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How Many Miles Can You Drive on an Hour’s Wages? 100 Years in One Chart

Recently I came across this assertion in a comment box on one of my favorite websites: “The cost to fuel your car has never been higher as a percentage of disposable income.”

Really? I know gasoline prices are high, but you just can’t make that assertion without looking at incomes and fuel economy, too. I decided to check the data.

I was able to put together 50 years of pretty consistent data for the key variables, with only a little stitching together to make the starting points and end points fit. The series I used were:

  • Nominal wage in dollars per hour for production and nonsupervisory workers.
  • Average fuel economy of cars on the road, old and new, based on a series from the Department of Transportation for 1980 to 2012 and estimates from various sources to fill in the earlier years.
  • Average gasoline prices from the Bureau of Labor Statistics and Department of Energy.

For  years before 1964, data are harder to come by. Instead of trying to put together a complete series, I decided to go with spot estimates for three iconic cars of yore: A 1919 Model T (About 17 MPG), a 1935 Ford V-8 (about 15 MPG), and a larger 1950 Ford V-8, about 14 MPG.

To calculate the miles that you could drive per hour worked (MPHW), just divide your wage by the price you pay for gasoline and multiply by your car’s fuel efficiency in miles per gallon.

Back in the good old days, an hour’s wages wouldn’t get you very far. Your Model T only got about 17 miles per gallon from its 20 h.p., 2.9 liter engine. If you had a good job (making Model T’s, for example) you could expect to earn about 50 cents an hour, which would buy you just two gallons of gasoline.  That comes out to just 34 MPHW.

By 1935, with the Depression in full swing, wages were still pretty low and your 1935 Ford V-8 gave you even worse fuel economy than the Model T, but at least gasoline was cheaper. MPHW edged up to about 50.

After WWII, wages started to climb, pushing MPHW over 100 by 1950. For the first time, you could actually earn money faster than you could burn through it on the highway. In the 1980s, things started to get better still. Oil prices dropped from the peaks they reached during the crises of the 1970s, better technology pushed the fuel economy of the average car over 20 MPG, and wages more than kept up with inflation. Miles per hour worked peaked at 271 in 1999, a year when gasoline cost a modest $1.13 per gallon, the average car on the road got 22.9 MPG, and the average production worker earned $13.49 per hour.

Since then, gasoline prices have risen sharply, fuel economy of the average vehicle has gone up only slowly, and wages have not risen as fast as gasoline prices. As a result, the average MPHW has fallen by about 35 percent to about where it was in 1980. Here’s the full chart:

click on chart for full-size view

Does it look discouraging? Don’t lose heart. The good news is that each year there are more fuel-efficient cars on the market to help you beat the high price of gasoline. For example, the popular Toyota Prius, rated at 50 MPG (and many owners will tell you they do better than that) yields 285 MPHW at the average wage for production workers, beating even the 1999 average. If you don’t want to pay the extra sticker price of a hybrid, the peppy little Ford Fiesta I drive gets 42 miles per gallon from a conventional gasoline engine—at least if you can call one-liter displacement, three cylinders and a turbocharger “conventional.”

So sharpen your pencil, calculate the MPHW for your current car and job, and for your favorite cars of years past, and fill the numbers in on the chart. Enjoy!

15 Responses to “How Many Miles Can You Drive on an Hour’s Wages? 100 Years in One Chart”

TomAugust 6th, 2014 at 9:58 am

I agree with Peak Oil Poet (despite the typos and the brusqueness of his comment)- average daily driving distance is very important in considering the cost of fuel as a percentage of disposable income, and, since commute distances generally grew until the early 2000s, this will make recent fuel prices look relatively higher.

Another factor is looking at the percentage of income which is actually disposable income- I doubt this ratio has been fixed, either. I suspect that it will make fuel costs look relatively more expensive in the early years and possibly recently.

None of this is to day that the original comment “The cost to fuel your car has never been higher as a percentage of disposable income” was accurate, only that an actual analysis is even more complex than the one you did.

windrivenAugust 6th, 2014 at 12:57 pm

"“The cost to fuel your car has never been higher as a percentage of disposable income” was accurate"

That is an easy assertion to make, less easy to prove. Do you have data?

The US consumes 8.77 million barrels of motor gasoline per day *31.5g/barrel = 276 million gallons per day. (http://www.eia.gov/forecasts/steo/report/us_oil.cfm)

* 365 days = 100.83 billion gallons per year
* average price of gas 2013 $3.49 = roughly $352 billion in motor gasoline sales

We'll call disposable personal income $12.6 trillion for 2013 (http://www.tradingeconomics.com/united-states/disposable-personal-income)

Therefore 352/12600 = 2.79% of disposable income spent on gasoline

Pick the year that you'd like to compare against and run the same calculation. It isn't perfect and it doesn't answer important questions about the shifting distribution of disposable income and the impact of gasoline prices on those in the lower deciles but it is a good general overview.

EdDolanAugust 6th, 2014 at 4:32 pm

I agree, the question I asked, "how many miles can you drive on an hour's wage?" is not the same as fuel expenditures as a share of disposable income. I guess it is just that the original comment made me wonder about what the situation looked like when you corrected for wages and fuel economy. However, the additional adjustments you suggest are interesting . . .

(1) Yes, miles driven matter, too. They have been falling. There is a chart in the following link that shows that population-adjusted miles driven are down 9.3 percent from their all-time peak in June 2005: http://www.advisorperspectives.com/dshort/updates…

(2) Reader "windriven" gives a link in the next comment in this thread that shows that total gasoline expenditures as a percent of disposable income is up in the last several years but is well below its earlier peak level. Notice that the graph of gasoline as a share of disposable income is (approximately) a mirror image of my graph of miles driven per hour worked.

Ronald McDonaldAugust 12th, 2014 at 3:51 pm

The layout of your webpages is retarded. The floating text boxes are covering some of the graph.

RemoveThisPermanently (the AdBlock add on) is the only way to deal with this stupid page layout

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