Today, the Price is Righter

by Don Boudreaux on March 1, 2015

in Growth, Myths and Fallacies, Standard of Living, Video

The Tax Foundation‘s Joe Henchman alerted me to this YouTube clip of the first episode of “The New Price Is Right” (featuring Bob Barker).  This episode aired on September 4, 1972, right around the time I started my freshman year of high school.  Watching it will give you a pretty good snapshot of what life was like in the United States in the early- and mid-1970s – the time when, according to many pundits, middle-America’s living standards reached a peak from which they’ve barely budged in the ensuing nearly half-century.  You judge for yourself if, as evidenced by this video, the living standards of ordinary Americans are today likely not much higher than were the living standards of ordinary Americans during early- and mid-1970s.

Note how much work time it took ordinary private-sector workers back then to earn enough income to buy some of the goods featured on this episode of “The New Price Is Right.”

Consider – appearing at around the 3:30 mark of the show – the 30-inch electric kitchen range priced at $385.  In 1972, the average hourly earnings of a production or nonsupervisory private-sector worker in America was $3.90.  So, such a worker in 1972 had to toil for 99 hours to earn enough income to buy that range.  Here’s a 30-inch range available today at Home Depot for $349.00.  The average hourly earnings of a production or nonsupervisory private-sector worker in America today (January 2015) is $20.80.  So, today’s ‘ordinary’ worker can earn enough income to buy a 30-inch electric kitchen range in just 16.8 hours – a mere 17 percent of the work time required in 1972.

I could do this sort of work-time comparison for all goods and other prizes featured on this show.  The results in nearly all cases would reveal that ordinary American workers today get far more for each hour of their work time than they did back in 1972.

I say “nearly” because the modest car – a Chevy Vega (with “AM radio!”) that is introduced at around the 4:10 mark is priced at $2,746 – was less costly in work time than is a modest car today.  To earn enough (pre-tax) income to buy that 1972 Vega required the ordinary American worker in 1972 to work 704 hours (or almost four-and-a-half months).  Today, a low- (although, like the Vega of its day, not bottom-) end car costs the ordinary American worker more work hours.  Consider a 2015 Toyota Corolla, starting at $16,950.  At this price, the ordinary American worker today must work 815 hours (more than five months) to earn enough income to purchase this modest car.

But is today’s car really more expensive (when measured in work-time) than was a car in 1972?  Perhaps.  But perhaps not.  The answer is not as objective as you might think.  Switching t.v. game shows: Let’s Make A Deal!  On your current (2015) salary, you can buy a shiny, never driven, and fully functional and fully warrantied 1972 Vega at a price of 2,746 2015 dollars* or a brand-new shiny, never driven, fully functional and fully warrantied 2015 standard-package 2015 Toyota Corolla for $16,950.  What car would you buy to satisfy your personal transportation (as opposed to your car-collector’s) needs?

Some people might choose, at these prices, the 1972 Vega over the 2015 Corolla.  They’d, of course, not be wrong to do so.  But I’m confident that lots of people – I believe the great majority – would choose the 2015 Corolla, even though its work-time price is higher than that of the Vega.  The reason is that the 2015 Corolla is a luxurious, marvel-filled vehicle compared to the 1972 Vega.  The 2015 Corolla is also much safer than was the 1972 Vega.  (I myself would definitely choose the 2015 Corolla.  As it happens, the first car I ever bought was a used 1972 Chevy Vega.  I bought it when I graduated from high-school in 1976; the seller was my friend Roger who worked with me at a local supermarket.  My high-school graduation gift from my parents was $100 toward the purchase of this car.  I drove my Vega for two years until it was ruined in the great New Orleans flood of May 3rd, 1978.  For nearly all of that time I had to put a quart of oil into it every 50 miles.  I bought cans of oil by the case and kept them in the back of my Vega, beneath its hatchback.  I would often pull over to the side of the road to pour in another quart of oil.  And note: back then, motor oil came only in cans.  To pour motor oil into a car’s engine required that a metal spout be manually pushed into the top of the can of oil – almost always a messy job.)


* The only modification of this 1972 beaut is that, unlike in 1972, its engine burns unleaded gasoline.


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