How to think about the price of food

On a recent Friday evening, I paid more than $10 for a Bud Light for the first time in my life. The venue was nothing special — one of several gay bars squeezed into narrow spaces in New York’s Hell’s Kitchen, not a place I’d expect beer-flavored water to cost $12 with tax and tip.

You can tell yourself not to get hung up on such things. A cynic, Oscar Wilde said, “knows the price of everything and the value of nothing.” The value of that extravagant beer was the first of a few enjoyable hours with lovely friends. We soon left that bar (and some very loud drag queens) for a chiller, reliably cheaper place a block away. By that point, I didn’t even notice how much the beers cost.

Clearly, though, I’m not the only one disturbed by higher prices. In a recent Bloomberg News/Morning Consult swing state poll, two thirds of likely voters said “the cost of everyday goods” was the economic issue most important to their vote in the presidential election — twice the next most-popular choice, health-care costs.

The latest data show food prices at the supermarket have barely budged in the past 12 months. But even as inflation has cooled overall, the costs of going out on a Friday night keep rising, part of a longstanding trend. In the last 10 years, the US Consumer Price Index shows “food away from home” prices have increased 78% faster than those of “food at home.”

While cost hikes have slowed recently, the complaining has not. You get used to a certain dollar range, some upper limit on what eggs or pizza or poultry should cost. Higher prices trigger not just surprise and confusion, but fear and outrage — that the economy is leaving you behind, that someone must be ripping you off.

Less than a mile from where I bought my Bud Light, in the climate-controlled vaults of the New York Public Library’s Stephen A. Schwarzman main branch, are some 400 cardboard boxes that help explain how we got here.

In 1900, a small, persistent woman named Frank E. Buttolph — yes, Frank was her first name — decided it might make sense to start collecting restaurant menus. A volunteer at the Astor Library, she then spent 23 years building what would become the largest repository of its kind in the world. The Buttolph collection of menus represents millions, perhaps billions, of meals eaten in hotels, ships, trains, taverns and diners across a century and a half.

Buttolph’s legacy is a unique form of time travel, into an era with vast and revealing differences from our own. Take a train ride from Washington, DC, to New York in 1913, for example, and the cheapest beers offered on the Royal Blue Line — Schlitz, Pabst, Lemps’ Extra Pale and Anheuser-Busch — are 20 cents, the same price as a whiskey. Arrive at New York’s three-year-old Pennsylvania Station, walk a block to the grand new Hotel McAlpin, and 20 cents gets you a ham sandwich. Or you can splurge on a $1 course of “Egyptian quail en casserole with Malaga grapes.”

The Value of Money

Those might sound like amazing deals, but everyone knows you’re supposed to plug the prices in an inflation calculator, preferably the Consumer Price Index. To translate 1913 into 2024, the CPI says you multiply by about 32. So the beers and sandwich were around $6.40 — not bad — and $32 for the quail makes sense for a high-end entree at a Manhattan hotel.

Dig deeper, though, and something’s off. In The Wealth of Nations, Adam Smith wrote, “the real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.” The average factory worker in 1913 made just 20 cents an hour, according to a wage index created by economic historians on MeasuringWorth.com. A comparable employee in 2023 earned $36 an hour. So for the rare assembly-line worker who found themselves in the McAlpin 110 years ago, that quail dish would have felt more like a $181 purchase today. That 20-cent beer? $36.

The first thing I should do, Samuel Williamson, a retired economics professor and co-founder of MeasuringWorth.com, told me, is to stop thinking of any inflation gauge as a “calculator.” The CPI is really a “comparator,” and there are many others to choose from. Compare John D. Rockefeller’s 1913 estimated net worth of $900 million to CPI, and his fortune was the equivalent of $29 billion today, not enough to crack the top 50 of the Bloomberg Billionaires Index. But the CPI measures just one thing, the changes in consumer prices over time, and do we really care how many train tickets, ham sandwiches and beers the world’s richest person could buy in 1913? (Rockefeller didn’t even drink.) The better question is how much economic power he wielded. As a share of US gross domestic product, Rockefeller’s fortune would be above $600 billion today, more than the current combined net worth of Elon Musk and Jeff Bezos.

Even over the short term, CPI misses so much that shapes the value of money, including changes in income, wealth, taxes and interest rates. “Yes, prices have gone up 20%” since President Biden took office, Williamson says, “but people are buying more stuff. They’re buying more big TVs. They’re going on more vacations.” Americans can splurge because their overall earnings kept up with CPI and their wealth gains significantly exceeded it.

The more math I did, the more it became clear that no one “comparator” could do the job of accurately translating the prices of the past into the present. That requires not just basic arithmetic but leaps of imagination. Imagine, for example, spending half your income on food, as most working-class families did in the early 20th century. Any drop in income or jump in food prices had dire consequences.

Even for the most affluent Americans, food tended to cost more than housing. Homes were relatively cheap, if sometimes crowded and uncomfortable, in the days before strict zoning laws. Residential buildings could be built almost anywhere and at any size to accommodate local demand. But the farther you got from a farm, the more difficult it was to find a cheap meal, with urban dwellers paying substantially more for food than Americans overall.

Prices also jumped around a lot in this era before supermarkets, reliable refrigeration and modern agriculture. The resulting food inflation was, then as now, grist for political point-scoring. Groceries came up a lot on the campaign trail, like the 1928 Republican slogan “A Chicken for Every Pot,” a promise that soon hit the buzzsaw of the Great Depression.

The one place many Americans of the early 20th century knew they could feel dependably full was the corner saloon; many offered free lunch to attract customers. The food was also an answer to temperance crusaders who charged that the liquor industry promoted drunkenness by not giving customers something to absorb the alcohol. Saloons could offer better, cheaper food than almost anywhere else because breweries could afford to build systems for buying ingredients in bulk and rushing them to cities before they spoiled.

However, the popularity of the free lunch ultimately made saloons an even bigger target for alcohol’s opponents, who now associated such establishments not only with “demon rum” but other scourges like labor organizing and the growing political power of immigrants, especially Catholics and Jews. Worried about inebriated workers, wealthy industrialists including Rockefeller poured money into a sophisticated lobbying operation, the Anti-Saloon League. In 1920, the 18th amendment to the US Constitution prohibited the sale of alcohol, and effectively eradicated the saloon overnight.

Cheap and Cheerful Chow

The saloons were supplanted by a new phenomenon: chain restaurants serving affordable food to the masses. One of the first of these was Childs Restaurant. Samuel and William Childs, brothers raised on a New Jersey farm, opened their first restaurant in 1889 in lower Manhattan, blocks from Wall Street. As they expanded across the city and then up and down the East Coast, they found creative ways to source inexpensive food. By 1921, they had 3,500 cows and were serving 7 million quarts of milk a year, along with 22 million eggs, almost 3 million loaves of bread and 40 million cups of coffee.

An order of butter cakes from the griddle cost 5 cents in 1913, the same as tea, coffee, milk or a variety of sandwiches. One of the most popular dishes was “corn beef hash browned in the pan,” at 15 cents. The priciest item was tenderloin steak with onions, at 60 cents. A notice pinned to the menu warned that a “scarcity of fresh eggs in market” meant any dishes with the ingredient would cost 5 cents extra.

Prices jumped during World War I, but William Childs promised that the chain would keep revising prices lower as inflation abated. The typical customer check was 47 cents in 1921, almost exactly what a US factory worker earned per hour.

Childs was one of the first big-city institutions that attracted Americans from all walks of life. In 1913, there were five Childs restaurants on or just off Times Square, all of them open 24 hours a day. The mobster and bootlegger Arnold Rothstein, who allegedly fixed the 1919 World Series, was known to spend late nights at the Childs in Columbus Circle. Gossip columnists could imply a celebrity was gay by mentioning they visited the Childs on Fifth Avenue where, one observer wrote in 1933, members of “the uncertain sex” gathered “until police began warning them.”

When Samuel Childs died in 1925, William made some questionable decisions. A health enthusiast, he introduced a mostly vegetarian menu and ended the practice of automatically greeting each guest with a glass of cold water. Business declined, prompting a revolt by shareholders, who fired William in 1929. New management re-introduced meat and free-flowing water, and added alcohol to the menu in the years after Prohibition was repealed in 1933. A dry martini was 32 cents in 1944 and a daiquiri 10 cents more.

But the chain struggled, exiting the Great Depression loaded down with debt. It filed for bankruptcy in 1943, was sold a couple times and gradually closed or converted its restaurants into fast-food franchises in the 1950s and ‘60s.

By then, the role of food in American life was being transformed. The corner shop, the lunch counter and cafeteria were being replaced by the suburban supermarket and the fast-food outlet. Factory farming and ever-more-efficient supply chains were slashing costs, shrinking the share of families’ budgets spent on food. From about 40% of the CPI market basket at the end of the 1940s, food fell to 23% in 1967. It’s now 13% of the typical consumer budget.

The postwar path of food prices allowed Americans to spend their rising incomes on new necessities — automobiles, appliances, college educations. Housing also started soaking up more and more of paychecks. In the past 40 years, shelter — which includes rent and the equivalent costs to homeowners — has soared from barely a fifth of the CPI market basket to more than 36%.

For the people who sat in front of Buttolph’s menus in the early 20th century, economic anxiety was something you noticed in your gut. A member of the poorest third of urban households in 1936 was getting 550 fewer calories per day than the wealthiest third, the Census estimated. Financial stress feels very different today. Of course the price of food still matters, especially to the poor. Rising costs at restaurants and bars also seem to be discouraging Americans from getting out and socializing more. But for most of us, economic status is now determined less by what we eat and drink than where we sleep.

In the past decade, housing costs have risen 50% faster than the broader CPI as the US failed to build enough homes to meet demand, particularly in the most economically productive places. A 20% down payment on a median US home now requires 83% of a typical buyer’s annual income, a Bloomberg analysis found, up from 65% eight years ago. Other essentials for a middle-class lifestyle, like cars and child care, are also consuming far more of Americans’ budgets. The consequences of these trends might not be hunger pangs, but they’re just as real and just as politically potent.