On March 9, 2019, Congresswoman Alexandria Ocasio-Cortez (D-NY) argued that “Capitalism is irredeemable,” because “people can’t afford to live.” Is that true? The cost of living isn’t easy to calculate. The declining cost of home appliances, for example, needs to be juxtaposed with the growing cost of healthcare, etc. Here we focus on an expense that’s intimately tied up with the very survival of human beings – the cost of food.1 Throughout history, people lived in a state of undernourishment. Yet in developed countries today, obesity is a growing problem. The declining cost of food is partly responsible for that reversal.
Our analysis begins with the 1919 nominal prices of 42 food items, ranging from a pound of sirloin steak to a dozen oranges.2We then express those nominal (i.e., 1919) prices in terms of hours of work.3 The “time price” of a food item in 1919, in other words, denotes the length of time that a blue-collar worker had to work to earn enough money to buy that same item in 1919. We then look at the 2019 prices of the same food items (including, of course, the same quantity of those foods).4 We then express those nominal (i.e., 2019) prices in terms of hours of work.5 The time price of a food item in 2019, therefore, denotes the amount of time that a blue-collar worker had to work to earn enough money to buy that same item in 2019.
We find that the unweighted average time price of our 42 food items fell by 87 percent between 1919 and 2019. The total time price (i.e., the nominal price divided by the nominal hourly wage) of our basket of 42 food items fell from 27.26 hours of work in 1919 to 3.85 hours in 2019.