NYTimes Ezra Klein on affordability in the modern era -

In the 1960s, it was possible to attend a four-year college debt-free, but impossible to purchase a flat-screen television. By the 2020s, the reality was close to the reverse.

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EZRA KLEIN
Inflation Has Unmasked the Depths of Our Affordability Crisis
July 17, 2022

June’s just-released inflation data is startling. At 9.1 percent, it’s the highest year-on-year rate we’ve seen since 1981.

Maybe it’s the highest we will see. Oil and other commodity prices are falling, real wage growth has turned negative and retail inventories are thickening. None of that is fertile soil for continued inflation. If the only prices problem we had was the one that the past year of inflation reports tracked, I’d think the light was beginning to glint into the tunnel.

But it’s not. In February of 2020, The Atlantic published a piece on the affordability crisis that was souring a seemingly strong economy. “In one of the best decades the American economy has ever recorded, families were bled dry by landlords, hospital administrators, university bursars and child-care centers,” Annie Lowrey wrote. “For millions, a roaring economy felt precarious or downright terrible.” Lowrey’s framing has stuck in my mind over the last couple of years. I don’t think you can understand the broader price crisis without it. (I should mention here that Lowrey and I are married, but don’t hold that against her — or her work!)

The numbers are startling. The median home price in 1950 was 2.2 times the average annual income; by 2020, it was six times average annual income. Child care costs grew by about 2,000 percent — yes, you read that right — between 1972 and 2007. Family premiums for employer-based health insurance jumped by 47 percent between 2011 and 2021, and deductibles and out-of-pocket costs shot up by almost 70 percent. The average price for brand-name drugs on Medicare Part D rose by 236 percent between 2009 and 2018. Between 1980 and 2018, the average cost of an undergraduate education rose by 169 percent. I could keep going.

We papered over the affordability crisis with low prices for consumer goods, soaring asset values that kept richer Americans happy, subsidies for some Americans at certain times and mountains of debt: housing debt and student-loan debt and medical debt that kept the working class semi-afloat. But none of this addressed the core problem. For far too long, the prices of the things we need most have been growing far faster than inflation.

And so a weird economy emerged, in which a secure, middle-class lifestyle receded for many, but the material trappings of middle-class success became affordable to most. In the 1960s, it was possible to attend a four-year college debt-free, but impossible to purchase a flat-screen television. By the 2020s, the reality was close to the reverse.

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