Why America's Essentials Are Getting More Expensive While Its Toys Are Getting Cheap

[undeterred]

The past decade in prices—and the story it tells about poverty and America. Derek Thompson May 2 2014, 8:00 AM ET

In the last ten years, what's gotten more expensive? And what's gotten less expensive?

Here's a fascinating snapshot of the last decade in American prices...



It comes from Annie Lowrey's look at U.S. poverty, which is appropriate, because you occasionally hear conservatives say that poor people aren't really poor because, you know, they have refrigerators and TVs, don't they? Yes, they do. More than 80 percent of low-income households have a fridge, TV, microwave, and stove. They can heat food and cool food and watch American Idol, no problem.

But the power to alter the temperature of your food and watch FOX is not quite the same as being rich. Tens of millions of families remain uninsured, millions more can't afford to go to (or finish a degree at a high-quality) college, and millions more struggle to pay for daycare for their children. Meanwhile, used HD televisions are dirt cheap and it's never been more affordable to buy simple electronics. Why does it seem like the least important things in life—TVs, toys, and DVD players—are getting cheap while the most important parts of the economy are getting more expensive?

Two observations here.

1) On poverty: Jordan Weissmann nails it: "Prices are rising on the very things that are essential for climbing out of poverty." The road to upward mobility is uncertain, but we know the checkpoints. Graduating from college—whose sticker price is actually rising faster than its actual cost—correlates with higher employment and richer earnings. Chronically sick children affect parents' mental health, and chronically sick parents hurt a family's well-being. Single moms and dads who can't afford daycare and wind up spending lots of hours watching after their kids have trouble finishing school or establishing themselves in the workforce. Just as the benefits of wealth create a virtuous cycle of behavior, the challenges of poverty start a vicious circle that continues to spin down through multiple generations.

2) On productivity: When you look at the items in red with falling prices, they largely reflect industries whose jobs are easily off-shored and automated. The secret to cutting prices (over-generalizing only slightly here) is basically to replace American workers. If you can replace U.S. labor with foreign workers and robots, you're paying less to make the same thing. Look back at the items toward the bottom of the graph. Our clothes come from Cambodia. Our toys come from China. Meanwhile, Korea, a world-leader in electronics and auto manufacturing, has the highest industrial robot density in the world. Cheap things aren't made by American humans.

Read more at: http://www.theatlantic.com/business/archive/2014/05/its-expensive-to-be-poor/361533/

[House of Roberts]

1. Demand for essentials is a constant.

Demand for toys falls as disposable income disappears for too many.

[MADem]

2. WE (RCA, Zenith, Admiral, etc.) don't make those tee vees anymore.

Some poor basstid making subsistence wages is making it. Cheaper workers, cheaper prices.

When tee vees were pricey, people who were getting a decent wage or a halfway decent wage (us, or the Japanese, or the Koreans) were making those things. Now, people in sweatshops make them.

[undeterred]

3. And nothing gets repaired any more.

Used to be that appliances and electronics could be repaired for a reasonable price. Now if something goes wrong its cheaper to replace the item than fix it. Soon the whole planet will be landfill full of our broken toys.

[BrotherIvan]

4. Americans don't support Made in USA business

In a rush for quantity over quality, we've killed ourselves. How do I know? Our company makes Made in the USA goods and people email me asking why things are 10% higher in cost. I let them know that it certainly isn't markup, because in order to compete with slave labor goods, are markup is very low by comparison to most goods. I let them know we pay our employees far above minimum wage and provide full time benefits. I tell them we ensure the production of the product from start to finish and use only the best materials. I tell them we make our products to last for years, making them a much better value. But most people are not willing to pay $1 or $2 more for something. Made in the USA is not worth it to them.

[MADem]

5. Unfortunately, the price point differential is too great for many products.

It's not a dollar or two, it's a difference of, say, forty dollars or more for something like a fleece lined hoodie. The foreign models are much, much cheaper.

I think USA needs to combine robotics more robustly with humans and split the diff--that'll bring that differential way down. It won't eliminate it but it will reduce it from tens of dollars to just a few dollars.

Things that are Made in USA can only be made affordably if there's fewer salaries involved in producing a given product. The only way that will happen is if the workers have robot helpers who don't expect a paycheck. In the short run, yeah, fewer people are employed, but in the long run, if the model is successful, more people here in USA will do it--lots of automation with some human Quality Control and oversight. And that'll spark growth in the robot maintenance industry; we'll need robot repair folks as well--sure, some robots could learn to repair themselves, but at some point a human will need to check their work!

[BrotherIvan]

6. Or wages increase

Erasing jobs in favor of machinery will not boost the economy. Wages, for instance, in Australia are much higher than ours. We have no trouble with customers willing to pay for quality products, even with the higher shipping because they can afford it. The big corps got people hooked on cheap, disposable goods made by slave labor. People over-consume cheap goods rather than buying quality. If Made in the USA was important, a status symbol, people would have no trouble paying that. They already pay high prices for designer labels, not caring those products are still made in India or Vietnam. It's a change in attitude that's needed. We don't need to race to the bottom to compete with slave labor. We need tariffs and a movement to support American workers.

[MADem]

7. You can't compare Australia to USA. Australia has a people SHORTAGE.

You do realize Australia is importing Americans to serve in the Aussie Armed Forces? They're looking for skilled immigrants in a variety of fields as well.

We have more people in USA than we have jobs right now. We need to find a way to bring more jobs to America, to encourage manufacture in - house rather than offshoring it. The costs of production must be competitive before an employer will move their production facility--after all, their goal is to make as much money as they possibly can. They're all about the bottom line. Automating, while initially seeming counter-intuitive, might bring more jobs to the fore if the bottom line is that there's more productivity happening at a competitive price as a consequence of combining humans/robots to cough out a product.

I don't understand this sentence--people do have limits on their incomes, you know--when you have kids to clothe, you buy what you can afford; it has nothing to do with 'status symbol'--that kind of thinking is for One Percenters and One Percenter Wannabees (most people aren't in that category):

If Made in the USA was important, a status symbol, people would have no trouble paying that.

If you don't have the disposable income to pay thirty or forty bucks more, you will "have trouble paying that."

If we can change the manufacturing paradigm in USA, we can one day have a twenty two dollar an hour minimum wage. But we've got to find a way to prime the pump.

[Mosby]

8. why has tuition gone up so fast?

[yurbud]

9. gov't spending hasn't kept up with demand in large part because

Republicans have convinced people that raising taxes is a cardinal sin.

So the cost has gradually shifted from the feds and states to parents and students.

At some levels, it may also be that health insurance costs for faculty and staff have skyrocketed (like it has for everyone else). On the other hand, a lot of colleges get around that by hiring part time faculty and not offering them health insurance.

So it's mostly the budget.

[undeterred]

10. Wages have been stale for years.

So the cost of a college education becomes more and more out of reach every year.