Boston Magazine has a sidebar on page 61 of its August 2018 issue.
A nurse in metro Boston earned $11,596 in 1975, about $54,500 in today’s dollars, adjusted via the official CPI. Today the nurse’s median earnings will be $97,136. So the nurse is way better off, right? That’s $42,635 extra.
Median annual rent in boston has supposedly gone from $675 ($3,173 in 2018 money) to $36,012. The 1975 number sounds too low, but there were a lot of slum areas of Boston back then. If we do believe the numbers, nearly all of the nurse’s advance in pay has been captured by a landlord. Professional sports can perhaps capture the rest? A grandstand seat at Fenway Park has gone from $3.75 ($17.63) to $83.
Perhaps explaining why our highways are so jammed, tolls on an example section of the Mass Pike have gone from 70 cents in 1972 ($4.53 today) to $1.20. The cost of a subway ride has gone up only slightly faster than official inflation, from 50 cents in 1975 ($2.35 today) to $2.75.
The nurse/housing juxtaposition does not sound right, maybe in part because of the improvement in housing stock though i doubt that is the whole issue. Cities like Boston and New York are way more affluent today than they were in the 1970s — just look at any movie from that time and what a dump both cities were. As for the baseball example, I don’t know who consumes baseball tickets these days. When i was a child you could sit in the bleachers at Yankee Stadium for 75 cents. But i have not been to a baseball game out of choice in decades and my kid and his friends would think me crazy if i suggested that we spend an afternoon watching a baseball game. My feeling is that a lot of consumption of baseball tickets now is large companies entertaining clients & probably outside of the refreshments neither party really wants to be there.
Price data from my mid-west city: early 2000s median houses were priced 3.5x median household income, today its 6.5x. Metro population has increased by almost 40% in 10years.
My immigrant grand parents got a 10 year mortgage to buy their first house, my parents got a 15 year mortgage to buy theirs, I got a 22 year mortgage for mine. My sister’s son is now house shopping, he will be applying for a 30 year mortgage!
My parents rented a house in Pennsylvania in a town, for about $10/month in 1950. The minimum wage then was about 75c/hour. So it took less than 20 hours of work per month to cover the rent. What is the typical number of hours a person needs to work per month at minimum wage, to afford the cheapest housing?
Boston experimented with rent control during this time. Chances are high that market forces were distorted.
See this article for another take on the issue:
https://www.businessinsider.com/tech-workers-cant-afford-silicon-valley-housing-prices-2018-2
Landlords have captured much of the high compensation of knowledge workers in desirable coastal cities. Rents are high due to restrictions and disincentives on supply, and the increase in demand from all those well paid workers. Property owners are lucky to have been in the right place at the right time. And because they vote, property owners engage in regulatory capture very effectively.
I’m reminded of the gold rush towns in 19th century Alaska and California: didn’t the businesses supplying the miners capture most of their excess earnings too?
Speaking of now and then, we spend far more today than then on non live essential items.
Some examples: smart phones (everyone has one even a 7 yo), cable / entertainment (every house has one), fancy cloths (we buy and throw away far more now), eating out / home delivery (taking food to work is what we use to do), cars (few families had a car), vacations (we take far more vacations today), so on and so fort.
No wonder why Americans live check-to-check even with 2 family income those days.
Median annual rent in boston has supposedly gone from $675
That’s $56/month. I really doubt that 1/2 the housing in Boston rented for less than $56/month in 1975 (unless they are counting public housing). Something sounds wrong there.