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01 / 05
Even with Gas Prices at Historic High, Your Time Takes You Farther

Blog Post | Cost of Living

Even with Gas Prices at Historic High, Your Time Takes You Farther

You can drive 62 percent farther for your time today than in 1980.

Gale Pooley —

Summary: Although nominal gas prices recently reached historic highs, your time can get you further than ever before. As this article explains, the time price of gasoline has decreased by 4 percent since 1980, and the time price per mile driven has fallen by 38 percent.

The top-selling car in 1980 was the Oldsmobile Cutlass. Gas mileage on this vehicle averaged 20 miles per gallon (17 city/23 highway). By 2022, the Honda CR-V claimed that title. The CR-V reported mileage at 31 miles per gallon (28 city/34 highway). This represents an increase of 55 percent over this 41-year period. Mileage has been increasing at a compound rate of around 1 percent a year.

Back in 1980, gasoline was selling for $1.19 per gallon and blue-collar hourly compensation (wages and benefits) averaged $9.12 per hour. This indicates a time price rate of 7.83 minutes per gallon. Today, gasoline is selling for around $4.18 per gallon and blue-collar hourly compensation is up to $33.39 per hour, indicating a rate of around 7.51 minutes per gallon. While the nominal price of a gallon of gasoline has increased by 251 percent, the time price has actually dropped by 4 percent.

But how much does it cost to travel one mile? That depends on the time price of gasoline and the car’s mileage. In 1980, at 20 miles per gallon, the time price per mile on the Cutlass would have been 23.5 seconds. By 2022, with the CR-V getting 31 miles per gallon, the time price per mile would be around 14.5 seconds. The time price per mile has decreased by 38 percent.

You can look at mileage from the perspective of how many miles you earn per minute of work time. The 1980 Cutlass would have given you 2.55 miles per minute of your time, while the 2022 CR-V gives you 4.13 miles. Gas mileage abundance, from your time perspective, has increased by 62 percent.

There are other differences to consider. NADAguides, a website that values automobiles and other transportation equipment, reports that the price of a new Cutlass in 1980 was $6,735. At $9.12 per hour, it would have taken a blue-collar worker 738 hours to own this new car. Today the CR-V is retailing for around $28,334. At $33.39 per hour, it would take the worker 849 hours to buy one. So, while the time price of the top-selling car has increased by 15 percent, the mileage, safety, reliability, and comfort have all increased by much more.

Yes, nominal gas prices are at historic highs, but it’s not the money that counts, it’s your time. Time prices are the true prices.

Blog Post | Food Prices

Thanksgiving Dinner Will Be 8.8 Percent Cheaper This Year

Be thankful for the increase in human knowledge that transforms atoms into valuable resources.

Gale Pooley —

Summary: There has been a remarkable decrease in the “time price” of a Thanksgiving dinner over the past 38 years, despite nominal cost increases. Thanks to rising wages and innovation, the time required for a blue-collar worker to afford the meal dropped significantly, making food much more abundant. Population growth and human knowledge drive resource abundance, allowing for greater prosperity and efficiency in providing for more people.

Since 1986, the American Farm Bureau Federation (AFBF) has conducted an annual price survey of food items that make up in a typical Thanksgiving Day dinner. The items on this shopping list are intended to feed a group of 10 people, with plenty of leftovers remaining. The list includes a turkey, a pumpkin pie mix, milk, a vegetable tray, bread rolls, pie shells, green peas, fresh cranberries, whipping cream, cubed stuffing, sweet potatoes, and several miscellaneous ingredients.

So, what has happened to the price of a Thanksgiving Day dinner over the past 38 years? The AFBF reports that in nominal terms, the cost rose from $28.74 in 1986 to $58.08 in 2024. That’s an increase of 102.1 percent.

Since we buy things with money but pay for them with time, we should analyze the cost of a Thanksgiving Day dinner using time prices. To calculate the time price, we divide the nominal price of the meal by the nominal wage rate. That gives us the number of work hours required to earn enough money to feed those 10 guests.

According to the Bureau of Labor Statistics, the blue-collar hourly wage rate increased by 240.2 percent – from $8.96 per hour in October 1986 to $30.48 in October 2024.

Remember that when wages increase faster than prices, time prices decrease. Consequently, we can say that between 1986 and 2024 the time price of the Thanksgiving dinner for a blue-collar worker declined from 3.2 hours to 1.9 hours, or 40.6 percent.

That means that blue-collar workers can buy 1.68 Thanksgiving Day dinners in 2024 for the same number of hours it took to buy one dinner in 1986. We can also say that Thanksgiving dinner became 68 percent more abundant.

Here is a chart showing the time price trend for the Thanksgiving dinner over the past 38 years:

The lowest time price for the Thanksgiving dinner was 1.87 hours in 2020, but then COVID-19 policies struck, and the time price jumped to 2.29 hours in 2022.

In 2023, the time price of the Thanksgiving dinner came to 2.09 hours. This year, it came to 1.91 hours – a decline of 8.8 percent. For the time it took to buy Thanksgiving dinner last year, we get 9.6 percent more food this year.

Between 1986 and 2024, the US population rose from 240 million to 337 million – a 40.4 percent increase. Over the same period, the Thanksgiving dinner time price decreased by 40.6 percent. Each one percentage point increase in population corresponded to a one percentage point decrease in the time price.

To get a sense of the relationship between food prices and population growth, imagine providing a Thanksgiving Day dinner for everyone in the United States. If the whole of the United States had consisted of blue-collar workers in 1986, the total Thanksgiving dinner time price would have been 77 million hours. By 2024, the time price fell to 64.2 million hours – a decline of 12.8 million hours or 16.6 percent.

Given that the population of the United States increased by 40.4 percent between 1986 and 2024, we can confidently say that more people truly make resources much more abundant.

An earlier version of this article was published at Gale Winds on 11/21/2024.

NBC News | Personal Income

The Typical US Worker Out-Earned Inflation by $1,400 a Year

“While higher costs for everything from milk to medicines have preoccupied U.S. consumers in the pandemic era, earnings have also risen enough, on average, to push up households’ purchasing power a bit. And blue-collar workers have been the biggest beneficiaries.

An analysis published in July by economists at the Treasury Department found that the median worker can afford the same representative basket of goods and services as they did in 2019 — plus have an additional $1,400 a year.”

From NBC News.

Wall Street Journal | Wealth & Poverty

The Dramatic Turnaround in Millennials’ Finances

“The median household net worth of older millennials, born in the 1980s, rose to $130,000 in 2022 from $60,000 in 2019, according to inflation-adjusted data from the Federal Reserve Bank of St. Louis. Median wealth more than quadrupled to $41,000 for Americans born in the 1990s, which includes the generation’s youngest members, born in 1996. 

The turnaround has been so dramatic that millennials—mocked at times for being perpetually behind in building wealth, buying homes, getting married and having children—now find themselves ahead.

In early 2024, millennials and older members of Gen Z had, on average and adjusting for inflation, about 25% more wealth than Gen Xers and baby boomers did at a similar age, according to a St. Louis Fed analysis.”

From Wall Street Journal.