Do Incomes Buy Less Than 1938?

February 3rd, 2024

A viral meme with mostly fake data.

Video claims, using a viral meme, that incomes buy less stuff today than in 1938. Let’s go through the numbers and sources. The number comes from meme and doesn’t cite any sources. As such, nearly every dollar number is fake or misleading. The average income number is not found in any source. The closest, I could find is $1,249 for Wages and Salary Accruals for Full-Time Equivalent Workers. The viral TikTok video attempts to compare this to today, but cites $31,133 from 2019 from a quick google search. If you dig into the sourcing, Google never cites where they get that figure from. The closest I could find is Median Personal Income, which has $35,980 for 2019. This figure is now over $40k by 2022.

The issue, is that Median Personal Income is going to include part-time workers – those who are not working enough hours to support themselves on their own. If we look at median full-time earnings, we find $55k for 2022 (and $59.4k by the end of 2023). The final issue with comparing with 1938, is that we do not have a measure of median earnings from back then. We do, however, have a measure of mean wages cited above. The mean wage and salary accruals for 2022 are $78,465. These dates and ways of measuring income matter significantly for any claim about affordability.

Now, what about rents? We don’t have any rent data from 1938, but we do have the Census 1940 data. That year, median gross rents were $27. In 2022, the Census ACS 1-Year Estimate has median gross rents at $1,300. Putting all this together, we find median rents were $24.6% of average income in 1940, whereas today that figure is 19.9%. Things are now more affordable, at least compared to 1940.

Year	Mean Full-Time Wage & Salary	Rent	% of Income
1940	$1,317	$27	100*27*12/1317=24.6
2022	$78,465	$1,300	100*1300*12/78465=19.9

We can say more though. Because we are now using 1940 as a date of comparison, we do have a measure of median income. Not for an individual, though, but for the entire family.

Table 1 of the Census’ Family Wage or Salary Income in 1939 shows $1,226. The number is lower than the mean, because median income will always be below median income. However, note that the gap is attenuated because we are looking at a whole family, not just an individual. The median family income in 2022 is $92,750. Now, today, the median family income is higher than the individual mean income because women earn far higher wages (and have a higher labor force participation) than they did in 1940.

Now, let’s redo the table. We find median rent for the median family is even more affordable than it was compared to the mean full-time individual.

Year	Median Family Income	Rent	% of Income
1940	$1,226 (year 1939)	$27	100*27*12/1226=26.4
2022	$92,750	$1,300	100*1300*12/92750=16.8