$1,731 in today’s USD is $37,392. That new car would be $18k, rent was just over $500. There’s places in the US where average rent is close to that, and I bet if we removed NYC and the Bay area the national average wouldn’t be super far off.
Education and staples are where you’re getting drilled on a daily basis. Harvard costs many times the average national income rather than being a fraction of it.
Someone’s overlooking the low low cost of buying a house back then. Essentially 2 years of salary. Housing where I live is now 20 years of median salary and about 19 years of average salary, and far more once you consider a loan.
Didn’t overlook it, I simply didn’t comment on it. You also have to be careful about comparing where you personally live and the national average. Because the national average includes a lot of places that are shockingly poor.
Median price of a (not new construction) house in the US as of November 2023 is 387k. Using the $3900 in the OP, that’s about 83k today. The average home price in 2023 is apparently 492k. Either way, it’s waaaaay higher than 1938
Okay. Let’s go local on a market. Chose San Antonio because it’s been fairly steady over the years and has a decent cost of living compared to other places…
Average Salary: approx $55,000 Average Home Price: approx $300,000
So you would still need 5.5 years for a home compared to just over 2 years. And that’s assuming the gross, not net and entire paycheck. You can still pick most places in the US that are out in rural nowhere and the inflation is plainly obvious, it’s just the degree may change a bit.
House sizes have also ballooned. The average home size in 1949 was ~900 sq ft, whereas a new home now is ~2500 sq ft. It was still cheaper, but those homes prices are for a lot less house than people are imagining.
Not to mention changes in wiring, plumbing, materials, insulation, engineering, finishes, appliances, etc.
My relatively small house (~1200 sq ft) was built in 1950 and is currently appraised at $550k, so it’s not just house size. Granted, I live in a highly-desirable west coast city and the lot is worth more than the house itself, but the point remains.
I agree, it’s definitely not just house size. But still, I’m not sure that your one data point anecdote is very meaningful. Desirable areas were more expensive in the 1950s too.
True, however, the concentration of wealth has meant that desirable areas are far more out of reach for the middle class than they were in the 1950s when unionization was at an all-time high and the difference between a highly-educated professional vs a skilled tradesman was more a matter of what kind of car they drove and how big their house was rather than what we see now which is working people being priced out of entire markets.
I got lucky because my wife and I bought our house when the neighborhood we’re in was still seen as the ghetto. We bought it because it was the only thing we could afford and it was relatively close to my wife’s parents, but since then the neighborhood has rapidly gentrified and our property value has gone way up.
This wouldn’t be an issue in a country wherein wealth is not so egregiously concentrated at the top.
Larger houses are due to many factors. Weren’t a lot of power tools around in 1949, and houses were heated by cast iron radiators and coal burning furnaces.
Yes that’s the point. We’re wealthier and more productive now and can consume some of that extra wealth. I am pointing out that we’re not comparing like for like.
Right now, most people are poorer than their counterparts from fifty years ago.
Take away technological advances like computers and cell phones that that would have occurred anyway and look at things like work hours and quality of life.
Hunter Thompson’s “Hell’s Angels” has a great chapter on the economics of being a biker/hippie/artist circa 1970. An Angel could work six months as a union stevedore and have enough money to hit the road for two years. A part time waitress could support herself and her musician boyfriend.
As late as 1980, ‘middle class’ was defined as one high school graduate supporting a family of four. After three terms of Reaganomics ‘middle class’ was two college grads working full time. Also, $1 million in 1980 was still a vast fortune and nowadays it’s what a rich guy pays for a party.
That’s a lot of difference, really. Makes me wonder if this is needed, considering that the average household size had decreased from 3.33 in 1960 to 2.51 in 2023
So it was 270 ft²/person or less before, now it’s about 1000 ft²/person
There’s places in the US where average rent is close to that, and I bet if we removed NYC and the Bay area the national average wouldn’t be super far off.
Sorry but I think you’re mistaken or several years out of date. I live in a midwestern city that overall has pretty reasonable cost of living. I also used to be a Property Manager for one of the bigger national companies. Our class B properties here were ~$800 for a 1 bedroom up until Covid, $1050 for a 2 bedroom. Now they’re 1300 for a 1 bedroom and 1600 for a 2 bedroom. House prices around here have done the same thing. I think it’s 800+ to be in a trailer park.
Not to mention people saying, “just ignore every major metro in the US which happens to make up a majority of the population” in response to housing being expensive is ignoring that most people are dealing with housing being way too fucking expensive. Like sure if I go buy a plot of dirt with a house 2 hours from a major population center then of course it’ll be affordable. Too bad there’s 0 jobs out there and 0 reason to live in the sticks for most people.
274 million people live in or near population centers, with only ~57 million living in rural areas. We can’t just ignore that the places with most of the people are becoming unaffordable due to draconian zoning policy and lack of government push for more housing.
I always crack up when folks like Sarah Palin say they represent ‘the real America.’
Yeah the small town (less than 15k population) I live in is getting close to $1k/mo for a 2br apartment and just 5 years ago it was about $500/mo for a 2br apartment
2br in Austin are around 1500 rn for decent ones. 775/mo per person is doable
I bet if you looked at the average in your area, it’d be below $800. Now, whether any of those units would ever become available without the current occupant dying? That’s another question entirely. I think COVID was an excuse for the entire economy to go stupid, but the utter lack of new housing everywhere has a lot to do with why costs are nuts. Especially in cities. Here on the east coast if you’re in literally any city, you’re paying out the ass. But the second you leave the city you can find decent places at decent prices still.
I avoid the official income averager for just that reason. It skews to make things look like they aren’t as bad as they really are.
If you just look at the prices of houses and labor, you get a much different story.
Back in 1960, minimum wage was $1.00/hour and the average house was $11,000.00. A high school grad could buy a house.
Or, think of it this way. The ‘offical’ rate tells us that $1 million in 1960 would be $10 million today.
In 1960, $1 million meant a Beverly Hills mansion, a half dozen luxury cars, and enough left over to buy a block of businesses.
Today, $10 million will get you a condo in Manhattan.
Certainly the effectiveness of a dollar has decreased, which is why this post is interesting. It includes several elements of normal life to contrast against that average income per person.
Quick history of how Conservative policies destroyed the middle class. Lyndon Johnson thought he could deliver a knockout blow to the Viet Cong with a massive build up. Instead he got caught in a quagmire. LBJ was afraid to raise taxes, so he printed tons of paper money to pay for the huge bombing campaign the Pentagon promised would wipe out the VC. Nixon ran as a pro-peace and anti-inflation candidate. He doubled down on LBJ’s bombings.
Meanwhile, the old US factories were working 24/7 to supply the steel the war needed plus make enough to keep American businesses supplied. Germany and Japan couldn’t buy US steel and started building their own plants. When the Arab Oil boycott hit the US was screwed twice over. We had to keep making bombs and suddenly Toyotas and VWs were a great deal. That’s how we got the Rust Belt and the death of Detroit.
The War ends, inflation is still awful, and Jimmy Carter gets caught up in the Iran hostage mess. Reagan gets in and the party goes into high gear. In 1980, middle class still meant one income to pay for a family of four, even if a lot of housewives had been forced to go to work. In 1980, $1 million was still considered a great fortune. By 1992, the two job family is the norm, but thanks to Reagan’s tax cuts for the wealthy $1 million is what a rich guy pays for a party.
Not sure who this was for, but it probably should have been a comment on its own. It’s more about the original post than my comments.
Also the parties realign during this period with conservative southern Democrats going to the Republican party and fully embracing the idea that government is the enemy rather than a potential force for good in people’s lives. The subtext being that if you’re poor, it’s your fault and rich white men should be left alone to run big businesses however they want.
The new Republicans hated the Civil rights Act so much that they filled local swimming pools with concrete rather than open them up to the entire population.
The average income, according to a quick search, was $975. Comparing this to the current US median wage of $32k (and keep in mind the 1937 figure is arithmetic mean, the median was likely lower), incomes went up at a rate far beyond inflation as well. Not everything is affected equally. Though without living in the US and mostly guessing from prices here I’d guess many things on the list went up even more, like movie tickets.
The same search also suggested that the 1937 average wage was 25% lower than the 1932 one, so it seems 1937 was actually a pretty shit year.
We owe the last two generations a big thank you for the absurd cost of housing right now. They made it a major portion of their wealth, and they prevented new housing from being added. People my parents’ age were able to buy a house while waiting tables and being teachers. You couldn’t even afford a down payment on a house where I live with that kind of income.
Can we stop the generational blame game? Its just not fucking helpful and its maddening how its become such a big distraction from actually placing blame where its needed.
The people who make these problems are the people we vote for. From your local community to the highest office/power in your country.
Because current generation people who follow old dogma are just as responsible as old generation people if they are voting for the same shitty policies/practices.
We KNOW this. The GOP, as an example, has young people that arent old enough yet to vote who believe in their bullshit.
Same with all the religious fucktards and by god it seems they are crawling out of every nook and cranny.
And one more thing to consider on this.Measles is making a comeback because of YOUNG people being fucking idiots who believe the bullshit they are fed. Is this their fault? Or the fault of the status quo? Go on a dating site. Look at how many young people are still antivax. Its apalling and the covid antivaxers of all walks of life are a good example(just my opinion) of how our leaders, if we let them do whatever they want without consequence, will make decisions that are good for them but bad for everyone else.
Its people who make decisions only caring about short term results who are also selfish people are the ones who fuck over the vast majority of everyone who isnt them.
What i would like to see is blaming the institutions and people who are usitilizing the mechanisms of our torment to continually degrade the experience we should all be having into the one we are having.
Blaming boomers or zoomers for all of the problems we have is just not helpful and only divides the suffering masses and prevents us from. Wanting to help each other. There are some individuals who hold a lot of the blame for the problems we have. But most of the problems we have are from a million small changes and influences working towards empowering power for the financial benefit of power. And money is always a form of power and always has been. When money gets to do what it wants then we all will suffer the consequences that are often not realized until well after the actions were taken.
Unless we want to start over from scratch we going to have to shift from just blaming those who came before and start future proofing the decisions that will need to be made in the future.
We need to start thinking planning and making sacrifices not for today or the next 5 years but 25 to hundreds of years in the future.
We need new visions of what the world should look like today but we cant do that without understanding how we arent all better off already.
Sorry for the rant. Im sure i didnt make a lot of sense but i hope anyone reading this will at least one time will make a difference in how they would have treated someone because of the different generation they are part of and help bring us all together instead of dividing us further, or just keeping to our separate groups
Edit. Got onto ramble and it didnt end up being just one more thing
Can we stop the generational blame game?
No. You seem to think I’m a young person. I’m not. Don’t need to lecture me about things I see at town hall meetings.
I’d like to smoke whatever you’re smoking.
Yeah and that 18k car in 1938 was a fucking death trap. Now u can get a newer car for price that that is 1000x safer.
No one wants to pay for progress
Not all of this is down to progress. Look at the cost of that college education. Look at the cost of a house. Manufacturing has also made vehicle production massively more efficient.
To be fair, this was in a recession during the great depression. The unemployment rate was 19% in June 1938.
To add to this, a new car in 1938 was $860 according to this, but essential information was left out. What that actually converted to in today’s money $18,709.33 which is a lot less than what I’m paying today but only by about half. I don’t disagree with wanting to get back to this point or better. But the picture seems to assume the reader already knows this?
More important, some quick googling says that the average per-capita income for 1938 was $515 (new york per-capita was $822, Mississippi was $205), which another search says was just under $11k. That car would cost an atomic family close to 2 years’ wages.
my Corolla was less than $18k so I don’t even think that’s unreasonable
Honestly big ups to the Milk industry for keeping milk inflation down relative to the rest.
but uh… curse them for their awful practices and ruining the environment etc etc
Well…it’s heavily subsidized, so you pay for it in taxes and then pay for it at the store.
Jokes on you, I don’t pay taxes.
Well as someone who does, I don’t like that
You don’t shop at all? Are there no sales tax or property tax where you live?
Average income of $1,731/yr is equivalent to $37,393 in present dollars. Current average wage is $63,795.
Yes but a house would only cost $84,240 in todays dollars. It’s all relative.
Which begs the question, is $1,731 really equivalent to $37,393? Because it sure sounds like we aren’t using the right metric for that conversion.
We should be comparing purchasing power instead of raw inflation.
Yeah, the numbers in the parent comments of this thread make me wonder how useful those “in today’s dollars” conversions are in general. Especially considering entire markets that existed in the 30s don’t today (or do but are vastly smaller, like horses would have played a bigger role and shoe shining was a job) and new markets exist today (like the entire tech sector). Is it even meaningful to compare money between those two timeframes without putting it in some specific market context?
Well, you only had to save about 2 years worth of wages to buy a new home (if you didn’t spend any)
Doubt you can do that this day and age.
6 months to buy a new car. Which is about the same as now.
3 months to pay for Harvard. Now about a full year.
Inflation is the combined change in prices, not just the change for one good.
There were no 30 year mortgages in 1938. Home prices are more related to the monthly payment than anything else.
Maybe? I do not have enough information on it to speak intelligently. What % of adults (let’s say over 25) were homeowners then compared to now?
Depends on what you want to buy. An inflation index uses select goods and services that are thought to represent the general economy but it’ll be different for any one individual.
This is the right question. Many goods and services have far eclipsed the average rate of inflation. Housing being one of them. But hey, we can buy cheap TVs now, so it all balances out, right?
If the official inflation figures (which are used to calculate that equivalent amount) understate the real inflation, that has the side effect of mathematically makinh the official GDP figure larger (because inflation is used to deflate the nominal - in dollars - GDP to create the official one).
There absolutelly is a political interest in the official Inflation understating reality (because it lets politicians claim as GDP Growth something is just the mathematical result of that understating error in the inflation figures).
It neatly explains why inflation is so consistently understated that dollar amounts at spearated by over half a century points in time which those official inflation indices tell us are worth the same do not in fact buy the same (i.e. are not worth the same) by a massive distance.
Random errors in measuring inflation would be just as likely understate it as overstate it and would not result in this difference in worth of a dollar amount thats several hundreds % off from the worth of present day dollars as measure by what it can actually buy.
I live in a house built before the year in question and paid not too much more than that price for it (~$95,000) in 2018. For reference the house is in a working class suburb of a small city in the Midwest, so it’s not a housing hotspot but not out in the middle of nowhere.
There’s no insulation in the exterior walls, I had to rebuild the dangerously steep basement stairs, and I’ve spent about five grand on asbestos abatement so far with more in the near future. Those are just problems with the original construction, I’m excluding issues caused by age or mistakes made by previous owners.
Cheap housing from that era doesn’t meet even the most basic safety related modern building codes (to say nothing of energy or environmental codes). Modern housing is more expensive because cheaper housing is a goddamned death trap.
I lived in a 3 decker built in the 1940s outside of Boston and the thing had barely functioning steam heat that had constant water hammer and it was so drafty that in the winter I could actually feel a breeze coming through cracks in the walls.
I know the feeling. In the mornings and evenings when light comes in through the basement windows I can see it through the gaps in the floorboards. I just tell people that I really committed to getting natural light.
Even when you take age related issues out of the picture the older, cheaper homes wouldn’t pass muster if they were built today. They’re bad for the environment and they’re bad for people.
A house may have been more affordable, but food was fucking expensive. A gallon of milk was more than $10 in today’s dollars.
Food production is “artificially” cheap. There’s a middle man taking a big cut, and there’s somewhere where the cut is taken. Be it poverty wages for poor immigrant workers or animal welfare, there is no price small enough considered by the powers that be for constant production of cheap food.
I’d take that as a smaller dairy farmer was able to make a living at that time, understanding that maybe people valued milk over the non-existent necessities that we now rely on today. Milk got cheap because it became an industry.
I wonder what median wage is like. Average, which I assume is mean, would be greatly skewed by high wage earners since the lowest you can go is zero (if that even counts as a wage), but the highest you can go is much higher and far more people are closer to the lowest wage than the top.
Income inequality has risen above 1938 levels after a huge decrease after WW2.
That’s wild! Plus the chart stops at 2010 and I’m sure it’s much worse now.
Unwittingly you have just pointed that the officail Inflation Rate indices that are used to calculate the equivalent amount in todays’ money are not only complete total bollocks but consitently understate the real inflation, which is why those maths produce an amount today for that past salary which is according to those indices worth twice as much and yet buys way, way less that the supposedly equivalent amount bavk then.
If the Inflation figures are telling us two amounts at different points in time are worth the same yet the present day amount buys a lot less (i.e. is worth less when you try and buy goods and services with it) that means those inflation metrics have been understating inflation.
I’ll even give you the reason why: the lower the official inflation figures, the higher the official GDP, because in its calculation those inflation figures are used to deflate the nominal GDP (i.e. the dollar amount) to create a supposedly inflation-free GDP that can be compared with other years. If the official inflation understates real inflation politicians get to claim as GDP growth something that’s just the Matematical outcome of that inflation figure being lower than reality.
Sure vast conspiracy across decades of civil servants is one option, or inflation as an overall number is an average and some things increase in price faster while some go slower.
You can always look at a price as a percentage of average income if that’s what you’re interested in, nobody is hiding these numbers.
That’s a massive strawman and a pretty lazy falacy to use: it’s like saying that CEOs cutting jobs to boost short term bonuses is a “vast conspiracy” or that politicians lying is “a vast conspiracy”.
As if people influencing people and people doing what’s best for themselves requires them to all coordinate with each other forming a “vast cospiracy”.
As soon as the heads of the institutions that produce economic figures are nominated by politicians, both the ones nominated are the ones expected to be friendly to the interests of those politicians and the ones in there will be under political pressure. Politicians want to look good and win elections and they’ll put pressure on those who produce politically important figures to make those figures look good so that they look good - no conspiracy required - and, guess what, GDP Growth has been a politicially important figure for several decades now, as noticed by the loud celebrations from whomever is in power that GDP is growing.
As for the numbers: here’s a pretty chart. Notice that’s the median, which is the correct average to reflect the experience of most people since the numbers aren’t skewed up by a small fraction of high-earners, unlike the mean.
Observe how in the 60s a single factory worker salary was enough for a house, a car, a family of 4, whilst now it takes two degree level salaries to get the same with smaller families - feel free to explain why what we are told is equivalent to 2x the salary back in the 60s buys less that half as much.
Keep in mind that any “beautification” of those figures was not be massive: we’re talking about in average maybe 1-2% a year. It’s just that over the span of half a century or more it significantly adds up.
Funny they don’t also post the median salary.
The median was about $1200, or about $26,000 today.
https://www2.census.gov/library/publications/decennial/1940/population-families/41272167ch7.pdf
They do post the average income under living expenses for some reason, at about 1700 dollars in the picture
This is the one that always gets me. When we’re specifically talking about the middle class, median means a whole lot more than the mean of the national wage.
Im betting most people dont know what you mean because they see average income and dont know what the difference would be
Are people not taught mean, median, and mode anymore?
I was taught the same multiplication/division for 3 years straight.
I did have a section on those 3 M’s in math, but it was a small part of the curriculum and over in a flash. I recall nothing of value.
Except the mean which came back up extensively in G10 Chem and that was it.
Watching my younger sibling do math was even worse especially when they transferred to online and a lot of the questions were actually wrong… which was a great exercise in learning, but… ugh.
Sorry friend, but not in any meaningful way as far as I’m aware. :(
I think a better question is did most people ever learn these things before they stopped formal education
This is a valid point. It was not taught to me in High School and I didn’t do so hot in Statistics my first time around with it.
IME, most people I have met have never learned, or at least committed to memory, any of these terms, or (most likely) not the concept of their specific value to analysis.
Felt like nerding out on this.
You can use the rule of 72 to figure compounding inflation (or interest) in your head. Just take 72 divided by your inflation rate and you get how long it takes for a price to double. Example: Assuming 3% yearly inflation , It would take 72/3 or 24 years for the price to double. Then, just double the starting price for each 24 year period. So assuming a car was 1,000 in 1950, it would cost about 2,000 in 1975, 4,000 in 2000, and 8,000 in 2025 if inflation for that product was exactly 3% yearly.
A couple percentage points difference makes a huge difference in how long it takes for a price (or investment to grow). The stock market has an average yearly interest rate of like 8%. That translates into a investment portfolio doubling every 9 years instead of the 24 years it would be for 3%. So 45 years in the market would turn an initial 1k investment into a ~$32k investment.
Of course, you could also use an online compound interest calculator(simple one here), but I like to know how to do the calculation myself personally.
But then you get greedflation periods (maybe never before like the past four years?) where you see some brands raising their car prices 50% since 2020 (inflation over that period an already high 21%).
Yep it doesn’t stay at the same rate. Best you can do is base it on the average. 3-4% is probably the most realistic average to go with for a rule of thumb.
What’s the explanation for the 72 magic number?
Maths :). I don’t know well enough to explain but my good friend wikipedia has an explanation.
Yeah, that tracks with my experience, but I didn’t realize there was a reasonable easy to remember rule of thumb. I figured out last year that the value of the dollar had reached 50% of what it was when I started working. That was 25 years at the time.
That realization really helped me re-ground my price expectations.
As pissed as I am about the current state of afairs, violent revolutions tend to turn into a total shit show real quick.
Revolutions are a response to material conditions. Typically it was already a shit show, then the revolution happens and it gets even shitter very briefly, before working itself out over time.
Usually over pretty long time. Hard to tell if nothing except for revolution would work (and it’s different in each case, I guess)
It would be kinda funny if, in like two hundred years, historians refered to this time period as “The Total Shit Show.”
It would be good if there we historians at that time. I’m turning a bit pessimistic as of lately 😞
Oh I’m sure there will be… Rome didn’t fall in a day.
how long did it take for most of everything on earth to die after the climate got messed up? which has happened more than once and is dixon’ to again…
Rome never had a climate apocalypse
They had at least one small one. Rome was around for a while.
Most wellbeing metrics are better than almost any other time in history, including lifespan and hunger. For history, we’re living in a golden age. It’s just a bit rough for us younger people because I believe we’re doing worse than our parents, and we are the first generation to experience that.
Unlike the current state of affairs?
Damn, that’s a lot of sugar. Everything else seems to be sold in “reasonable” amounts, why is the sugar so out of proportion?
Poundful of sugar helps the medicine go down
I’m assuming that’s the wholesale price. I can’t imagine a single family buying 10 lbs at a time.
I can, given that most families did a hell of a lot more baking/cooking themselves instead of going to restaurants, buying processed food, etc.
Edit: plus, I forgot about making their own preserves and canning food, both of which require a fair bit of sugar, too.
Preserving fruits for winter was what came to my mind.
Explains all the sugarcane farms
Well, lots of demand for an extended period of time (ie centuries), plus a crop that grew well in areas that didn’t take to traditional cash crops, and sugar was relatively easy to process into a form that shipped well even back in the Age of Sail (molasses and rum).
Frankly, there are a lot of reasons that sugar cane was a popular crop.
TBH food and postage appear to have been hella expensive.
Kurt Vonnegut’s book ‘Mother Night’ takes place around 1965. There’s a line where a shut in almost swoons when strawberries come back in season. Today you can get fresh fruit any month.
Even when I was a kid fruit was seasonal. Strawberries, blueberries, watermelon, pineapple, kiwi, etc. were all seasonal.
I remember being excited when my favorites started showing up in stores through the year. Watermelon was the big one and seedless wasn’t the normal, it was great.
You can’t get good strawberries out of season.
Maybe you can’t.
Yeah I suppose you could fly them in from New Zealand or Okinawa.
Mexico, Guatamala all of central and South America…
My mom still talks fondly of the first time she ever saw a mango in the supermarket. Nowadays I literally don’t even know when mango season is.
You can get fruit out of season, but they’re definitely not fresh.
I love the fact that guiotines have become a part of normal conversation.
#KILLTHEBILLIONAIRECLASS. #HEDGEFUNDSSHOUKDBEILLEGAL #DERIVATIVESCANTBEWORTHMOREASTHEORIGINAL
Have you ever been to church “on weeeeed”, man?
yeah guillotine the whole economy fuck it
Nuke the fuckin world. That’s my motto.
How about degrowth?
Just build more houses.
We need so many more reasonable houses with strong public transit and micro mobility access
I wonder what is total houses / total population ratio
We need a cool guide with values adjusted for inflation.
Be the change you wish to see in the world [email protected]
Chasing lower prices? How about higher incomes?
NYT: “Per capita income in 1938; Average Figure Was $5l5, Compared With $679 in Boom Year and $376 in 1933 NEW YORK STATE HIGHEST Yearly Earnings Show a Mean of $822, With Mississippi Lowest With $205”
Get outta here with yer “math”! We want coins back, damnit! That’s all!
Those houses are cheap as hell. I guess they are built cheaply as well.
