The figure above illustrates the increase in the consumer prices of certain goods and services since 1982, comparing them to the increase in median usual weekly earnings for U.S. workers. All prices and wages are indexed to 1982-24, allowing us to easily compare whether the price for the good has increased faster than or more slowly than the usual median weekly wage. For example, the price of milk has been increasing, but the line falls below the line for the increases in the median usual weekly earnings, indicating that wages have been increasing faster than milk. Other items that are becoming more affordable relative to wages include wireless telephone service, new and used motor vehicles, and food and beverages. All of these items have had price increases lower than the increases in the median usual weekly wage since 1982.
Particularly interesting is the level of price for personal computers; personal computers were quite expensive when the product was still relatively new, but improvements in technology have significantly reduced production prices, allowing those cost savings to be passed on to consumers through lower purchase prices.
The chart also illustrates how the prices paid for college tuition, medical care, and fresh vegetables have all increased faster than wages since 1982, underscoring why there is considerable political debate over the affordability of these items. The price level of college tuition is eight times higher than it was in 1982, while wages are only three times higher than the 1982 level. The cost of college has been a hot topic in both political and economic debates because of the reduced affordability, combined with the increased importance of higher education in our economy. Medical care costs also have increased faster than wages, which causes strain on the budgets of many workers.
To read more about changing prices and how they relate to inflation and the consumer price index, check out our article What is Inflation and Why Do We Care?