No Time Like the Present

Don Boudreaux at Barron's.

Many Americans, including some famous economists, yearn for the good old days. They talk about the U.S. economy of the 1950s with loving nostalgia, which they contrast with a parallel story about the alleged economic stagnation of middle-class Americans over the past several decades.

Typical is Paul Krugman's assertion in the New York Times last November that "America in the 1950s made the rich pay their fair share; it gave workers the power to bargain for decent wages and benefits; yet contrary to right-wing propaganda then and now, it prospered. And we can do that again."

In a nutshell, this variety of left-wing propaganda holds that middle-class Americans are no longer prospering as they did in the 1950s because top income-tax rates and labor-unionization rates are each much less than half of what they were in the 1950s.

While the 1950s were indeed a decade of economic growth, the notion that the standard of living of ordinary Americans today is not much higher than it was back then is a myth. Regardless of causes, average Americans today are much more prosperous than they were 60 years ago.

Live Long and Prosper

Perhaps the best evidence that today's Americans are better off than Americans in the age of Eisenhower is the fact that life expectancy is now 6.3 years longer. Compared with the average American in the 1950s, today's average American enjoys 9% more time on Earth. The average time that grandparents remain alive to enjoy their grandchildren is now about 25% longer than in the 1950s.

Evidence more mundane than life expectancy casts further doubt on the myth of economic stagnation. That evidence is the shrinking cost—and growing size—of ordinary Americans' consumption.

A superb way of comparing the consumption options open to Americans in the 1950s to those that we enjoy today is to study a Sears catalog from the 1950s. Sears was then the premier retailer for middle America. And because its longtime slogan—"Sears has everything!"—was not much of an exaggeration, Sears catalogs are gold mines of information about middle-class living in the past.

Let's compare a sampling of the offerings from Sears' Fall/Winter 1956 catalog to similar goods on sale today. Sears' lowest-priced no-frost refrigerator-freezer in 1956 had 9.6 cubic feet of space, and sold for $219.95 (in 1956 dollars). Because the typical production-line worker back then earned $1.89 per hour (in 1956 dollars), an average American in the mid-1950s had to toil 116 hours to buy this refrigerator-freezer. Today, Home Depot sells a similar refrigerator-freezer for $298 (in 2013 dollars). Earning $20.14 per hour, an average American worker today works 15 hours to buy that appliance. That's a reduction of work-time cost of 87%.

Likewise for a 30-inch electric range-oven combo. The work time required of an ordinary worker in 1956 to buy this appliance was 69 hours. The same-size appliance is available today to the ordinary American worker for a mere 18 hours of work.

What's true for refrigerators and ranges is true also for washers, dryers, toasters, automatic dishwashers—indeed, for any household appliance you name. It's true also for clothing. For example, the lowest-priced ensemble of woman's jeans, blouse, pumps, and underwear cost 5.2 hours of the typical worker's time in 1956. Today, a similar ensemble available from costs 44% less—only 2.9 hours of the typical worker's time.

A basic man's business outfit (two-piece suit, shirt, tie, belt, shoes, socks, underwear, and raincoat) cost the typical American 36 hours of work in 1956, much more than the 20 hours required of the typical worker in 2013.

Everyday Low Prices

If promoters of the stagnation myth would compare prices of goods in the 1950s with prices of similar goods available today, they would discover that work-time costs are today much lower not only for appliances and clothing, but also for consumer electronics, sporting goods, home furnishings, children's toys—you name it. Nearly every consumer good costs less work time today than it did back in that mythical golden era.

It's unsurprising, then, that total consumption on food at home, cars, clothing, housing, household furnishings, and utilities fell from more than 50% of Americans' disposable personal income in the 1950s to only 32% today.

Yet, even more revealing than what can be found by browsing a 1950s catalog is what cannot be found in such a catalog. The list is long of consumer goods that ordinary Americans today can easily afford but that were unavailable commercially to even the wealthiest Americans in the 1950s. This list includes digital cameras, lightweight waterproof sportswear, high-definition televisions, recorded Hollywood movies to play at home, MP3 players, personal computers, cellphones, soft contact lenses, and GPS devices.

More serious items are also on the list, such as indexed mutual funds, antilock braking systems, statins, measles and meningitis vaccines, portable defibrillators, oral contraception, and magnetic-resonance imaging.

There Are Exceptions

Of course, not everything today is less costly when measured in work time. Most notably, the costs of health care and of postsecondary education have skyrocketed. And while it's proper to note that these industries operate under especially heavy government involvement, it's also important to understand that the lifetime monetary returns to earning a college degree have risen (the wage premium for college grads today is about twice what it was in the 1950s), as has the quality and effectiveness of health care.

Reasonable people can argue about whether the higher quality of education and health care justifies the higher costs of these services. But no reasonable person familiar with the costs and full range of consumer options available in 2013 can reach any conclusion other than that ordinary Americans today are far more prosperous than at any time in the past.