Food Affordability Revisted

Many Americans believe that grocery prices are slipping out of reach. Admittedly, inflation has left a mark on household budgets in recent years, but let’s take a timeout for a food reality check.

Using Bureau of Labor Statistics data on blue-collar pay (versus usually higher white-collar pay), and the Consumer Price Index for food purchased to make at home, a truer affordability can be calculated. Over the past two years, wage inflation outpaced food inflation 8.1% to 4%. Over 10 years, those numbers were 50% to 30%. Thirty years: 169% to 111%. Fifty years: wages 558% to food’s 403%.

Last year, wages grew about 40 percent faster than food prices. Are there exceptions? Of course. Not everyone’s wages rose fast enough and certain food items rose more than other foods. That’s where common sense comparison shopping plays a role. Buy less of what one can’t afford and more of what one can. For me: less beef, more eggs.

Americans may buy goods with dollars, but those dollars require work hours and/or taxpayer-funded handouts to achieve. The best way to look at affordability is to link prices to the number of work hours required to purchase a good or service. To calculate a time price, divide the dollar price of a good by one’s hourly wage. The result is the number of hours a worker must spend on the job to earn that good. The American Farm Bureau Federation did just that, with this year’s Thanksgiving meal as an example.

Thanksgiving for a family gathering of ten rose from $28.74 in 1986 to $55.18 in 2025, a 92 percent increase. Hourly wages over that same time frame rose from $8.92 to $31.33, a gain of 251 percent. Converted into hours of work, 1986 required 3.2 hours vs 2025’s 1.7 hours. Granted, 1986 was very expensive. It followed the 1973-82 period that saw yearly inflation rates range from 6.1 – 13.5%. However, every ten-year period previous to today required more work hours to afford groceries.

Here’s why. Modern technology has allowed for better seeds and fertilizers, machinery, transportation, refrigeration, and inventory/data systems to raise agricultural productivity. Competition from global trade also pushes producers to deliver more for less in today’s economy.

In 1960, U.S. consumers spent about 17 percent of disposable personal income on food. As of 2019, that share had fallen to 9.5 percent. Even with the recent inflation spike, Americans now spend about 10.4 percent of disposable income on food. Granted, those stats do have a bit of ambiguity in them. Families were larger fifty years ago. On the other hand, today’s Americans have far more non-necessities competing for their purchasing dollars.

Naturally, not every household benefits equally. The pressure of higher rents, insurance premiums, and attention to health puts stress on wages – and not everyone can work. Policy debates about safety nets, housing supply, and tax burdens remain important. My generation will never forget their grandparents saving aluminum foil so it could be reused. Intelligent shopping has always been required. For some, it’s a real need. For others, it’s simply a denial of proper priorities.

Source used: Cato Institute