I haven’t done any price comparisons lately of the time cost of goods today versus periods in the past, so here’s one for the summer season on the cost of room air conditioners — today vs. 1956.
In 1956, the 1-HP (about 2,500 BTUs) room air conditioner pictured above was advertised in the Sears Spring/Summer catalog at a price of $299.95. At the average manufacturing hourly wage in 1956 of $1.83 (that’s the only BLS wage series that goes back to the 1950s), the average American factory worker would have had to work more than a month — 164 hours or more than four 40-hour weeks – to earn enough pre-tax income to purchase the $299.95 window air conditioner from Sears.
Fast forward 58 years to 2014. The Sears Kenmore 8,000 BTU room air conditioner pictured below is available today for $219.00, so the retail price at Sears has actually declined over the last half-century in nominal dollars, even though the overall CPI has increased almost 9 times since 1956, and the average hourly manufacturing wage has increased almost 11 times. At the current average factory hourly wage of $19.64, the work time necessary to purchase today’s Sears 8,000 BTU room air conditioner (more than 3 times the BTUs of the 1956 model) is only slightly more than 11 hours, or less than a day and-a-half of work time. Amazingly, the time cost of a Sears room air conditioner has declined from 164 hours in 1956 to only 11 hours today!
MP: Measured in what is ultimately most important — our time — the cost of a standard room air conditioner at Sears has fallen by more than 93% over the last 58 years, bringing the cost of what was likely a high-priced luxury item in 1956 requiring more than a month’s salary down to a price that is affordable today for even low-income Americans. If room air conditioners had increased in price since 1956 at the rate of inflation, today they would cost about $2,700, more than 12 times the actual cost today of only $219, and would still be a luxury item not easily affordable by many lower- and middle-class Americans.
But it gets even better, because today’s appliances are so much more energy-efficient than in the past, generating additional savings for consumers today from the lower operating costs of appliances like air conditioners. In the thirty year period between 1981 and 2012, the energy efficiency of room air conditioners increased by more than 46% — and the energy efficiency of other household appliances increased even more — as high as a 217% increase in the energy efficiency of refrigerators, according to the Association of Home Appliance Manufacturers.
Bottom Line: Today’s affordable and energy-efficient household appliances like room air conditioners are part of the “miracle of manufacturing,” which continues to deliver cheaper and better goods to American consumers year after year, which translates into a higher standard of living for all Americans, especially for lower and middle-income households. If we wanted to identify a “golden era” of prosperity for middle-class America based on the affordability of common household appliances like room air conditioners, today’s consumers are many times better off than the consumers of any past decade, including the 1950s that Paul Krugman and others wax so nostalgic about. The significant reduction in the cost of purchasing and operating common household appliances like room air conditioners help to remind us that the “good old days” are now!