A couple days ago, I was asked by a reporter whether I thought this year would be the most expensive thanksgiving ever. I sidestepped the question because I didn’t think it was very serious. Today, I see headline after headline after headline is asking the same question or making the claim that 2021 will be the priciest Thanksgiving.
Is it true?
One can certainly look at food prices over time. The figure below shows data from the Bureau of Labor Statistics showing the percent change in prices of food for at home consumption relative to January 1980. In September 2021, the price of food at home is 210% higher than in January 1980. By, this measure we are indeed on pace for the priciest Thanksgiving ever. But, look at the graph. Wouldn’t that statement be true each and every Thanksgiving since 1980? Because of inflation, prices tend to inch upward every year. Thus, looking only at changes in the price of food over a long period time doesn’t really tell us much about whether food is more expensive.
What we want to know is whether food prices are rising at a faster rate than other items that we might care about. One key economic variable many households care a lot about is their income. Income and wages also increase over time because of inflation. But, by comparing prices to income, we can get a sense of whether food items are, in fact, more expensive for a worker.
To explore this issue, I pulled data from the Bureau of Labor Statistics (BLS) on median weekly earnings for people employed full time going back to 1980. I also pulled average price data from the BLS for selected food items that have been reported on a fairly regular basis since 1980. Assuming people work an average of 2,400 minutes a week (40 hours a week * 60 minutes per hour), I calculate the amount of work time it takes to earn enough money to buy selected food items today compared to 1980. To my liking this is a much better measure of whether food is, in fact, more expensive.
Back in 1980, a worker earning the median weekly salary would have to work about 175 minutes (almost 3 hours) to earn enough money to buy a 20 lb turkey. By 2019 (this is the latest data available because the BLS unfortunately stopped reporting retail turkey prices in 2019), shows the median worker only had to work about 80 minutes (1 hour 15 minutes) to buy a 20 lb turkey. Why has the time price of turkey fallen so much? As I described here, there have been incredible efficiency improvements in turkey production over this time.
In 1991, a worker earning the median salary would have to work about 170 minutes to earn enough to buy a 10 lb ham (1991 is the first year BLS reports retail ham prices). Today, the median-salaried worker only has to work 113 minutes to buy a 10 lb ham. The time price of ham is 33% lower today than in 1991. In other words, ham is less expensive today relative to our incomes than it was in 1991.
While the overall trend is less apparent for items like potatoes and bread, it is clear from the figure above that the time-price of these items are not at their peaks. Bread and potatoes were more expensive in the years 2008 to 2012 than they are today.
Steak is indeed expensive today relative to the past. The most recent data suggests a worker making the median wage would have to work about 102 minutes to earn enough to buy 4 lbs of beef sirloin steak at retail. Nonetheless, steak has been more expensive in the recent past. The time price of sirloin steak was higher in 2004 (104 minutes) and 2014 (103 minutes) than it is today in 2021.
The figure above does show that food is more expensive (at least the the way I’ve measured it) in 2021 than was the case before the pandemic began. But, is Thanksgiving 2021 going to be the most expensive ever? No.