The women with $20 of groceries going home to her $15,000 home in 1980. Really?

by Rod Williams, August 24, 2023- A lot of people have the impression that things in the past were so much better than they are now. It is just not so.

I know inflation is a serious issue. We need to address it, but we need to keep it in perspective and not distort the facts. 

Also, unless America gets serious about tackling the problem of the national debt, we will see an economic decline in America. A decline is inevitable without a course correction. 

In America we have always expected the next generation to be better off than the current generation and I do not believe that will be the case going forward. That being said, we do not need to exaggerate how wonderful things were yesterday. 

There are problems. However, we need to keep things in perspective.  I think a lot of the reason people believe that things were so much better in the past than now is because of social media. Look at the picture to the right. This was in my Facebook feed today and I am sure it was all over Facebook and many people will believe it.  Many will just accept it as the truth. One sees this kind of thing all of the time.

I don't know what the true cost of that big cart of groceries was in 1980. I bet it was more than $20.

A box of 19 oz Kellogg corn flakes cost 99 cents in 1980 and today at Walmart you can get an 18oz box for $4.89. In 1980 the median family income was $21,020. On an hourly basis that is about $10.11 ($.17 @ minute). Today the median family income is $70,784. On an hourly basis that is about $34.03 ($.567 @minute). So in 1980 one had to work about 6 minutes to buy that box of cereal. Today one has to work about 8 minutes to buy it. In 1980 the average per pound cost of a coffee was $3.18. In 2021 it was $5.89. So, it took 18 minutes of work for a pound of coffee in 1980 and now it takes about 10 minutes. So some things relative to the amount of work one must do to purchase them, went up; other things went down.

Also, keep in mind that we are now experiencing a spike in grocery prices. Average annual food-at-home prices were 11.4 percent higher in 2022 than in 2021. That makes looking back make things seem so much better. We have already seen egg prices decline and the peak in prices appear to be over and prices appear to be leveling off. 

Also, the quality and variety of food was not as great in 1980. Good seafood, olives, cheeses, and sushi were not common fare in 1980. For many people, if they ate like they ate in 1980, their groceries would cost less. 

In 1980, if the shopper pictured above lived in a house valued at $15,000 it was a substandard house. In 1980 the median house value was not $15,00 but $47,200. The median home price today is $416,100. So it takes a lot more money to buy a house today than in the past, but that is not all bad. It is not all bad because for most people their home is their largest asset. While it is more difficult for people to buy their first home, if you live in a half-million-dollar home, you should not complain. You have a nice net worth and that is a nice inheritance to pass on to your children.

Another thing to consider in thinking about how cheap housing was in the past is to compare the quality. In 1980 homes had much less square footage and fewer bathrooms. Families were also bigger. Sharing a bedroom with a sibling was a lot more common. 

One thing to know about comparing 1980 to now, is that 1980 was actually not a good year. In fact it was a very bad year. I bet the person who created this meme didn't do research but just picked a year at random. People earning, buying, and spending in 1980 were experiencing anxiety about the cost of living. Every time they went to buy that shopping cart of groceries it cost more than the week before. The annual rate of inflation in 1980 was a whopping 13.5%.  That was the highest since 1947.  It has not been that high since. Last year was the highest since 1981 when inflation was 10.3%. Last year it was 8% (link).

In addition to social media spreading false information, I also think there is a tendency for people to misremember what things were really like. People often have nostalgia for the "good ole days," even when they weren't that good. 

Not only is the cost-of-living something that is distorted on social media and something about which people think the past was so much better, but the crime problem and political divisions were at times just as bad in the past as now. While we have seen a crime uptick in the last year or so, for years we had been experiencing a decline in crime. As for political division and partisan tribalism, it is bad. I do think we are experiencing stronger political divides than in a long time. However, if you compare now to 1968, we don't look that bad. Everything in the past was not Happy Days. 

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