One way to illustrate your good fortune of being a holiday shopper today is to measure the cost of consumer goods by the number of hours it takes working at the average hourly wage to earn enough income to purchase typical consumer products at their retail prices, and then compare the “time cost” of goods from the past to today’s “time cost” for similar items (this is an update of a CD post in 2009). (Don Boudreaux has been featuring some similar comparisons in a series on Café Hayek titled “Cataloging Our Progress,” which inspired this post.)
For example, the retail price of an automatic Kenmore two-slice toaster advertised in the 1958 Sears Christmas Catalog (available here online, and pictured below on the left) was $12.95, or 6.54 hours of work at the average hourly manufacturing wage of $1.98 in 1958 (wage data here). Today you can buy a comparable Kenmore two-slice toaster for $25.99, and the “time cost” would be only 1.35 hours of work at the current average hourly wage of $19.19, for a reduction of almost 80 percent since 1958 in the amount of work hours required to earn the income necessary to purchase a standard toaster. Additionally, the Sears website today features more than 100 different toasters, compared to the Sears catalog in 1958, which only featured a few different models.
Next, consider television sets, a fairly common holiday gift. In 1958, American holiday shoppers paid $269.95 for Sears’s “best 24-inch console TV” (see photo above), or 136.34 hours of work at the average hourly wage then. Today you can purchase a Sansui 26-inch LCD high-definition TV (see picture above) on the Sears website for $249.98 (or choose from the several hundred other TVs available), which would be a “time cost” today of only 13.03 hours of work at today’s hourly wage of $19.19, for a 90 percent reduction in the cost of today’s HDTV compared to the 1958 model.
Finally, consider the equipment with the “best stereo sound” that Sears had to offer in 1958, which was advertised for sale in its Christmas catalog for $84.95 (see picture above), boasting that “You’ll be amazed at the ‘living sound’ you’ll hear on this newest development in portable phonographs. Four tubes per rectifier. Hear every note, every shading of tone.”
I don’t think anybody today would be too amazed at the sound quality of that 1958 “state-of-the-art” stereo equipment playing 45 and LP records of the day. And certainly nobody would trade his or her iPod for that system, especially considering that the time cost of today’s iPod is only 12.25 hours of work at today’s average hourly wage (to earn $234.99 for a classic iPod), which is more than 71 percent cheaper in time cost than Sears’s best stereo equipment in 1958 (42.9 hours of work at $1.98 per hour).
Putting it all together, a typical American consumer in 1958 would have had to work for 185 hours (more than a month) at the average hourly wage of $1.98 to earn enough pre-tax income ($368) to purchase a toaster, a TV and a stereo system. Today’s consumer working at the average wage of $19.19 would only have to work 26.6 hours (a little more than three days) to earn enough income ($511) to purchase a toaster, TV and iPod. In other words: 4.64 weeks of work in 1958 vs. less than 3.5 days in 2012 for those three consumer products, and one could argue that today’s products (especially the iPod) are far superior to their 1958 counterparts.
If you’re not convinced that today’s consumers are better off than at any time in history, spend some time browsing the old Sears, Wards, and J.C. Penney’s Christmas catalogs available here back to the 1930s, convert those old retail prices into their “time cost” equivalent using that year’s prevailing hourly wage, and you’ll quickly see that there has never been a better time to be a holiday shopper and consumer than right now. For that, you can thank the “miracle of the marketplace,” which brings us better and cheaper consumer goods all the time.