Why everything today is more unaffordable

If you think people today are finding that homes, cars, and student loans are unaffordable, well, you’re right.

Have you ever watched Company Man on YouTube?

His videos take a look at businesses, primarily restaurants, and talks about how they became successful, or how they were successful and then became unsuccessful.

(For that last part, the answer is almost always “because of leveraged buyouts that saddled the company with too much debt”. In case you thought that using debt to invest was a good thing.)

Anyway, one day I was watching a video on Popeyes, the fried chicken chain, a place I’m almost certainly never going to visit (that’s how interesting this channel is) when I got to hear the origin story of the chain.

Apparently, the founder wanted to get into the restaurant industry, and, as it was put, “sold his car and used the money to open [a franchised restaurant].

And let’s stop right there, because I think that tells us everything we need to know about why we have an affordability crisis in our country, one that most people from older generations can’t relate to.

That 70’s economy

Let’s go back to 1970.

In that year, the median household income was $9,870 , the average home price was $17,000, and the average new car price was around $3,500.

Now, let’s contrast that with 2021.

In 2021, the average household income was $79,900, the average home price was $346,900, and the average new car price was around $42,000.

To put this in terms that everyone can understand:

In 1970, a household would have to work for 21 months (1.75 years) to buy a house, and 4 months to buy a new car.

Today, a household would have to work for 52 months (4.3 years) to buy a house, and 6 months to buy a new car, which is 250% and 150% longer, respectively, than in 1970.

And I’ve already touched on how student loans are wildly out of step with basically any other metric.

With this in mind, it can plainly be stated that all the major purchases one makes today are much more expensive now than they were 50 years ago.

The car and the franchise

I’m unable to get a solid date on when the Popeyes founder traded his ride for his store, but I suspect it was in the 1960’s. Which is why I rounded up to 1970 for my analysis, to make the math a little more fair.

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Now, we can’t assume that he had a luxury car, so let’s assume, for the sake of argument, that his car was worth $3,000.

He was able to buy a restaurant franchise for three grand??

Today, sources put buying a restaurant franchise from the low end of $10,000 to upward of $2,000,000, with most of the options easily in the mid-six figures.

You find me anyone today who can sell their car and buy a franchise. I’ll wait.

How out of control prices hurt everyone

Fewer new cars and fewer houses purchased mean less of an economic engine in our economy, making for fewer jobs, and less growth and prosperity all around.

Fewer franchises signed for means fewer opportunities to start one’s own business. Fewer business owners mean, again, less economic engine, fewer jobs, and less financial autonomy.

Of course, some people are immune from these price hikes, but they are few in number. And it’s hard to argue that the way we’ve been moving has been in a better direction.

When things are less affordable, most people will buy them less.

What can we do?

Most obviously, we need to increase wages. If your business can’t function when you pay your employees a living wage, then your business should close down.

We could institute universal health care in our country, so that health care costs could be shared among everyone and people could spend less money on services, and so that unlucky people wouldn’t be brought to financial ruin.

For homes, we could limit benefits for people who buy homes as investment opportunities. Why should we confer tax breaks and benefits to people and companies who can buy up all the homes, driving up prices for everyone who is trying to exist on standard salaries.

But beyond all of this, which are all bigger policy conversations, the very least we could do would be to stop vilifying the younger generations as being “lazy” or somehow less deserving as older generations. “I was able to afford it” when you’re talking about your experience in the 1970’s is no excuse for why someone today can’t. The situation is truly different.

And if you’re one of those people who are struggling to afford those things that earlier generations think are easy, you have my permission to go easier on yourself.

(And for those younger folk who were able to afford these things, great, good for you. Go bask in your uniqueness, and then tell us all how you are planning on helping people who didn’t have your level of privilege. I’ll wait. As for me, I bought a home, and I’m helping others do the same.)

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We need compassion for those who are struggling to achieve what once was more achievable. Then we need to accept that something needs to change. Because if current trends keep up the way they are, then pretty soon, almost no one will be able to afford anything. And we need more opportunity, not less.

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