The rent really isn’t that high

In a recent post about time prices, the excellent Jeremy Horpedahl noted that workers are better off today than in 1924 except in the cost of housing. These comments are rooted in data compiled by Anthony Davies.

Antony Davies recently did a 100-year comparison of time prices for an average worker in the US. He compared prices in 1924 for several common food items, gasoline, electricity, movie tickets, airline tickets, an automobile, and several measures of housing costs to the best comparable thing in 2024. This following table shows his results:

Is housing really more expensive?

Rent is shown to be less expensive than in 1924 in small and medium cities, not more expensive, and by quite a bit. Living in a small city today only costs the worker 4.7 days of labor versus 1.3 weeks in days of yore.

However, consider the increase in the cost of living in a large city, shown at 2 weeks versus a week and a half. Doesn’t the proximity to work and services save workers a considerable amount of time? Many people who live in smaller towns or rural areas commute long distances to work. They drive to larger commercial centers for shopping and medical services. In an emergency, an ambulance service can run up a large bill.

Aren’t there considerably more services in the large cities than in 1924? In addition to road transit, there is access to international airports. The city is also the heart of entertainment culture, from major sports franchises to fine arts and musical venues. Conferences take place in the city, and universities are located there. Cities provide the landscape for all the restaurants and eateries where politicians and leading business figures congregate.

When you rent in a large city, part of what you pay is the capitalization of the entrance fees to many more social enterprises that were not available in 1924.