Prices in the Good Old Days

I’m still working through The Race Underground: Boston, New York, and the Incredible Rivalry That Built America’s First Subway,which has some good facts but pretty much no rivalry, much less an “incredible rivalry” as promised by the title. I’m thinking that the author called this book “Some notes on the history of a couple of American subway systems” and a marketing person at Macmillan decided that wouldn’t sell very well.

One thing that is interesting about the book are the prices from around 1900. Here are some excerpts:

The news that New York was about to build a subway spread fast. Two dollars a day for eight hours of work was good money for a laborer. Engineers, axmen, levelers, steelworkers, inspectors, cement mixers, masonry men, accountants, stenographers, diggers, and even messengers were all suddenly needed. At the Municipal Lodging House on First Avenue at Twenty-third Street, skilled and unskilled laborers from around the country began to flock in day after day in search of a cot to sleep on and a penny to earn. There would be thousands of men within a few days. A three-room apartment in New York, which rented for eight dollars a month, could be divided among three, four, or as many as six workers to reduce the cost. A dozen eggs was going for twenty-five cents, about the same for three tins of sardines, while a dozen pints of beer could be had for a dollar fifty. At the saloons, drafts were five cents, whisky shots ten cents. With those basics, a group of immigrant workers could be quite content, as long as they had paychecks to purchase them.

they would earn two dollars a day for ten hours of work, gouging a trench into the ground by swinging axes, picks, shovels, and hammers,

At Sherry’s on Forty-fourth Street and Fifth Avenue, the Carte du Jour offered Little Neck clams for twenty-five cents, filet of sole for forty cents, filet mignon for sixty-five cents, roast lamb for seventy, venison in a port-wine sauce for a dollar, and, the real splurge, chicken partridge for two dollars and fifty cents.

One thing that hasn’t changed is that some people prefer to pay whatever prices prevail with money that others have earned…

And it took barely a minute of operation for the first theft on the subway to be reported, when a West Side resident named Henry Barrett told police that he took the first train at 7:02 P.M. and that one minute later his $500 horseshoe pin with fifteen diamonds on it was gone.

Let’s see what kind of inflation rate we can get from the above numbers. Employers circa 1900 paid no benefits so the $2 per day/20 cents per hour rate is comparable to today’s full loaded cost for a worker. The New York Times in 2011 said that an unskilled construction worker was getting $58 per hour in total compensation (source). http://www.westegg.com/inflation/ says that 20 cents from 1900 would be equivalent to $5.32 in 2011. So real wages have risen by 10X for unskilled construction workers in Manhattan, consistent with the findings in A Farewell to Alms about economic growth hugely benefiting the unskilled (though in this case they also got a boost from unionization).

The filet mignon that was 65 cents back then is perhaps $50 now. The Westegg calculator says that official government inflation numbers would result in a rise up to about $18 over the same period. How about rent? It was $8 per month for a three-room apartment. That’s $221 in today’s money, supposedly, not enough for one night’s rent of a single room in Manhattan! Another way to look at it is that a three-room apartment could be rented with 40 hours of monthly labor (there were no income taxes back then so the arithmetic is simple). Today the three-room apartment would cost at least $3000 per month? And an after-tax wage for an unskilled worker might be $10-$40 per hour? So now it costs between 75 and 300 hours of monthly work?