[lozenge]

I think this is because inflation in the US has two tiers.

There's the big "essential" stuff- housing, healthcare, education- which have skyrocketed in price and nowadays take a higher percentage of people's salaries. Then there's groceries, consumer goods, electronics, restaurants, which have gone up much slower. So in a way, that $12/hour was good in terms of the amount of non home cooked food you could get (or live music tickets or whatever other things you considered luxuries at the time).

[steveBK123]

The tiers are not essential vs non-essential.

The tiers are relative to the labor component.

Goods & services that have gotten more efficient over time as we've introduced technology, automation, (what we do on this site) or been offshored.. have gone up slower than inflation.

Everything that has a fixed, domestic labor component has gone up faster than inflation.

There's really no other magic trick to it.

Food is a great example. Something like 40% of the country lived & worked on farms in 1900. That number is now about 1%. That means 40% of the entire countries labor was required to feed 100%, and now it only requires 1%. So a 2.5:1 to a 100:1 ratio change of food labor consumers to providers.

Other areas like education & healthcare, the lack of efficiency is often a selling point. Look at colleges that advertise student:faculty ratios or K-12 districts that talk about classroom sizes. In my experience we've probably actually gotten less efficient as everyones gotten much more precious about the education their kids receive.

[zbrozek]

Housing might be neither. There we have artificially constrained supply, driving up prices and price volatility.

[steveBK123]

How would you drive down cost in housing? Automate building prefabricated homes of a simple common designs. Use smaller lots of land. Build smaller units. Build higher to put more units on the same land. Build multi-family/apartment style to reduce single family home costs (siding/roofing/boiler/yard/etc). Basically all the things government tends to ban and populace tends to frown upon.

Most stats have shown we haven't really made much labor efficiencies on housing construction. No one wants to live in a prefabricated / factory built home, which is what would drive down the labor costs dramatically. That said I'm kind of a weirdo and like to browse the container home websites frequently, lol.

Further, modern homes are bigger (and nicer) than our parents or their parents generation lived in.

Couple that with the land component being basically inflationary due to natural scarcity PLUS government zoning rules restricting lot sizes to be artificially high, banning multi-family construction, etc.

You have a lot (basically all) tipping the needle towards higher cost.

[zbrozek]

Given that the same house costs vastly different amounts in different places, it seems reasonable that those places drive the costs to be different. Maybe in rural Nebraska the actual cost of building materials and the technology of construction is relevant.

Here in the San Francisco Bay Area the twin forces of NIMBYism and Big Government have made it difficult and uneconomical to build anything. The NIMBYs have enacted extremely restrictive zoning laws almost everywhere that prevents you from entitling projects on the front end, and well-intentioned over-regulation has driven up the cost actually building anything on the back end.

After you spend years in public hearings placating bored and angry old people, you then need to hire more professional services, pay higher impact fees, pay higher permitting fees, etc than practically anywhere else in the country. It'll cost me more to knock down my house here than it would cost to build the same plans somewhere else.

[steveBK123]

Yes, the land & zoning compliance costs in HCOL areas crowd out any of the actual building materials (and some of) the labor component.

My parents live on a 1 acre lot in a non-HCOL area, which costs 1/2 of what a parking spot in Manhattan sells for. Their 1 acre lot comes with a 2000 sq ft home.

[frosted-flakes]

You drive down housing costs by building more housing, full stop. Housing is expensive because the supply is extremely limited, and the supply is limited because it's too hard to actually build housing, because governments and NIMBYs seemingly don't want more housing.

[noduerme]

There is tons of cheap, prefab housing available, they're called trailer parks. They're everywhere except where you want to be. The anti-NIMBY argument basically boils down to "If I can't have that house, no one should have it. Let's invoke the unfairness of life and have it torn down, or else build a vertical trailer park next to it."

[steveBK123]

I think the NIMBY argument is - no you can’t build stuff on your land because I don’t like it.

See it works both ways.

YIMBY argument is largely that government and neighbors shouldn’t have such a front ability to restrict development.

[frosted-flakes]

The YIMBY crowd basically boils down to "do whatever you want, I don't care, just don't stop me doing what I want". More basically, "government regulation bad, capitalism good". which happens to be one of the Republican party's main platform points (in theory, but only when it suits their own goals). The YIMBY crowd doesn't want to tear down your house, it wants to let YOU tear down your house and build something more profitable in its place.

[steveBK123]

Generally the government problem is government subsidizes demand for housing without subsidizing supply. More dollars chasing fixed goods.

[steveBK123]

Yes I think we agree here.

[lozenge]

Restaurants have gotten more efficient over time? I don't think so. Not enough to explain why their price is so different from education or housing.

Class sizes haven't gone down in colleges, admin costs have gone up though.

What's common between them is they're essential services and the government increases their affordability. Student loans, mortgage interest deduction, tax breaks on healthcare spending (HSA, etc).

[dreamcompiler]

Yes, restaurants have gotten more efficient. When was the last time you went to a restaurant where you sat down and then someone walked over and took your order?

Okay it still happens but until the 1990s it was pretty much all restaurants except fast food chains. Now, it seems like most new restaurants use the "customer orders at the counter" model to save money on wait staff.

[steveBK123]

My original point was more on the farming end of things, but yes I'd argue there's clearly been efficiencies in restaurant service.

First, like it or not, chains are a form of efficiency in terms of management/procurement/logistics overhead.

Certainly more fast casual formats than before that reduce the need for front of house staff.

And as always with labor shocks, efficiencies get found. With the recent pandemic shock of restaurant shut downs & slow reopening... a lot of restaurants are back to full pre-pandemic high tables served (or more, in places like NYC where seating has expanded to large outdoors spaces never occupied 2019 or before), but never hired back their full staff.

[landemva]

> The tiers are relative to the labor component.

Im my experience, it seems more like the tiers are relative to the regulatory or barriers to entry.

Starting a hospital or college or building a home has regulatory barriers. And those prices have climbed dramatically the past two decades.

[wardedVibe]

This is called the baumol effect. It's certainly part of the picture.