March 26, 2019

NOBODY HAS IT HARDER THAN THEIR FATHER DID:

Free markets dramatically reduce the cost of living (Marian L. Tupy, 3/26/19, Human Progress)

[B]asic food items in America have become almost eight times cheaper relative to human labour over the course of the last 100 years.

In our analysis of the cost of food in America over the last century, we begin with Retail Prices, 1913 to December 1919: Bulletin of the United States Bureau of Labour Statistics, No. 270, which was published in 1921. On pages 176-183, we encounter nominal prices of 42 items - ranging from a pound of sirloin steak to a dozen oranges - as registered in the city of Detroit in 1919. Those can be seen in the second column of the attached graphic.

Our second step was to express those nominal prices in terms of hours of human labour. Together with Gale Pooley, associate professor of business management, Brigham Young University-Hawaii, we took the index of hourly wages of unskilled labourers (i.e., workers at the bottom of the income ladder) between 1774 and 2016 from www.measuringworth.com and re-indexed it to 1919. That gave us a nominal wage rate of unskilled labourers amounting to $0.25 per hour in 1919. The nominal prices of food relative to nominal wages in 1919 can be seen in column 3.

Our third step was to find the nominal prices of the same goods (including, of course, the same quantity of those goods) on www.walmart.com, which is where most unskilled labourers shop in 2019. Those findings can be seen in column 4. According to our calculations, the nominal wage rate of unskilled labourers amounts to about $12.70 per hour today. As such, the nominal prices of food relative to nominal wages in 2019 can be seen in column 5.

What did we find?

The time price (i.e. nominal price divided by nominal hourly wage) of our basket of commodities fell from 47 hours of work to ten (see the Totals line in column five).

The unweighted average time price fell by 79 percent (see the Totals line in column six).

Put differently, for the same amount of work that allowed an unskilled labourer to purchase one basket of the 42 commodities in 1919, he or she could buy 7.6 baskets in 2019 (see the Totals line in column seven).

The compounded rate of "affordability" of our basket of commodities rose at 2.05 percent per year (see the Totals line in column eight).

Put differently, an unskilled labourer saw his or her purchasing power double every 34 years (see the Totals line in column nine).



Posted by at March 26, 2019 3:58 AM

  

« THE CRUSADER STATE IS A UNIVERSAL HEALTH PLAN: | Main | NATIONALISM IS RACISM: »