Inflation of Both Income & Expense
When you were younger, you may have heard older relatives marvel over the high cost of everything from automobiles to aluminum foil. It’s worth taking a look back, once in a while, and acknowledging exactly how significantly the world has changed.
Let’s begin by picturing the United States at the beginning of the twentieth century. One-quarter of households had running water and outhouses were more prevalent than flush toilets. Few people owned homes. Less than 10 percent of households had gas or electric lights, 5 percent had telephones, about 1 percent owned a car, and nobody owned a television because they didn’t exist yet.
Approximate household income:
- 1901: Average household income was about $750 a year. Almost 96 percent of households had income earned by men, 8.5 percent had income earned by women, and 23 percent had income earned by children.
- 1960-61: Average household income was about $6,691 a year. Almost 34 percent of women were working and 83.3 percent were men. Almost 39 percent of heads of household were craftsmen and machine operators, and 27 percent were professionals, managers, or proprietors.
- 2013: The mean after-tax household income in the United States was $56,352.
Approximate household expenses:
- 1901: The average family spent about $769 a year: $327 on food, $108 on clothing, $179 on housing, and $155 on anything else. On average, households spent 2.5 percent more than they earned. Just 19 percent of families owned homes; 81 percent rented.
- 1960-61: The average family spent about $5,390 a year: $1,310 on food, $561 on clothing, and $1,590 on housing. Almost three-fourths of Americans owned cars. Fifty-three percent of families owned homes.
- 2013: Mean household spending was about $51,100: $17,148 was spent on housing; $9,004 on transportation; $6,602 on food; $3,737 on utilities, fuels, and public services; $3,631 on healthcare; $1,604 went to clothing; and so on. About 64 percent of households owned homes.
It’s true. Times really have changed.
Weekly Focus – Think About It
“A bird doesn’t sing because it has an answer, it sings because it has a song.”
–Maya Angelou, American author and poet
http://www.bls.gov/opub/uscs/ (Scroll down and click on “PDF” for Chapters 1901)
http://www.bls.gov/opub/uscs/ (Scroll down and click on “PDF” for Chapters 1960-61)
http://www.bls.gov/cex/#tables (Scroll down and under “CURRENT combined EXPENDITURE, SHARE, AND STANDARD ERROR TABLES,” click on “PDF” for “Age of reference person”)