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.
