Costs Go Up Over Time
Posted by Gail | Filed under talking about money
It’s a well-known fact that costs go up over time. Inflation and all that. But costs are relative to income so when you look at just the cost of stuff you get the wrong idea. Alex pointed me to an infographic (I love these things) that showed how much you could buy with one hour of minimum wage in 1979 and in 2012. Over 33 years the cost of a pound of chicken (in the U.S.) went from $1 to $3.18, but you could buy the same 3 lbs for one hour of minimum wage. You might be surprised at what went up and what went down.
You can buy marginally less apples, 6.75lbs in 1979 compared to 6.5lbs in 2012. Ditto litres of milk, pints of beer and loaves of bread, which were all ate up just slightly more. You could by 13.5 litres of gas in 1979 compared to the 8.2 litres in 2012.
Back in 1978 shelter ate up 21% of income, compared to 28% in 2010, even after the 2008 market correction in the U.S. But food costs have gone up over all since in 1978 food accounted for 22% of spending compared to 2010 when it was only 14%. Clothing has gone down by almost 3%, recreation has stayed almost the same and we’re spending more on loan interest and gambling (geeze!) We spend far more now on household operation (think pets, child care, telecom) and on furniture and appliances (cos we have to have all the new stuff) despite the fact that they have come way down in costs, so I guess we just have more of them.
But there were things that were more expensive too. Coffee for one, cos you could buy 50% more coffee in 2012 than you could in 1979 for the same hour of minimum wage. A 19” TV used to cost the equivalent of 221 hours of minimum wage in 1979 while in 2012 it was just 10 hours of minimum wage. Perhaps this is why there’s now a TV in every room in most people’s houses.
All you Toyota fans will be happy to learn that a 79 Corolla took only marginally fewer hours to afford than a 2013 Corolla: 1400 hrs vs 1500 hrs.
The big surprise for me was newspapers. Back in 1997 you could buy 20 newspapers for an hour of minimum wage. In 2012 it was less than half that – just 8 newspapers – which is probably why the industry is flailing: it’s just gotten too expensive!
You don’t have to go all the way back to 1979 to see the impact of inflation. Here’s another infographic that compares 2000 and 2010 costs and how they changed.
I’m hosting a special edition of The Current on CBC radio dealing with money and we’re looking for peeps who would like to share their stories.
- Are you in a relationship with a money moron? Have you LEFT a money moron because could you just couldn’t take it any more?
- Are you carrying a crap load of debt and wondering how you’re going to get out? Feeling disheartened and not sure what to do next?
- Have questions you’d like to ask me about money and how to take control of it? For best chance of success, have a specific question in mind and don’t ramble too much.
Submit your story or question to email@example.com . See you on the radio!