When reading about earlier times, the costs of various items are often mentioned, as are wages for different kinds of work. To get any sense of meaning from these numbers, they need to be compared somehow with equivalent costs in our present currency. But the estimation of inflation is far from an exact science.
Here’s a site that looks at historical vs current costs from multiple angles: Measuring Worth. I haven’t studied it in any detail yet, but it looks interesting.
See also this: Prices and Wages by Decade, 1600s-2000s
In 1968, I bought a new Ford Mustang convertible for $3050. I financed it through the credit union at LA County Hospital and my monthly payments were $95. When I finished my Surgery residency in 1971, it was paid off and I had a balance of $1500. in my account. In 1969, my father died and left me a little money (about $7500.) and I bought a house in South Pasadena. It was a pretty house but small, about 1800 square feet on a 50x 100 foot lot. I paid $35,000, with 10% down and a 10% second TD.
This is that house.
Present estimate $ 1.9 million. Los Angeles housing prices are crazy but that is an example.
My salary at the time was $17,000 per year and I worked in ERs to bring my income up to about $21,000.
Price changes are all over the map depending on what you’re looking at. I understand that you could build a pretty decent merchant sailing ship in 1830 for about $50K. Applying the CPI ratio at the Measuring Worth site, I get a $1.7MM equivalent today.
How much would it really cost to build an equivalent ship today? I found an article that said the Goetheborg of Sweden replica was estimated at $40MM. This included engines and modern monitoring systems, though.
https://www.boatsnews.com/story/41760/gotheborg-of-sweden-replica-of-the-worlds-largest-wooden-sailing-ship
The $40MM was also in the mid/late 1990s…$40MM in 1997 translates into $75MM today, using the CPI calculator on the Measuring Worth site.
I doubt if you could chop of more than $15MM of that if you remove the engines and the other modern stuff, yielding a $60MM equivalent cost. OTOH, the replica was a one-off build, whereas the ships built in the 1830s were from yards that built a lot of them and were presumably pretty far down the learning curve. They had no power tools, though.
Gotheborg – interesting story (from April??) of a ship losing its rudder. The first ship to arrive after the distress signal was the Gotheborg. Were some sailors wondering if they went through a time warp?
Very rough rule of thumb is that I consider 10x inflation to be a little more than 55 years, so figure the price of something now to be about 1/10 that in 1968. A pound of hamburg, a gallon of gas, a pack of smokes, a cup of coffee – those approximately track. Some other things are wildly different in one direction or the other. And on some things, like a six pack of beer or a new car, it matters what level you are buying at.
And on some things, like a six pack of beer or a new car, it matters what level you are buying at.
One thing about cars is that regulations and safety rules have massively expanded the cost of new cars. It’s not all inflation but most of it is. In 1975 I bought a new Mercedes Benz 450SL roadster for $16,000. The new AMG SL roadster is a bit fancier but $137,000 is a lot more.
While still in elementary school, bubble gum taught me about the reality of inflation. The one cent piece stayed one cent, but became half as big.
Twain’s “Connecticut Yankee in King Arthur’s Court” has a scene vivid in my recall from reading it circa 9th grade. Not an assignment (today I understand why I’ve never seen it on any reading list, but that’s another story), I read it because my dad had read Tom and Huck to my brother and me and I had reread them and liked Twain and saw Yankee in a library. The scene has the Yankee in a pub talking with locals about their pay. He is trying to communicate to them that the number of monetary units they earn has secondary importance to the amount of time they need to work for those units. The locals got angry with the Yankee, figured he was screwball. I grasped Twain’s point: he was poking fun not only at the results of inflation, but the personal choices driving inflation..and, of course, the “common folk’s” ignorance. Labor, producer, shopkeeper all wanted more money; none focused on increased productivity, but relied on thinking they were cheated by others increasing costs.
The 1968 year Mike K bought his Mustang for $3050, I was still a college student. I could not afford a Mustang, but got instead a new Rambler American for $2200. Sold it 8 yrs later at 140K mi for less than $100.
Last year one of family’s two cars “died” and we needed a newer car. (Other than that first car, I have never since bought new. I let somebody else take the “showroom hit”, find and solve the manufacturing problems.Instead I get cars I inspect myself at 20-60K mi.) Ended up selecting a 2018 Ford Fusion with abut 26K mi and about $23K. About 10X the price of the Rambler, but in multiple ways much better car.
Took wife and some of family to dinner last night. 7 of us. Pizza. Including tip, $130. When in jr I noted for first time what it cost my dad to take out family of 6 to a Mexican restaurant: about $20. (The Mexican dinner was better, with more variety, than the Italian dinner. ;^D ) A cost factor of more than 6.
Inflation is real. I have a hard time wrapping my mind around it. Paid 3 cents for the postage I used for mail to a high school girlfriend. Current 1st class postage is 63 cents (soon to increase), a factor of 21. Gov’t increases faster than private enterprise–go figure.
On the income side, I earned about $2/hr on manual labor jobs in college. Same sort of work maybe $20/hr today. Meanwhile, I moved on from manual labor into a variety of engineering jobs. If I were working professionally today, I’d earn >$70/hr.
When, while still in college, I got a private pilot’s license, it cost me 4 hrs labor to rent a flying hour in a Cessna 150 = pilot plus passenger (my wife-to-be was my first passenger), a bit of luggage, 105 mph. While working in the early 2000s, it took a little over 1 hr labor to rent a flying hour in a Piper Arrow, pilot plus 3 passengers and some luggage, 155 mph. Twain would say I did OK. (I’ve flown across continental U.S. several times with family, have flown as pilot/engineer across much of central U.S. doing field service work . Could fly at about the same cost per mile as driving.)
Over the 200 plus years of U.S. history, productivity/wealth has increased at roughly 5% annually.
Using the Rule of 70 (if % is small, divide that number into 70 and the result is the time it takes for a doubling), 5% is 70/5 or 14 years to double, or, since I was a kid, 4 doublings or 16X. At 6%, 70/6 or 11 1/2 years. Means 5 doublings, or 32X.
I tend to divide by 15 to make cents of prices. And that does not make sense.
Last year one of family’s two cars “died” and we needed a newer car. (Other than that first car, I have never since bought new.
About six years ago, I decided on a new car. Both Honda and Toyota had changed the body shape of the mid size SUV. I didn’t like either of them so I bought a used Honda Pilot. Still have it with about 160,000 miles on it. When I was still in practice, I tended to lease cars and then buy them at the end of the lease.
Graph showing price history by type of product or service:
https://www.visualcapitalist.com/inflation-chart-tracks-price-changes-us-goods-services/
The cheapest I remember gas is 27.9¢ a gallon, so gas, hovering here, around $3 is a real bargain though the $85 to fill up last time didn’t feel like it. Every time I buy it for less than $2, I wonder if that’s the last time. Then there’s McDonald’s hamburgers, french fries and 12 oz bottles of pop for a dime and Hershey bars, albeit small ones by that time, for a nickle. All, long gone.
Restaurants are caught in a real bind, their cost are headed nowhere but up. The last time I ducked in to pick up a burger on my way home from work, the “deal” was just barely below $10. I’m blessed that $10 isn’t a real issue but cursed with a mind that remembers when $10 was a fair chunk of money, so it’s not something I do as often as once a month. Not when I have the fixins for less than a third at home.
I’m also cursed with a mind analytical enough to realize that eating lunch out would be at least $200 a month and can remember when that was rent and phone to boot. I do splurge on an orange for desert, that at 88¢ per, probably costs as much as the rest of it. It’s my, probably, single nutritionally defensible habit, and I’m keeping it.
The aforementioned fast food places are caught in a labor shortage, not in spite of, but because, they are paying more than ever before. When they were paying $8-10 an hour, a couple of extra bodies a shift to deal with all the employee drama of broken cars, broken alarm clocks and just not feeling like coming to work today, wasn’t a big deal. Now, for $15-18, they expect you to just be there and that’s going to take time to become embedded in the psyche of their prospective work force, if it ever does. The same for all the rest of the casual labor, casual service sector. They, oddly enough, intend to get what they pay for.
On the topic of fast food, I grew up in Chicago in the 40s and 50s. There is a popular chain called “White Castle” there. Their hamburgers, which were small, sort of like “sliders” in the Navy, were 10 cents and a dozen could be had for a dollar. There is a “White Castle” in Long Beach CA but I have not tried it and don’t know what the price is these days but I doubt it is 10 cents.
Not quite an apples-to-apples comparison like gas and rent but…
Back home in Arizona they had what we called “$1.50s” movie theaters. Basically old theaters that were abandoned when the round of 1980s/1990s new theater construction made them obsolete. The $1.50s ran movies that were between their initial theater run and their release into video and as long you weren’t dying to see a movie right-away were a great bargain. In fact we used to rate movies not so much by quality but how much we were willing to pay and we had a soft spot for movies that we had a great time watching for $1.50 (Spaced Invaders) but would never spend full price. I think there is one such theater left.
Back in the early 1990s or so when Starbucks was really taking off I remember a column, I believe it was George Will, who asked why people who were strapped to pay for a decent standard of living were willing to pay so much for a simple cup of coffee. He came to the conclusion that it was a status item and also a palliative. Dunkin, and McDonalds have had great success in addressing that part of the market, in fact Circle K (the 7-11 of Arizona) has some of the best coffee around) but it’s not a status item.
A while back I went into a long review of my experiences in managing minimum-wage labor at Home Depot. To a certain extent, yes, you do get what you pay for in the sense that most with motivation and initiative will not stay long at HD if apply at all. However I have found, and I believed proved, that even at such places it’s more a matter of you get what you expect and I blame HR to a large extent for the slovenly situations you find at retail and fast food. I’ve always had a thing for In’N-Out Burger and when I’m back it’s always the first stop out of the airport. Not only a great burger, but great value. The thing I really like the most is the incredible dynamic behind the counter. When I see stuff like that in my travels I try to pigeon-hole a manager to ask questions, but at In’N’Out they are always too busy of a place. I did get a chance to meet one while hiking in of all places Payson and he basically confirmed that even for a low-wage job it’s a about a proper culture.
Mike…If you haven’t read it yet, I recommend Zeynep Ton’s book The Good Jobs Strategy, which I recommended here:
https://chicagoboyz.net/archives/60771.html
(which I *reviewed* here)
Here’s an interesting diversion for a Saturday afternoon. It’s not specifically about inflation but does go into relative costs and values over a period from the 17th century as well as touching on development of technology and comparative technology’s impact on defense:
https://www.youtube.com/watch?v=zlRxWJ_kGEA
If you’ve read “Longitude”, there won’t be any surprises but you’ll get to see the first three of the Harrison Clocks still running and a pleasant presentation.
Matt Ridley’s Ted Talk on his book, “When Ideas have Sex”, should be must viewing for everyone. https://www.ted.com/talks/matt_ridley_when_ideas_have_sex
The video is far more valuable than the course content of the average college semester for an average college student.
Beginning at the 5:50 mark he discusses how much labor is required to produce an hour of light in order to read at night. It was 1/2 a second in 1997. He traces the cost back in time. It was six hours in 1800. It’s an interesting way to measure inflation.
Ton apparently will be releasing next week what seems to be a.follow up to that book. We will see if he addresses any concerns of mine https://www.amazon.com/Case-Good-Jobs-Companies-Everyones/dp/1647824176
Mike…should be interesting, I’ll download the sample for starters. (btw, Zeynep Ton is a she)
Not to cast aspersions on books I haven’t red, but I sort of stopped paying attention to business authors, especially those with “institutes” and lots of paid speaking gigs when I found out some, maybe all, of the beautiful anecdotes Tom Peters used, which I did read, were made up.
When I see: “From MIT professor and pre-eminent voice on Good Jobs comes a leadership guide for choosing excellence and providing good jobs that offer a living wage, dignity, and opportunities for growth.” the density of buzz words raises my hackles. In my experience, there’s nobody quicker to tell you how you should run your business than somebody that never has and has no stake once their check has cleared. Maybe I’ll get a wild hair and decide to invest the $17 and the time to read 272 pages to see if she really has something new, stranger things have happened.
Mike K
In 1958 family friends bought a Mercedes sedan in Germany for $2,000, and shipped it to the US.
MCS…Zeynep when growing up in Turkey did some work at her father’s textile firm, seems to be more operationally-oriented than most consultants. (She originally came to the US on a volleyball scholarship, didn’t know that was a thing)
MCS, when I sailed to Hawaii in 1981 competing in the Transpacific race GPS was not an option and SatNav was limited to a few large yachts as it required continuous electricity to track the satellites. We had a sextant, a small calculator and a Texas Instruments digital watch, which was our chronometer. Much of the race was in cloudy skies, limiting the observations by sextant, especially at morning and evening twilight. Noon sights were also a bit tricky as the latitude of Hawaii is almost exactly the same as the summer sun. Nonetheless, we found Hawaii on time and finished as second overall, losing the first overall by 9 minutes. Here is a clip from a movie I made of the race. It shows how clouds gathered toward evening.
David,
I re-read your review which I had forgotten. I probably agree with her on some things as well. One of those would be the idea that non-monetary issues like schedules play a bigger role in worker satisfaction than many businesses are willing to admit. I’ll bet a lot of workers were surprised that $15 didn’t fix everything for them as well. Maybe I should think harder about reading her books.
Something that isn’t addressed is that some sorts of businesses just aren’t going to attract a significant proportion of long term employees. Those sorts of businesses will also attract a different sort of manager, it seems to me.
I doubt many people that take a job in fast food intend to flip burgers for the next 20-40 years. There will be some who rise through the ranks by intent but for the great majority, it’s just a job for a while. Managing them will be different than managing skilled workers or professionals. Then there’s the difference between drawing your employees from what might be called euphemistically, an urban labor pool and a suburban or rural one. Success comes from managing and motivating the the workers you have or can get and for many, that seems elusive.
As I said back then, retail especially, seems to have been engaged in a long term effort to drive any sort of initiative out of their line managers and eliminate any employee that could find a job anywhere else.
Mike K.,
I remember one of the ads for an early electronic watch was from an explorer that had used it to survey Greenland. My father did celestial navigation in the Air Force with an Air Force issued watch, a slide rule and an octant. A neighbor that was a pilot for Continental flew with a navigator to Hawaii in the 60-70’s. I remember hearing about it when Boeing stopped putting navigation domes on their airplanes.
David,
Him/Her….. I have a hard enough time with the Turks, let alone commenting on them on a Saturday afternoon while grilling.
I think it’s a combination of both a background in social science combined with cynicism born from experience, but I find I distrust books on management almost as much as I distrust management consultants. We seem to have a deep-set, almost instinctual need as a species for overarching theories to explain complex social realities, principles that we can apply deductively to provide guidance in given situations. In one sense it’s not bad since we have to start with some sort of theoretical framework otherwise we wouldn’t even get out of the bed in the morning. However such frameworks usually run afoul of inductive reality, that is facts on the ground. I find it especially true with her work given what I personally know of her examples.
Home Depot is in , arguably, its fourth generation of leadership and as you pointed out in your past review it’s employee policies have changed. In part this was because of growth, but also because of labor is the second biggest cost line on the company P&L which is why the company moved to a minimum wage+ model for its stores. The models that the company put in to help guide employee relations, the ones that Ton describes such as the inverted pyramid, have been around for decades and are meant to systematize the values of the founders of the company (the first generation of the founders)
The problem becomes, as with any organization, is what happens with those processes once you move beyond the original leadership team. The processes and symbols, such as the HD inverted pyramid, were a means to express values that were useful to the organization and not as ends in of themselves. What sort of utility? Well to be blunt, useful to the company though that can be justified as a happy employee is a productive employee. That clearly isn’t the case in HD stores today as shoddy and disinterested service has become a running joke among the customer base driven by unmotivated employees and poorly trained in-store management. Yet I will guarantee you that in the first hour of a new employee’s orientation, on every binded piece of training material, on the wall of every meeting room is the HD inverted pyramid.
I am still working through an explanation of the process itself, I don’t think it’s quite as cynical as Eric Hoffer’s admonition of great causes turning into rackets or as deductive as Strauss-Howe theory of generational change. Perhaps it’s the fact that the people and processes that are needed to carry out those policies exist far beyond their initial implementation and become a bureaucracy. Or in my cynical (though more humanistic) view a cult who see the inverted pyramid as a mystical artifact that is capable of great power and beyond all criticism though whether it is capable of achieving its original purpose
I was always torn when training new HD managers for the stores because one hand you needed to give them the training necessary to succeed in the company while at the same time giving them the knowledge to succeed as a managers. Unfortunately HD has degraded to the point where the two are not the same; you can say that about a lot of mature organizations. That is not to say that the original values the pyramid were meant to invoke are not still relevant only that the pyramid has lost its ability to properly express them. The problem for a HD is now it has an entrenched bureaucracy (HR) that has lost sight of both it’s original mission or of its larger role in the company; the means have become the end. That is not even just a theoretical problem, because after years of basically employees running the stores the company needs to impose a new labor model and value system to drive efficiencies at the same time the labor market makes that increasingly difficult. See aphorism about fixing a leaky roof before it rains.
I’ll be curious to see what Ton has to say in her new book given that it will be 9 years since the last one. To put it bluntly, has she learned anything? Have anything new to offer? I’ll offer a suggestion, especially relevant in the days of Bud Light, Target, and focused marketing. People want to spend their money as customers, but even more so their precious time as either customers or employees in situations that they feel good about or their dignity (to use one of her favorite terms) is honored. It’s why some people like going to Target instead of Wal-Mart or refuse to go back to a store where they got rude service. The same holds true for our time at work, nobody wants to work at a place where they are degraded but at the same people will not work where they feel their contributions don’t matter. Ask yourself if you wanted a job in retail would you want to work in a place like HD?
When I visited stores across the country I heard a lot of stories that jibed with my personal experience, that really good people left not because of the relatively low pay (they knew that coming in) but because of the anarchy that was the result of the bureaucratic imposition of the inverted pyramid. The employees ran the store.
I might not be an MIT professor, but I have a bunch of degrees and a lot of practical experience managing and to me as I compare it to reality and what I accomplished Ton’s work strikes me as the 21st Century academic version of a Tom Peters book. Hopefully her thinking has evolved.
Stan,
I think Ridley has to have made a mistake in figuring the cost of illumination in 1800 although it doesn’t affect the validity of his point. I know that at the time, the best wax or spermaceti tapers were extremely expensive but that wasn’t what most people would be using. The most common would have been either candles made with tallow or oil lamps using animal or vegetable oil. The cost wasn’t negligible but it wasn’t the equivalent of half a day’s wage.
The 19th century saw three revolutions in illumination in fairly quick succession. First was the advent of cheap whale oil for lamps, courtesy of the industrialization of whaling in New England. Then kerosene produced from the newly liberated “rock oil”. And finally, electricity with “city gas” for lighting mixed in for good measure. Each increased quality while decreasing the cost. Somebody should write a book.
This illustrates the near impossibility of measuring “inflation” over more than a few years. The richest person in the world in 1800 or 1900 or even 2000 couldn’t have bought the $5 led flashlight I keep in my pocket for any sum. It’s not just a matter of what things cost but what money will buy and that’s constantly changing. That $30 (If I remember correctly because I had one too.) TI watch that Mike K. had was better than all but the best chronometers available at the time, not withstanding that radio time fixes had made that accuracy moot as long as your radio worked. A contingency that seems to have escaped the notice of modern navigators.
When I brought Skunk, perhaps the best marijuana ever, to Vancouver Island I was selling it for $300 an ounce. This was in the eighties, and now a very good strain, goes for $1200 a pound.
We have legalized it, and so many hopeful halfwits invested billions in trying to capture this market, and went broke. This is happening in the states, as they try to legalize it in various places.
It is difficult to understand how so much money was thrown away in these enterprises. We were fine when it was illegal and had production to match our needs. Why did these morons think they could just waltz in and take over.
Now I can buy very fine dope quite cheaply and legally, to the point its almost not worth growing it. A mature market at this point. ;)
Speaking of dead end, soul destroying jobs, that pretty well describes processing the marijuana harvest into saleable bud. Not going to be robotocized any time soon. Add in the fun of doing supercritical fluid extraction with apparatus designed and built a only a hop head knows how and you certainly have a recipe for job satisfaction.
By the way, the tests on the “legal” weed for THC aren’t going to tell you what else is there. Something to keep in mind with the rest of the drug trade awash in cheap fentanyl and other cheap adulterants. The high ethical standards of everyone involved is all the assurance anyone should need.
“Speaking of dead end, soul destroying jobs, that pretty well describes processing the marijuana harvest into saleable bud.”
No! My trim shows were fun. A bottle of fine scotch on the table for the workers. The trim in my Skunk yielded a lot of hash like resin, and we were required to smoke that as it accumulated. A very stoned and slightly drunk crew made for a party.
In Canada our dope is regulated and tested, and as so many have crashed and burned trying to sell us what they thought we needed, the producers are quite careful.
I’ll grow some this summer, my son has some nice clones for me. It will be heat squeezed, perhaps the purest form of drug extraction there is.
I’m glad you’re not fixing my brakes.
If you live in a state where pot is “legal”, how can you be sure the person fixing your brakes isn’t high or the driver in that car coming at you? Not that it’s necessarily a sure thing anywhere, at least places that haven’t legalized it can fire somebody for failing a drug test. That’s not so in New York or California:
https://duckduckgo.com/?t=ffab&q=can%27t+fire+for+drug+test&ia=web
At least with alcohol, the amount found in the body roughly correlates with intoxication.
“I’m glad you’re not fixing my brakes.”
Brakes are easy, I have always done my own. In fact I do all my own repairs and maintenance too. I have run repair shops for medium sized trucking companies as well. Rebuilt all their 460 ford motors at Ladner Transfer..
But for my car, my new Solterra, I hardly use the brakes. With the strong regeneration I use, I can drive around for quite a while without touching the brakes. ;)
There was this Dept of Highways study in Oregon in the late 60s and its is gone. I can’t find it anyway.
It showed an experienced marijuana user was less incapacitated after a toke, than a normal user with nothing in their system. Less errors for almost 20 minutes, til the two lines crossed again. The alcohol line of user errors was in another place entirely.