Economist David Henderson at the EconLog Blog recently pointed to a great online archive of Radio Shack catalogs going back to 1939. David commented, “Choose any date earlier than 10 years ago and you get a feel for just how much our standard of living has increased. The items are generally what we regard as junk—and they’re expensive.”
One example from the 1964 Radio Shack catalog is the “Moderately priced, excellent stereo system” on sale for $379.95 (pictured below). That might not seem too expensive, except when you consider that the average hourly wage in 1964 was only $2.50 (data here). When measured in what is ultimately most important—the “time cost” of goods—that 1964 stereo equipment was actually very, very expensive. At the average hourly wage of $2.50, the typical American in 1964 would have had to work 152 hours (full-time for almost an entire month) to earn enough income (ignoring taxes) to purchase that “moderately priced” stereo system.
To help understand how expensive the 1964 stereo system really was, consider that a typical American today would earn almost $3,000 working 152 hours at the current average hourly wage of $19. Now imagine what you could purchase with a $3,000 budget for today’s electronics products, and you’ll begin to appreciate how fortunate you are today compared to the consumers in previous decades like the 1960s.
For example, the picture below shows the “cornucopia” of electronic items you could get today for just under $3,000, which is the income the average consumer would earn today from working the same amount of time (152 hours) that enabled the 1964 consumer to buy just the Radio Shack stereo system:
Here’s the breakdown of the items pictured and their retail prices:
1. Panasonic Home Theater System for $500.
2. Insignia 50″ Plasma HDTV for $700.
3. Apple 8GB iPod Touch for $175.
4. Sony 3D Blu-ray Disc Player for $219.
5. Sony 300-CD Changer for $209.
6. Garmin Portable GPS for $139.
7. Sony 14.1-Megapixel Digital Camera for $200.
8. Dell Inspiron Laptop Computer for $450.
9. TiVo High-Definition Digital Video Recorder for $300.
That list above might not be your personal, preferred bundle of electronics products if you had $3,000 to spend, but it clearly illustrates how much purchasing power consumers have today when it comes to electronic products. After working 152 hours at the average hourly wage in 1964, all an average American consumer would have been able to afford was one very expensive stereo system. For that same amount of work in 2010, the average consumer today can afford an entire houseful of electronics goods.
And since none of those items on the list above were even available in the 1960s at any price, it’s a “miracle of the market” that almost all Americans today can purchase low-priced electronics products that even a billionaire in the past wouldn’t have been able to buy. The increasing affordability of electronics is just one of many long-term trends that demonstrate that the “good old days” are now, and life for the average American keeps getting better and better all the time (see related Enterprise posts here and here).