documentation if so inclined)
Why are we so quick to believe that the U.S., the world's largest and most innovative economy is DOA?
"The refrigerator in my art studio is a 62 year old Philco (the 1947 model)."
I suspect that the energy consumption is due to the defroster on the newer refrigerators. By the way, a 1996 refrigerator is much less energy efficient than the energy star (or near energy star) models of today.
I think everyone is missing the point while you're all trying to be cute in your replies.
THINK! Government got us into this, and now they're telling us that we're going to have to pay to get out of it? This whole thing is disgusting.
Obama is a Socialist, and he's appointing a radical cabinet. God help this country for your blindness to that slick marketing campaign. You'll all see...just wait. You've all been fooled! I'd laugh if it wasn't going to affect ALL of us!
Obammunism will destroy this country and our freedom.
I like to talk about stool.
Can't help wondering where Ray Hyde is buying his parts from.I've never paid anywhere near what he says he's paying for things...Looks like somebody sees him coming !!!!!
I think your comparison is somewhat faulty in 2 areas. First, without having specific knowledge, my guess is that refrigerators were somewhat new types of appliances in 1947 and a 9.2 cf unit was probably fairly large, resulting in what at the time would have been a luxury item. A 9.5 cf fridge today is not a luxury item.
Second, my guess is that a significantly larger portion of the population in 1947 were employed in the manufacturing sector compared to today. I'm not sure how the average wage rate would vary if you made a better comparison between average wage earners, but it would result in a better picture.
I still wish Obama would be forced to produce a legitmate birth certicate. He has not so he should not be inaugurated.
What if I don't want a refrigerator? Would the results be the same if the object of desire was a new car? Or a house? How about a college education?
I would like to see a similar comparison done for other countries over the same period of time to test the theory.
Yeahhhh, I think we could eliminate a lot of our upcoming problems with the production of an Obama birth certificate.
@Michael
The two faults you see are the very points made by the comparison.
The reduced cost over the life of a product and the increased wages are a direct result of the capitalist/intellectual property based economy we enjoy. Competition encourages newer and cheaper ways to manufacture while more complex technology and higher education encourages higher pay.
Capitalism works. Socialism will doom this country into collapse. Everybody needs to wake up, take responsibility for their lives and families, and preserve their freedom. I make 165,000 a year, refuse to buy a house because I can't make the 20% down payment yet---but I stop everyday to pick up CRV recycling items out of the trash cans at the spray and wash carwash on my home from work. Save your money and realize when government takes over, we are doomed. We will not create anything anymore and China will take over the world since they will control everything. Romney said it, when China starts building the airplanes, and high-tech big dollar items----America will cease to exist and we will be a poverished nation.
Lifespan of a $300 refrigerator today...5 yrs
Lifespand of the refrigerator from 1949, approx 40 yrs.
***
I'd much prefer to see this done with a) automobiles and b) firearms
I think these would be better measures.
I have a Kenmore frig purchased in 1979 that's been used constantly and it still looks and runs great...30 years, not to shabby.
Excellent Article! I feel more grateful to be living in this time of plenty.
My parents bought a fridge in the early 80s and it lasted through the early 00s. So ~20 years or so.
I dunno where you get this 5 year lifespan thing from... apartment complexes only swap out fridges every 10 or 20 years.
That 1949 refrigerator was built in North America to last with quality materials and workmanship.The new cheap ones are made in China and are built to make a quick profit and nothing else.You get what you pay for!
Lets play with the math and you will see you are working harder and longer than your generation of 1947.
A 176.4 hrs @ $1.26 hr. today is more like the $10.00 adv. wage of the service jobs in America today. Less than 15% of the population make manufacturing. The service business adverages $10 - $12 per hr. At this rate it takes 33.9 hrs BUT give the government their 40% and you will work 47.5 hrs. for the refrigator. Now the hres are 51.5 for the appliance. Now consider the fact you purchase your food as apposed to growing and canning. Now you need a freezer and fresh space. The refrigator needs to be about 21 to 27 cu. ft. This is a cost of $700 - $900 dollars per purchase. Now add the fact it will take 3 of these to see you to retirement. Now the service of one verses has pushed the hrs. to make the purchases to 156 hrs. to have the appliace working for you working and retirement years.
Now you work three times as hard a your older generation to get the same benefit as one appliance they purchased to last them a life time.
Now add all these hours to your car, home, other appliances, etc.
You will be working three times the hours for the same basic living as you forfathers.
So yes we are not better off then people after the Great Depression. We don't have the freedom to make a living because of the EPA regulations making us work double to have the same thing. We are paying taxes through the nose that our older generation would never have dreamed of. We have foolish laws on the books that control our personal lives that the Government has no business making. We are taxed to take away our freedoms, individuality, and livelyhoods.
We are not better off.
Ayn Rand tried to make some of these same points. The USA had the beginnings and potential to continue to be the greatest civilization the world has ever seen. Unfortunately, the liberals and socialists are slowly picking away at your great country. Too bad. Don't get me wrong, I am from Canada and here we are even worse. We actually wish we had Obama up here.
A point of order -- 1949 was NOT the great depression. It was the post WWII boom time. It was the beginning of our economic expansion. In 1949 I had just graduated 8th grade. I could work if I wanted to. Kids cannot work today. And I did work in the apricot cutting sheds in Concord, California. We were paid 25 cents a tray and the drying trays were huge. It took almost two hours to fill a tray with apricots the size of large marbles. We have had a good run and now it is time to look around and see where we are. My first house had 3 bedrooms, one bathroom, one living room, one dining alcove and a kitchen. It had slab floors and a flat roof. We were proud of it. Today a young couple would look at house like that and call it a slum house.
I look at these mansions and can't figure out how they get paid for, plus the taxes and utilities. Now we know how they do it. They just didn't make the payments and then cry when the house gets repossed.
As for the unemployed home builder in California, he was over- building California housing when it was not needed.
Signed
Old Historian
Three quick points:
1] Those "phony baloney" unemployment numbers tell a better story than most people know. To begin, they are based on "those persons seeking employment." So, if the govt says 7%, the poster says 15%, that means the other 8% aren't looking for a job. Why? Government hand outs! The people who PAY taxes give them their food, rent, and medical care. Why work?
2] I bought my first new car during that liberal icon, Jimmy
Carter's runaway inflation. I put $1500 down on a $6000 car, borrowing $4500, at a usurous 22.5%
interest rate. That $6000 car cost me over $11,000 in the end. Thanks,
Jimmy.
3] I lived through the demise of the steel industry in Pittsburgh. The USWA, like the UAW, priced themselves out of jobs with laziness, featherbedding, and ridiculous union rules. It took three people to change a fluorescent light: a laborer to bring a ladder, a mechanic to remove the cover, and an electrician to change the light. GOOD TRAININ' FOR 'EM!
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To Anonymous with the first post.
I don't understand how you have access to the correct unemployment numbers that you seem to project so confidently, but I guess you are just more enlightened than the rest of us.
Anyway I am from Pittsburgh and we're doing just fine. When Steeler games and Penguin games still sell out and people (not always the same people) still go out to dinner every night, I'm pretty sure we don't have as much to worry about as everyone tells us we do.
To bassjace:
God bless the 'burgh! I was born and raised there, and spent the first 28 years of my life there. I left years ago, but still bleed black and gold. The major reasons Pgh is such a great town today are:
1] the unions no longer dominate the economy
2] a shift from goliath mfg companies with megaworkforces to smaller enterprises and a service orientation, and
3] it took years, but the people quit whining and got over it
It's like the old swing song: "It's
good work if you can get, and you can get it if you try."
To Anonymous,
We are nowhere near the unemployment numbers that were going on in the Depression even if we were to take the 15% (during the Great Depression, the unemployment rate was over double that, at about 33 - 36%).
Don't bring in the drama about the soon-to-be unemployed car workers and other such potential unemployed. I just barely graduated with my BA and am hunting for a job (still). The car workers will get by. They did when Studebaker and other car makers of the 50s did. What did they do? They merged. It sucks, but it's capitalism and it's what keeps the poor off of the streets better than any other system created (i.e. socialism (USSR didn't do so hot), communism (not so hot for Cuba either), fascism (Hitler's Germany didn't make it), etc.)
My fridge bought new in 1995 is still in excellent working condition. No maintenance ever.
The comment that a 9.5 cf fridge was a luxury and today a 27 cf fridge is the equivalent in luxuriousness, tells us something about the American mindset. We are the first generations in history to live with an expectation that things will get better. We are raising generations that believe their houses will be bigger than their parents' houses, their cars more luxurious than their parents', their pay rate higher. For 99% of recorded history people had no such expectation that their living standard would rise. If I moved to what many would consider a "project house" like I grew up in, shut off the air conditioning, got rid of all the TV sets, electric lights, radios and other "luxuries" and lived like folks did a hundred years ago, it would cost me a whole lot less to live. It is our expectation that we have a right to a better life than our parents and grandparents that makes it hard for some to see that they're doing pretty damned well!
We'd have to backpedal a long way to get to the real poverty of the Great Depression. Sadly, we're approaching this one using the same tactics that Hoover FDR used to get us into the last one.
Sometimes you can endure the pain and cure the ill or you can stop the pain and kill the patient. I think that's the decision our Congress is fixing to make and it's like the old say, "If all you have is a hammer, everything looks like a nail." All they understand is "stop the pain", so the life of the patient (our economy) is not a relevant factor to consider.
To Anonymous,
We are nowhere near the unemployment numbers that were going on in the Depression even if we were to take the 15% (during the Great Depression, the unemployment rate was over double that, at about 33 - 36%).
Don't bring in the drama about the soon-to-be unemployed car workers and other such potential unemployed. I just barely graduated with my BA and am hunting for a job (still). The car workers will get by. They did when Studebaker and other car makers of the 50s did. What did they do? They merged. It sucks, but it's capitalism and it's what keeps the poor off of the streets better than any other system created (i.e. socialism (USSR didn't do so hot), communism (not so hot for Cuba either), fascism (Hitler's Germany didn't make it), etc.)
Glad to know that there are some people with some semblance of sanity left in this country. Question is, how do we vote the Socialist in Congress out. I don't mind Obama to Much, he can't do anything without the idiots in congress!
Stop and think about it if once we purchased a product we would never need another one. For one thing there would be but a fraction of the jobs that are availible today. Even now that most product are made over seas, we still need truckers, warehouses, distributors, banks, and stores to get them to us. Fewer jobs mean more poverty, higher prices, and really crappy products. I don't know about everyone else but I'm happy that I don't have to put in 30-40 5.25 floppys every time I want to go on the web or run any of todays computer programs. Also I like the truck I drive today many times over the one I drove in the 70s & 80s. Building products, home theaters, apliances, health care products, tools(cordless drills and screwdriver bits are a real blessing),and more. It is pretty sweet huh?
I like the system we have, but I don't like where it appears to be going.
I think someone has already mentioned this, but manufacturing is a rather well paid industry these days. I'm not sure that it's skilled labor, technically, but $18 is almost three times what I made an hour working minimal wage.
One thing to note: In 1949, the refrigerator that was bought by Americans was made by Amerians. We cannot continue to send good manufacturing jobs out of the country and expect to survive as a nation.
One of the reasons for our economic problems is because of excess borrowing. Some is caused by frivolous spending, but some is because people cannot survive on their income and must continually borrow.
Wal mart has made more items more affordable for more people, but at the cost of buying for overseas. That leads to a trade deficit, money leaving the country. If a country does not make things, it cannot survive.
When America has to go to war with China (and it will happen) will we contract with China's factories to make our armor, guns and bullets?
With regard to the comparison of the current unemployment numbers to those of the Great Depression, it is still apples and oranges. During the Great Depression there were few if any programs that exist now like food stamps and unemployment insurance which provide an offset from pure 'poverty.' In addition there were few if any dual income homes which are now prodominent and also provide an offset. To make a direct comparison these aspects should be taken into consideration so that we are not lying with statistics. Maybe a percentage of homes where all income has stopped, which I imagine would be considerably smaller now than during the Great Depression.
My dad bought our first house in Hawaii for $40,000 in 1970. He worked as a Sales Manager for a fairly large corporation making $25,000 annually. An average 3 bedroom house in Hawaii now sells for $600,000. I am a Sales Manager for a fairly large corporation making a bit over $100,000. I'd say our positions and pay are comparable, yet it will take me 3 times longer to pay for my house.It's much more difficult to own a home in Hawaii now than in the past.
Is no one in the media the least suspicious as to why Obamunist announced his running from a terrorist's house, will not provide a birth certificate, selected a vp that nobody can trust to lead, selected someone totally unqualified to lead the FBI, makes the release of hundreds of terrorists a top priority...the list goes on and on. He said himself during the campaign that "Life as you know it will never be the same if I am elected!"
Yikes.
guess there's something to be said for going to college.
I think that unemployment will be much worse than the 30-36% of the depression. I think that personal debt and a domino effect is going to get us there.
The credit card companies are going to have to reign-in the overextended folks with lower credit limits and higher monthly minimum payments.
Furthermore, since our economy is so fueled by retail spending, when people slow down their spending, we'll have hundreds of bankruptcies by retailers (like Circuit City). As all those people become unemployed, it will only make things worse.
The reason I think that unemployment numbers will be far worse during this depression, are because back then, most women didn't work. 30% unemployment meant, roughly, that 30% of the *men* were unemployed. What happens when 30% of the men and 30% of the women are unemployed? Do the math...
I've gone to change.org, the site of the new administration and I've battled with the socialists there. Reasonably-minded people are the minority there. I've posted as many times as I can muster, that the key to recovery is boosting consumer confidence and that won't happen unless we have real jobs, not make-work jobs, which are pretty much the only kind of jobs the government can create directly. I'm urging the president-elect to use tax incentives to get companies to hire again. Unless we lower unemployment, we're not going to restore consumer confidence.
I suggest you all go there and post... even the odds that the new president will get representative, reasonable, thoughtful direction.
My parents bought an avg priced house with 25 acres thirty years ago for $35,000; their combined income was $40,000. Before the bust in housing wasn't the avg price house appprox $235,000 and the avg income $45,000 up to maybe $75,000 with both working. It is much harder to buy a house now because income hasn't increased with the price of houses. I believe in capitalism, but there are amazing abuses in these big corporations. The top's income has increased way above the avg worker, and more and more the benefits are disappearing, but not for the top workers, ceo's etc and they didn't even start or own the company. This is from a major conservative person. Things need to change.
There are some good thoughts in this article; however, the pain we are feeling now is credit whiplash, not purchasing power. The point: the average American pays 13% APR on their credit card purchases and payment costs and duration can essentially continue on ad infinitem. We have borrowed more than we are worth, something unheard of in the "good old days," and now we get to feel the burn they never had to feel in the past.
Philco refridgerators aint that much , theres atleast 5 I know sitting on porches on the street here
do we really have it that good? work all day to have a few hours of HD TV, air conditioning and a manicured lawn?
I hear a lot about two income families, it seems to me that even back then men would work 10-12 hrs. a day or two jobs to support a family
It's nice to see that someone is resisting the continual doomsday news reporting from our wonderfully objective media.
Economics is a great field of study. So much to learn which touch so many aspects of our lives. Too bad alot of it is counter intuitive.
A voice of reason from michigan. Egads! Aren't you afraid they will take away your tenure???
Since we are talking about the depression era, there is a similar article at http://www.jitterbuzz.com/aplsho.html .
"They sold for $215 when $1/day was a good wage for workingmen (The Average Joe of the time would have had to work almost 7 months to earn enough to pay for this. $215 then is equivalent to about $10,000 today.)"
I've contributed to this once, but to repeat a common theme: Most of our problems today in terms of debt(or wants) vs. money come from people's desire to possess things they don't really need as status symbols. For ex., look at the computer/refrigerator. People wouldn't even want some things if they didn't confer some sort of "nyah-nyah" to their neighbors.
I'm not an economist nor do I claim to be the sharpest knife in the drawer, but why doesn’t the government offer incentives to all the companies who have sent jobs to China to bring them back to the U.S. and put our citizens to work? Oh, yeah, the U.S. is so in debt to China that the U.S. is unable to do that.
I have a 1949 GE refrigerator and runs great, they made things to last then, and worth the investment. If anyone is interested in buying it, let me know.
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