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Cost of Living in the 1950’s as Compared to Today in 2013

The 1950s were a time of great prosperity and economic growth in the United States. Today, looking at the decade objectively, we realize it wasn’t quite the post-war utopia portrayed in the media of the day or the nostalgic recreations since. Nonetheless, many look back fondly on what they view as a simpler time. One thing a lot of folks envy from that time is the cost of living. Everything in 2011 seems so much more expensive. Of course, no one in today’s world expects to pay 18 cents for a gallon of gas, $25 for a man’s suit, or $1,500 for a brand new car[1]. Still, paychecks just don’t seem to go as far now as they did then. Or do they?

Many Factors to Consider

When you compare the cost of living in the 1950s with today’s cost of living, you have to consider a variety of factors. For example, some things are actually cheaper to produce now than they were in the 1950s.  Of course, most of today’s goods and services come with higher price tag, but people also get paid proportionately more.

Household Income Then and Now

In 1955, the median household income in the U.S. was around $5,000[2]. That means half of all households earned more than $5,000, while half brought in less. Adjusted for inflation, that translates to around $25,000 today. However, today’s median household income is just over $40,000. We’re not really making that much more money though. That $15,000 difference can be attributed, in large part, to the increase in the number of two-income households since the middle of the twentieth century [3]. The big difference between expenses then and now is the amount of stuff we buy. We also tend to live in much bigger houses.

Average Home Size 1950 vs. Today

The average size of a new house in 1950 was 983 square feet. In 2004 it stood at 2,349 square feet [4]. At the same time, family size went from about 3.5 persons per household, to around 2.5 today [5]. A bigger house incurs more costs, even with fewer people living there.

Consumerism

We also buy more things to put into our homes today. Comedian George Carlin once described houses as “a place to keep your stuff while you go out and get more stuff.” TVs, computers, mobile devices, game systems, microwave ovens, and gadgets of all sorts fill a typical 21st century dwelling. In the 1950s, a family had a television, a few radios perhaps, and the most basic of household appliances and furniture. Today, many houses–certainly most new ones– have central air conditioning. This was unheard of in the 1950s, even in warmer climates.

There were fewer cars as well. By the end of the 1950s, less than 3% of households owned three or more vehicles. In 2009, it was almost 20% [6]. More cars mean more car-related expenditures–from routine maintenance and fuel to major repairs and insurance premiums.

A Dollar Then, a Dollar Now

So, we’re buying a lot more stuff with roughly the same amount of money, meaning consumption is taking up a bigger portion of household budgets. But do the items we purchase cost more today? The Bureau of Labor Statistics website has a fun little online gadget that allows you to convert dollar amounts from one year into those of another. For example, a loaf of bread in 1955 cost around 18 cents, which converts to about $1.50 today. Depending on the brand of bread you buy, that sounds about right. A new car in 1955 was about $1,500. Today, that same car will cost you $12,000. That may get you a pretty basic car, but remember that the 2011 model is much safer, gets better mileage, and has a lot more features.

TV Time

Of course, some items have come down in price; televisions for instance. In 1955, a new TV would set you back $250.00. That’s $2,100 now. For that kind of money, you could now buy a top-of-the-line TV. Even with $250 in today’s money, you could purchase a far nicer set than the one your grandparents used to watch I Love Lucy and Milton Berle. Then again, we’re buying a lot more of them. In fact, while the average household is 2.5 persons, it has 2.86 televisions [7]. Also, in the 1950s, programming was free. Today, most people have cable, or satellite, a monthly expenditure that easily runs over $50 a month. Add that to household expenses that people in mid-century America never dealt with, like Internet and mobile phone service.

Living Large

If you were to live like someone in the 1950s, you could live fairly comfortably. Indeed, by mid-twentieth century standards you’d be well-off, even with a modest income. However, living in a small house with one television, no cable or satellite service, one car, no air conditioning, and so on is seen as a low standard of living in 2011. You could certainly cut back some. Do you really need three high-definition TVs or a 3,000-square-foot house? You likely need computer and DSL internet services, because that’s simply the way the world is now. Mobile phones are more of a necessity now as well. Have you looked for a pay phone lately?

Perhaps we need to assess what we really want from our standard of living, and adjust our expenditures accordingly. On average we are living better now than at any point in history, but the key to happiness may be in finding ways to make it more affordable.

[1] “Cost of living 1950,” ThePeoplesHitstory.com. Web. 07 July 2011 <http://www.thepeoplehistory.com/1950.html#cost_of_living>

[2] Median Household Income, Stanford University, 23 October 2002. Web. 30 July 2011

<http://www.stanford.edu/class/polisci120a/immigration/Median%20Household%20Income.pdf>

[3] Aldrich, Howard E., Cliff, Jennifer E., “The pervasive effects of family on entrepreneurship:
toward a family embeddedness perspective.” Journal of Business Venturing 18. Web. 30 July 2011
<http://faculty.utep.edu/Portals/167/01%20The%20Pervasive%20effects%20of%20family%20on%20entre%20toward%20a%20family%20embeddedness%20perspective.pdf>

[4] Adler, Margot. “Behind the Ever-Expanding American Dream House.” National Public Radio, NPR.org, 4 July 2006. Web. 29 July 2011 <http://www.npr.org/templates/story/story.php?storyId=5525283>

[5] El Nasser, Haya, “Increase in household size could slow economic recovery.” USA Today. 7 May 2010. Web. 30 July 2011 <http://www.usatoday.com/news/nation/2010-05-06-household_N.htm>

[6] Oak Ridge National Laboratory, Center for Transportation Analysis. Transportation Energy Book 30. Web. 30 July 2011 <http://cta.ornl.gov/data/tedb30/Edition30_Chapter08.pdf>

[7] More than Half the Homes in U.S. Have Three or More TVs, Nielsen Wire, 20 July 2009. Web. 30 July 2011
<http://blog.nielsen.com/nielsenwire/media_entertainment/more-than-half-the-homes-in-us-have-three-or-more-tvs/>

About The Author

Check N Go is the fourth largest consumer financial service institution offering installment loans and online payday loans in the United States. As a founding member of the Consumer Financial Services Association (CFSA), Check N Go has always been committed to responsible lending and works with legislators to improve the credibility of the cash advance industry. Check N Go has check cashing and payday loan locations in 28 states, with online locations in an additional 3.

 

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38 Comments

  1. You’d have to look at other factors like what the tax rates were back then. Also, I doubt that anybody was paying health care premiums or co-pays or anything like that, and look what the cost of that stuff is today. Also, most households probably had one person that was working and had a pension to look forward to in retirement, so 401(k) savings and such were not anything anybody was worried about. Those three things alone probably made it a completely different financial world than you have today.

    • Live was indeed much different in the 1950 for most of us. Nearly everyone who had a car only had one. Indoor plumbing was common in the cities and towns but not so much 20 or 30 miles out of town. Food was much cheaper but most canned thier food too so not everyone bought everything from the grocer. Speaking of grocers,in small towns there was no large chain stores like we see today.

      Home were much smaller than we see today, even by “middle class” standards. One would rarely see anything much larger than around 1,000 sq ft and many were smaller. We had one telephone, one television, – it was black and white in those days and there were only three channels. Most of us dried our cloths on a “cloths line’.
      We rarely ever ate out and vacations were at a relatives house, but only for the day.

    • The healthcare costs may have been lower, but if you hurt you knee, you didn’t get an MRI. If you got cancer, your treatment options were limited. With many ailments, you simply suffered and or died — no hip replacements, no artificial hearts, etc.

  2. This is a great article to put things in perspective. I have heard people complain that life was easier back then and I happen to agree. I think at that time being frugal was more of a social norm than it is now.

  3. I think the term I’ve heard most about life back then is that it was simpler. Not easy, not cheap…just much simpler. I believe some of the hardships we suffer today are self-created. The insatiable appetites for ‘stuff’. The constant desire to replace something we didn’t have as a child – which, by the way, has become an old, used up cliché. You didn’t have it – nothing you buy now will change that, so enjoy what you have and move on.

    But as ShoeGal says, what a great way to get things in perspective. Good article!

    • The need to have more “things” is what drives us into debt. For people going back to what they are calling “micro” homes and frugality, it’s really just a return to the way that our parents and grandparents lived.

  4. Fascinating perspective. It’s interesting comparing the cost of goods over time. In many categories it is clear that producers have done an amazing job at keeping their costs well below inflation through more efficient uses of technology. Bicycles are an example of this. Although, there is a greater range of choice today, and if you want the very best, you will certanly pay for it.

  5. Very interesting article. Since the 50s we’ve grown rather accustomed to relative prosperity. As such the market for ‘stuff’ has grown and grown. I’d add that as consumers we have more choice now than people in the 50s could have possibly envisaged (in large part thanks to the internet), which is both a blessing in so much as we can make price conscious decisions and a nightmare in so much as we’re more exposed to products that we feel we need to incorporate into our loves.

  6. I can’t believe how big houses have gotten over the years even as family sizes has getting smaller. I’ve been looking at some nice 1920’s houses to buy and they’ve got a ton more storage compared to the newer homes.

  7. I own a house build in 1950 and it is very different compared to current day houses. It has more kitchen storage yet smaller closets. I think cost of living has not gone up much past inflation, we just expect more. We have internet, tv, and multiple cars when we do not really need them.

  8. Simply inflating dollars does not tell the whole story. Several years ago, the Wall Street Journal did a comparison similar to the one in this article. However, it used a more apples-to-apples comparison technique. It calculated the amount of time it took at the median income to earn the median price of certain items. The upshot was that over time and at the median income of the year under study, the amount of time it takes to earn the amount equal to the median prices of various products has increased, in most cases considerably. Big ticket items (houses, cars) had increased more in terms of time than lower price items.

  9. Those are great insights that we often (probably usually) overlook when thinking back to the “good ol’ days.” ‘Course, I was born in 1970, so the 50’s are out of my world, but the same analysis mostly holds true.

    • I always use bread and milk as my benchmarks. How much was a loaf of bread say 10 years ago versus now? Or even just a candy bar?!

  10. In addition to the smaller homes, etc, I think people generally paid less in interest for their purchases. I think credit was much harder to get back then and most people paid cash for their items. If you think about paying 20% interest on your credit card purchases, that’s a whole lot more cash the average consumer is dishing out.

    • Never thought about that. People actually spend MORE for things now if you factor in how much we are spending on credit with the interest tacked on.

  11. Interesting post, Sandy. I wonder how the effects of inflation would be different if, well, we had not inflated the currency to the same degree. That means a lot of wealth would not have been siphoned off to various misadventures where the wealth was destroyed.

    Also good point on how living standards still improved in spite of that. I remember even as a poor student I was able to live pretty decently on just part-time work!

  12. Interesting post, Sandy. I wonder how the effects of inflation would be different if, well, we had not inflated the currency to the same degree. That means a lot of wealth would not have been siphoned off to various misadventures where the wealth was destroyed.

    Also good point on how living standards still improved in spite of that. I remember even as a poor student I was able to live pretty decently on just part-time work!

  13. The cost of living comparatively is so hard to tell, there are so many factors that add up within an individuals life that cost of living becomes more of an idea than a tangible number to work with. There is one value I can say has raised the cost of living for an individual in the present times as opposed to the 1950’s. Medicare and medication. What were the cost of medication in the 50’s and how many pills did the average citizen take. I know a few friends that spend the majority of their money on prescription drugs, sometimes buying 10 different medications at a time… These are middle aged people, what about the elderly?

    • The thing is that we are living longer than the life expectancy in the 1950’s. Some of it is probably due to all of those medications. I’m not surprised that people are paying more both because of price increases and because people are just simply taking more health maintenance prescriptions.

  14. The cost of living comparatively is so hard to tell, there are so many factors that add up within an individuals life that cost of living becomes more of an idea than a tangible number to work with. There is one value I can say has raised the cost of living for an individual in the present times as opposed to the 1950’s. Medicare and medication. What were the cost of medication in the 50’s and how many pills did the average citizen take. I know a few friends that spend the majority of their money on prescription drugs, sometimes buying 10 different medications at a time… These are middle aged people, what about the elderly?

    • The thing is that we are living longer than the life expectancy in the 1950’s. Some of it is probably due to all of those medications. I’m not surprised that people are paying more both because of price increases and because people are just simply taking more health maintenance prescriptions.

  15. 1. Only one parent worked back then. So comparing “family income” then and now you would have to divide todays inflation corrected income in half to account for only one adult working. That makes a huge difference. Also, if you don’t have a mother to take care of the kids you risk lowering their future earning potential as well. A dedicated parent to raising kids can provide great support in academic education and psychological and philosophical preperation for life.

    2. You can’t just look at the tax rate. You have to look at what dollar amount they actually paid. I’ve watched a video on this that showed a top earner paying an effective 10% tax. There were also many deductions at different times which make the percentage alone misleading. You have to look at what they actually paid.

    3. You have to take into account inflation as a tax going forward as well. The inflation seems to be accelerating. Inflation is the amount of government currency creation which is tied to government spending. This is drastically larger today than in the 1950’s. So, what you save you in your bank account today won’t be worth much in 20 years.

  16. 1. Only one parent worked back then. So comparing “family income” then and now you would have to divide todays inflation corrected income in half to account for only one adult working. That makes a huge difference. Also, if you don’t have a mother to take care of the kids you risk lowering their future earning potential as well. A dedicated parent to raising kids can provide great support in academic education and psychological and philosophical preperation for life.

    2. You can’t just look at the tax rate. You have to look at what dollar amount they actually paid. I’ve watched a video on this that showed a top earner paying an effective 10% tax. There were also many deductions at different times which make the percentage alone misleading. You have to look at what they actually paid.

    3. You have to take into account inflation as a tax going forward as well. The inflation seems to be accelerating. Inflation is the amount of government currency creation which is tied to government spending. This is drastically larger today than in the 1950’s. So, what you save you in your bank account today won’t be worth much in 20 years.

  17. You also have to consider womens lib, when women wanted to have a career, demanding equal status in the workplace. Back in the 1950’s, women were expected to get married, and raise a family, basically running the household. I also believe this equal status was a factor in causing, the inflation of prices! Plainly said, if their are two incomes per household, then society has more money to spend, allowing busineses to expand, and pay this demand for the other salary. In turn, this would inflate services, manufactuers, foods, clothing, and goods that these businesses offer to our society.

  18. You also have to consider womens lib, when women wanted to have a career, demanding equal status in the workplace. Back in the 1950’s, women were expected to get married, and raise a family, basically running the household. I also believe this equal status was a factor in causing, the inflation of prices! Plainly said, if their are two incomes per household, then society has more money to spend, allowing busineses to expand, and pay this demand for the other salary. In turn, this would inflate services, manufactuers, foods, clothing, and goods that these businesses offer to our society.

  19. I agree with 50sfreak. Moving women out of the home and into the work place doubled the income. A woman working 40 hours a week does not have as much time for cooking from scratch, bargin hunting, sewing homemade clothes, and gardening and everything else that women did to save money. A woman who has to spend time away from kids may feel a sense of guilt so she often buys her kids more toys, clothes, movies and so forth. I know many women who wish they could stay home and raise thier children themselves but not many can afford to and I know of husbands who say “Why should I be the only one making money around here??”

  20. I agree with 50sfreak. Moving women out of the home and into the work place doubled the income. A woman working 40 hours a week does not have as much time for cooking from scratch, bargin hunting, sewing homemade clothes, and gardening and everything else that women did to save money. A woman who has to spend time away from kids may feel a sense of guilt so she often buys her kids more toys, clothes, movies and so forth. I know many women who wish they could stay home and raise thier children themselves but not many can afford to and I know of husbands who say “Why should I be the only one making money around here??”

  21. You also have to take into account that we live in a disposable time. When my folks bought household items and tools, they were built to last and they still have many of those items today, 50 years later. Most of what we buy is made cheaply and therefore needs to be replaced every few years.

  22. You also have to take into account that we live in a disposable time. When my folks bought household items and tools, they were built to last and they still have many of those items today, 50 years later. Most of what we buy is made cheaply and therefore needs to be replaced every few years.

  23. Don’t know where you gathered your information or what planet you came from but a loaf of bread cost 2.54 the average price ofa car is 25,000.,even a good usedcar is about 14,000.Milk ,gallon almost 5.00!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  24. Never thought about that. People actually spend MORE for things now if you factor in how much we are spending on credit with the interest tacked on.

  25. Live was indeed much different in the 1950 for most of us. Nearly everyone who had a car only had one. Indoor plumbing was common in the cities and towns but not so much 20 or 30 miles out of town. Food was much cheaper but most canned thier food too so not everyone bought everything from the grocer. Speaking of grocers,in small towns there was no large chain stores like we see today.

    Home were much smaller than we see today, even by “middle class” standards. One would rarely see anything much larger than around 1,000 sq ft and many were smaller. We had one telephone, one television, – it was black and white in those days and there were only three channels. Most of us dried our cloths on a “cloths line’.
    We rarely ever ate out and vacations were at a relatives house, but only for the day.

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