Money and millennials: The cost of living in 2022 vs. 1972
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Money and millennials: The cost of living in 2022 vs. 1972
Many young adults grew up hearing stories about their parents purchasing their first home while they were in their 20s.
But for a lot of millennials these days, that seems like a fantasy.
Young adults, many burdened by financial struggles, are now living with their folks at a higher rate than people of their age did 50 years ago. The proportion of young adults who live in a parent’s home more than doubled between 1971 and 2021, from 8% to 17%, according to a recent Pew Research report.
Young adults face rising student debt and housing costs on top of the inflation that reached unnerving levels over the past year. Consumer prices jumped 9.1% annually in June, the highest rate in 40 years, although there are signs inflation is cooling down. Among them, prices were flat in July on a monthly basis.
To make matters worse, Americans’ wages have stagnated since the 1970s, with worker productivity growing three times more than pay. The economy of the 1970s also underwent a bout of high inflation, with prices rising more than 12% in 1974, due in part to the Arab oil embargo.
In response to rising prices, many young adults have moved back in with their parents to save money. To put current economic challenges into perspective, we looked at how much more big-ticket items cost now compared to 1972. All amounts have been converted to 2022 dollars.
The cost of a home
Almost half of renters think they will never be able to own a home, largely because of the inability to afford a down payment, according to a 2021 Lending Tree survey.
The median price of a home in the second quarter of 1972 was just $26,800, according to the U.S. Census Bureau, amounting to roughly $189,500 in current dollars. Since then, home prices have climbed 132%.
That’s just the national median. In some parts of the country, sales prices are even higher. The median sales price of a home in the Los Angeles metropolitan area was $918,600 in June, while San Jose’s was $1.46 million. Seattle’s sales price was about $726,600, according to data from Zillow.
There aren’t enough houses on the market to meet demand, with new-home construction falling to record lows. David Dworkin, president and CEO of the National Housing Conference, told Marketplace that since the pandemic began, there’s been a large decrease in the construction of new homes priced less than $300,000.
When housing becomes too expensive, people rent for longer periods, which in turn drives up the rent for everyone, explained Diane Yentel, the president and CEO of the National Low Income Housing Coalition. The average monthly rent reached more than $2,000 in June, according to Redfin.
The cost of college
1971-72: $10,000 for a public four-year college
$20,700 for a private nonprofit four-year college
2021-22: $24,600 for a public four-year college
$56,100 for a private nonprofit four-year college
The cost of college tuition, fees, room and board has more than doubled since the 1971-72 school year after adjusting for inflation, according to data from the College Board. Climbing costs have saddled millions with student debt that they struggle to pay off after graduating from college, forcing many to postpone or abandon their hopes of purchasing a home or starting a family.
On top of rising costs, graduates deal with accruing interest on their loans. Payments and interest on student loans have been postponed due to the pandemic, but those obligations are set to resume at the end of this month.
In total, U.S. borrowers have accumulated a colossal $1.75 trillion in student debt.
Medical expenses: out-of-pocket costs
A recent Gallup poll found that rising health care costs have led about 40% of Americans to skip treatments, reduce regular household expenses or borrow money.
People paid an average of more than $129 for out-of-pocket health care expenditures in 1972, according to the Kaiser Family Foundation. That is equivalent to $915 today.
In 2020, the latest year for which data is available, people paid $400 more in out-of-pocket costs, totaling $1,350 (after adjusting to 2022 dollars).
Out-of-pocket costs make up a smaller share of the nation’s total health expenditures since the 1970s, according to KFF. That’s because insurance programs cover more costs, explained Cynthia Cox, vice president at KFF. For example, Medicare did not cover outpatient prescription drugs until 2006.
Per capita, however, out-of-pocket costs have risen.
“That’s a reflection of the fact that health care prices and health care costs are growing faster than the rest of the economy,” Cox said.
The cost of a new car
New vehicle prices have risen over the past several decades and even more so during the pandemic, thanks largely to supply chain issues that left manufacturers with a shortage of microchips. The average sticker price for a new car in July was almost $48,200, according to Kelley Blue Book.
But the average price of a new car in 1972 stood at $3,690, according to the National Automobile Dealers Association, which amounts to about $26,100 in current dollars. Since then, the price has risen about 85%.
We also looked at the prices of some popular vehicles that are still in production, like the Toyota Corolla and the Chevy Suburban.
The manufacturer’s suggested retail price of a two-door Corolla sedan was more than $2,100 back in 1972, equivalent to more than $14,900 today. The Corolla L sedan, the line’s base model, has a current starting MSRP of more than $20,400 — about $5,500 over what it cost back then.
And in 1972, a custom deluxe C20 Chevy Suburban cost almost $3,770, or more than $26,600 in today’s dollars. A two-wheel-drive, four-door LS, the Suburban’s base model, now costs almost $56,500. That’s more than double the price in 1972.
There are, of course, significant differences between today’s cars and those manufactured in the early 1970s, which make comparisons imperfect and help to account for today’s higher prices. Automobile companies now have to include airbags in vehicles. They also offer consumers more sophisticated features and capabilities, such as audio touchscreens and backup cameras.
Vacation (admission to Disney World)
1972: $1,170 for a three-night/four-day stay at Disney World for two adults and two kids
2022: $2,670 for the same
Leisure activities are more expensive too. Historians say that vacationing in the early-to-mid-20th century was more affordable and would sometimes even be subsidized by an employer or labor union, as Marketplace reported in 2016.
Now, vacations are getting to be out of reach for middle-class Americans.
The cost for two adults and two children to stay at Disney World for three nights, along with admission for four days, is more than double what it was in 1972.
A seven-ride ticket book — which included general admission and access to seven rides — cost adults $4.95 a day and kids $3.95, according to The Miami Herald at the time. Hotels at Disney World averaged $32 a night, putting the total cost at $167.20, which amounts to roughly $1,170 adjusted for inflation.
Today, a standard theme park ticket for four days with no add-ons, along with a three-night stay at Disney’s All-Star Music Resort, one of the cheaper packages available, costs about $2,670.
Over at Disneyland on the opposite side of the country, a “Big 11 ticket book” — which included general admission and access to 11 rides — cost adults $5.35 each and kids $4.30 in 1972. A family of four spending a day at the park would spend $19.30 for admission, or about $135 adjusted for inflation. These days, it could cost this family almost five times the amount it was back then. Ticket pricing is now dynamic — standard admission for one day would cost two adults and two children between $404 and $638.
Not surprisingly, the pricing structure at each park and the parks themselves have changed since then. A general admission ticket nowadays doesn’t limit your number of rides, and both parks have undergone upgrades and added attractions.
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