Are Americans richer than they were 50 years ago? The answer can be complicated, depending on where you are in your life experience.
How Buying Power Has Changed Since 1974
According to a report by the Tulsa, Oklahoma-based consumer news operation ConsumerAffairs, in some ways the answer is unquestionably yes. In looking at buying power, which measures income against inflation, the report found general purchasing power had risen 73.1% between 1974 and 2024. The average individual income, adjusted for inflation to 2024 figures, would have risen from the equivalent of $28,278 in 1974 to $48,960 by 2024.
But that’s only part of the story. The cost of many consumer goods has indeed shrunk in the past five decades, and the ubiquity of technological changes — central air conditioning, lifesaving medications, cars that last much longer, smartphones that put a world of money- and time-saving information in our pockets — has quickly become taken for granted, particularly by younger people who cannot recall a world without them.
Not all costs have shrunk. The costs that haven’t tend to be items that cannot be put off for a more convenient time, such as housing, health care and college tuition, according to ConsumerAffairs.
College Tuition Costs More Even After Inflation
Using inflation-adjusted 2024 dollars, tuition for a four-year public college has risen from the equivalent of $3,270 a year in 1974 to $9,872 in 2024; for private colleges, it has climbed from $13,010 to $35,911. The overall effect has been to shrink college purchasing power by 42.7% during that time.
That has been driven by multiple factors, according to ConsumerAffairs, including states cutting back financial support for colleges, expensive amenities added by colleges themselves to attract students, and expanded federal student loans, making it easier for students to find money to pay for college at the time, but not necessarily to pay back the loans in the years that follow.
Health Care and Housing Take a Bigger Bite
Medical purchasing power shrank 17.2% during that 50-year period, according to the report, with individual annual out-of-pocket health care spending growing from $972 in 1974 to $1,632 in 2024 in inflation-adjusted dollars. U.S. life expectancy during that time rose from 71.79 years to 79.25, according to Macrotrends.
Buying a home is also more expensive. Using inflation-adjusted dollars, the median home that would have cost the equivalent of $229,342 in 1974 now costs $418,975. While monthly rents haven’t increased quite as much, they have risen — from the equivalent of $910 in 1974 to $1,487 in 2024.
Are We Better Off?
“Are we better off? Ask a retiree with a paid-off house, and the answer’s probably yes. Ask someone a few years out of college, splitting rent three ways, and it’s probably no,” concluded the report. “Purchasing power went up. Many people still feel behind. Both of those things are true at once.”
Reporting by Dennis P. Carmody, USA TODAY NETWORK / Asbury Park Press.
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