A Toast to Cheaper Goods
My Freeman column today deals with the way in which the Internet has dramatically reduced transactions costs and made it much easier for us to execute mutually beneficial exchanges, with my example being finding a new part for my gas grill. I argue that gains such as this are hard to capture in standard economic statistics and thus provide reason for skepticism that we are in a "Great Stagnation."
A commenter suggested that perhaps we aren't better off than we were years ago if appliances aren't made as well as they once were, which means we have to replace them more often than we used to. As he put it "I would need to buy 10 toasters in a lifetime now, whereas two of the well-built quality ones in the 40s would be needed–and perhaps passed on to the children."
I decided to run some numbers and see just what the cost differences were. I went back to 1975 and a Montgomery Wards catalog and compared those prices to current prices at Walmart.com and calculated the labor hours at the average private sector non-supervisory wage needed to purchase the products. The results:
Essentially, you could buy 6 toasters or 7 toaster ovens today for the same price at one of either in 1975. So unless today's products are lasting 1/6th or 1/7th of the time that old toasters did (assuming no different in features and toasting quality etc.), you're still more able to afford to replace your toaster multiple times today than you were buying a new one in 1975.
Assuming it's true that small appliances break more often, there may well be issues with disposal and the like, but earlier obsolescence is not a direct financial burden on the average income earner. We are so much wealthier today and costs are so much lower that, financially, we can afford a much higher replacement rate than years ago. Unless you really believe stuff was 6 or 7 times better made 36 years ago, you're better off having to, or wanting to, replace your toaster every five years at today's wages and prices than you were having one that lasted three decades at 1975 wages and prices.
Sources: 1975 Wards Catalog, 2011 Walmart.com, FRED wages series.