Thomas Donlan‘s latest editorial commentary for Barron’s highlights one of the unsung benefits of productivity gains for the American consumer.
It’s easy to see the jobs lost to productivity improvements. Detroit has become a tourist destination to see white-elephant factories and vast wastelands of residences in a city that has lost half its population. But it’s harder to be aware of the huge benefits of productivity.
Comparison Shopping
Donald Boudreaux, a professor at George Mason University in Virginia, has been following the miracle of productivity in posts at his Café Hayek blog. Boudreaux is the sort of economist who likes to curl up with the 1956 Sears Roebuck catalog, because he has been wondering what consumer goods cost in 1956 compared with their cost at the end of 2012.
Rather than wrestle with consumer-price indexes and argue about calculations of inflation, Boudreaux determined how many hours the average nonsupervisory manufacturing employee would have had to work to purchase some of the good things in the catalog.
How many hours of work did it take the 1956 worker to earn the money to buy a frost-free refrigerator-freezer from Sears and how many hours of work were required to earn the price of an equivalent appliance in 2012? The Sears catalog’s cheapest, with capacity of 9.6 cubic feet, was $219.95. Going online to the Home Depot Website turned up a 10 cubic-foot appliance for $298.
The hourly wage of such a worker in 1956 was $1.89 an hour. In 2012, the statistical reports had changed a little, but the close equivalent wage was $19.79 an hour.
So it took your 1956 worker 116 hours of work to buy a basic refrigerator-freezer, but the 2012 worker needed only 15 hours to buy more or less the same product. For a cheap TV, Mr. 1956 had to work 61 hours; Mr. 2012 put in 10 hours. For a new washing machine, Mr. 1956 had to work 79 hours, and Mr. 2012 had to work 15 hours.
