We assume that the cost of living is like inflation but they are not the same.
Cost of living is the cost of maintaining a certain standard of living. Changes in the cost of living over time are often operationalized in a cost-of-living index. Cost of living calculations are also used to compare the cost of maintaining a certain standard of living in different geographic areas. Differences in cost of living between locations can also be measured in terms of purchasing power parity rates. (from Wikipedia)
In economics, inflation (or less frequently, price inflation) is a general rise in the price level in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. The opposite of inflation is deflation, a sustained decrease in the general price level of goods and services. The common measure of inflation is the inflation rate, the annualized percentage change in a general price index, usually the consumer price index, over time.
Inflation and deflation are all about the economy.
Cost of living is all about living, specifically, a standard of living.
In the USA, living free, as in homeless, unemployeed, owning no property, is highly frowned upon if not out right illegal. Further, it is not ok to go pitch a tent on government land and live there for free off the land. Parks have over-night stay permits that cost money. Other government land is not treated so much like public land as it is like forbidden land--with ranchers or miners frequently renting rights to use it.
The current standard of living has changed significantly from 100 years ago. In 1921, most houses were heated by open gas heaters in each room if modern or by a fireplace or wood stove if a little older or more rural. Lighting was either gas fixtures, kerosene lamps, candles, or in rare urban areas, oddly, some in Colorado being first, by electricity. There was national radio transmission in 1916, but actual stations didn't start until 1920 and FM stations weren't until 1937.
History of Commercial Radio | Federal Communications Commission (fcc.gov)
Statistics: The American Economy during the 1920s | Gilder Lehrman Institute of American History
By 1925, less than 20% of the population had a radio. There were enough cars for about 20% of the population, but they tended to be owned by the wealthy and businesses and government agencies such as police, fire departments and military. Roughly 1 phone for every ten people was available, but most of these were public phones, and those individuals with phones in their homes were on party lines with no privacy whatsoever. Also, the phone did one thing--it allowed people to hear each other, a huge improvement over the telegraph.
Entertainment was either live, singing, plays, dance performances, burlesque, caberet, AND movies, black and white film, silent, a little jerky, but well loved and only available in movie theaters, although I'm sure some of the rich 5% had theaters in their homes.
The income breakdown for this time per the IRS is:
$1,000-$2,000/year 37%
$2,000-$3,000/year 35%
$3,000-$5,000/year 18%
$10,000-$25,000/year 6%
$25,000-$50,000/year 2%
over $50,000/year less than 2%
(yes, very similar to now, and in 1929 all that inequality caused a lot of problems, all around the world)
What Did It Cost? A Look Back (davemanuel.com) a fun little site, try it.
A movie ticket in 1921 cost $0.07 cents, adjusted, that would be $0.97 cents today.
(can that be right? actually keep watching, someone is making a killing off of us)
1920s Cost of Living. New House. 1920: $6,296. Average Income. 1920: $2,160 per year. New Car. 1920: $525. Average Rent. 1920: $15 per month. Movie Ticket. 1920: 15 cents each. Gasoline. 1920: 33 cents per gallon. First Class Postage Stamp. 1920: 2 cents. 1929: 2 cents
Now, what is not comparable in cost of living: how has living in 2021 changed from 1921.
1. Except for a few people, we all have to pay for running water, and with that is frequently a required sewage and trash payment. A few people are off the grid and living on wells, where I'm from, those frequently come with a load of methane.
2. Electricity (and possibly gas) are not luxuries. Few houses are habitable without them as our houses are not cool in summer or hot in winter without a good energy source. If you are so off the grid that you have a good well and only use wood for heat, congratulations, you are self sufficient, and your kids hate you).
3. Internet service, wasn't even an option in 1921, but very hard to live without in the current age. Children with no access have an education hardship. Frequently, those without it get by with a cable subscription and a private hotspot on their cellphone, but cellphone is necessary for this.
4. The old payphone/party line is now a purchasable (the old ones were leased), and while land lines are still an option, frequently bundled with cable or internet, the electronic cellphone that rapidly becomes obsolete is both expensive and requires a subscription. (you can buy a cheap version, called a prepaid, that comes with a certain amount of hours of phone time and, depending on price, a bit of data available). It's not free--or cheap.
5. While you can listen to AM/FM radio on a car or home radio, most is so ad/saturated that people stream their music, podcasts, news programs. Free radio is probably about the same as the 1920's.
6. Television for free is possible, if you get a great antennae (not cheap) or are good with coat hangers and aluminum foil and live near a pretty good local station. Cable/Satellite/internet streaming are not free or even particularly affordable. (I have found streaming with internet considerably cheaper than a cable or satellite bundle, though)
7. Healthcare in the 1920's( 1920-1929 - Prices and Wages by Decade - Library Guides at University of Missouri Libraries )was not easily accessible. While Hammurabi mentions health insurance in ancient Mesopotamia and England had it in the 1850's, the USA had its first group health insurance plan in 1929. Theodore Roosevelt supported Universal healthcare due to success of systems in Europe at the time. The USA has still not bought this idea so pretty much no one could afford health care in 1921. We didn't have effective antibiotics, so infections were a frequent cause of death. Reality is, there wasn't much healthcare available, it wasn't particularly safe and effective, and most people couldn't afford it anyway. These days, even with laws allowing emergency treatment without upfront pay and Obamacare and medicare and medicaid, about 10% of adults can not seek treatment for anything but emergency care. Emergency departments hate when people show up for routine clinical care, and if they are being jerks, a trip in for a case of strep throat or uncontrolled blood sugar can legally be sent out with no treatment, just a reminder to see their private physician. No, they don't have a private physician, no private physician will schedule them an appointment without a payor source up front. At least the Doctor in 1921, if there was one nearby, would try to treat you for a chicken or a deer haunch.
8. Education in 1921 was not universally available in every locale. We did get the Education Act of 1921. Education Act 1921 - The National Archives Which gave free reign to local government. It didn't require education beyond age 14, no special education requirements or early education requirements. There is no mention of race. While Reconstruction caused the legal requirement of education available to Black children, that was not a push for desegregation. In North Carolina, for example, they finally required school to be available to black children for at least 16 weeks per year until age 16. At that time there were no high schools for black children in the state. I suppose that the fact that Chinese immigrants, were not allowed in school until 1905 and Native Americans were not recognized as even citizens of the USA until 1924 makes all of this less amazing. At least now everyone gets to go to public school. We just don't budget much for our non-private school students future success.
9. College is also not particularly better for everyone. A lot of us are ready for free university like in multiple European countries. A better educated population makes a better country, and a better workforce. Currently, 69% of our students go to college, the vast majority attending part time while working, though not always immediately after high school. In 1960 that number was 45%.
10. The immediate college enrollment rate by race from 2000 to 2017 was: 69% of white students in 2017 in opposition to 65% in 2000, 67% of Hispanic students in 2017 in opposition to 49% in 2000, 87% of Asian students in 2017 in opposition to 74% in 2000, 58% of black students in 2017 with no significant change since 2000. (that is the very definition of institutional racism---how many give up on college due to no funds without a sports or academic scholarship before they even get through high school)
College 1921 Tuition
University of Georgia FREE
University of South Carolina $40
William and Mary College $50
Clark University $100
Bates College $125
Bowdoin College $150
Johns Hopkins University $150-250
Dickinson College $160
University of Vermont $175
Colgate University $180
Boston University $225
Dartmouth College $250
Harvard University $250
Tufts College $250
College 2018 Tuition
Reed College $56,030
Cornell University $54,584
Connecticut College $69,970 (includes room and board)
Harvard University $46,340
Michigan State University $39,750
Dickinson College $54,636
Colgate University $55,530
Bucknell University $55,788
Gettysburg College $54,480
Dartmouth College $52,950
Tufts University $55,172
University of North Carolina $34,938
Pepperdine University $53,680
University of Virginia $48,891
These days, only 36% of jobs are available without any college. In 1937, only 37% of jobs required any college.
Inflation between 1921 and now: in 1921 a $1 is now worth $14.69.
The average income in 1921 was $3,269.40, but the Median income was between $2 and $3 thousand. (the difference between the two has to do with that usual 2-5% that made out like bandits---we still have that only vastly worse.)
One Hundred years later, the median income is $68,400.00. The average household income was $97,973.61 in 2020, yet minimum wage makes under $17,000/year.
Minimum wage didn't happen until 1933 and is part of the Roosevelt Great depression recovery. It was initially declared unconstitutional. But by 1938, was enacted at $0.25/hour. ($4.54 in 2019 dollars) Of course, most people were dirt poor on this wage, and the goal was food, people lost homes, farms, and families fell apart trying to survive. The minimum wage was not meant to do anything but make employers not try to pay people a dollar a day.
If, instead of that first, very low wage, we used the median wage of 1921 as the minimum, then our current minimum wage would be over $17.00 an hour.
America can eliminate poverty. We have the knowledge, the tools and the money, we just need to decide to stop trapping people by giving everyone equal opportunities.
