The New York Times
has a lovely little feature in its cars section today about an
Richard Fuchs Mustang has 600,000-plus miles on it, and he's kept track of the gas mileage (about 19 per gallon, overall) ever since he bought it new.
Given all the trouble Detroit's auto makers are having these days, I thought it'd be interesting to examine the issue from the perspective of the Mustang's first and truest fan: the 16-year-old boy. The Mustang allows an excellent Then and Now comparison because:
So a Ford Mustang is, functionally, just about the same car today as it was in 1971. Yes, I know, the new car has anti-lock brakes and air bags, and it'll do a better quarter-mile time out of the box than the old Mustang because horsepower-ratings systems changed. OK. Beyond that it's the same car.
So, given 38 years of innovation—in mechanics, electronics, manufacturing, materials science, and all the other technological advances—what I want to know is, how many hours does a minimum-wage-earning 16-year-old knucklehead have to work to get a Mustang GT today, versus his daddy's toil for his 1971 Mustang?
The answer: Twice as many hours.
I think this is a major element of the trouble in Detroit. Today's Ritalin-addled teenager, earning the government-minimum $6.55 per hour (and not accounting for taxes), would have to work 4,154 hours in order to pay the $27,210 MSRP on a 2009 Mustang GT. Assuming he's doing a 40-hour week, that's about 25 months (and again, this does not account for FICA, Social Security and other taxes. So the real wait would be much longer).
Now, I know it's been decades since a kid working a kid job could get a new car. I know that since the 1980s the deal is that the boy's parents (if one of them is a professional and they're still together) remortgage the house and buy junior his toy at graduation. That's the point.
The doppelganger 16-year-old would-be cruiser, earning 1971's federal minimum of $1.60 per hour, would have to clock 2,069 hours to earn the $3,310 it took Mr. Fuchs to buy his new Mustang with the 351-Cleveland V8 and the four barrel carb in 1971. That's 52 full-time weeks, or 12 months of mindless toil at the gas pump or burger stand.
In 1971 a boy could do it. In 2009, no way.
So one might ask, why does the same basic car cost nearly twice as much—when measured in hours—today after decades of productivity gains? The answer is that all those productivity gains were turned into money for people other than workers. The minimum wage, even with the current scheduled increase, is far below its 1971 value. And wages generally have stagnated or declined for ordinary workers, even as pay has increased exponentially for very high-level managers and certain investors.
All of the innovation in financial markets--the provision of subprime mortgages, the credit cards for everyone—has served to shovel money toward the top of our economic food chain while masking the fact of falling real income for most everyone else. The Ford Mustang shows us how, and Chrysler and GM show us where this trend leads.
The answer to our current trouble is not to rebuild that fast and dangerous credit machine, but to retool the economy so that the next generation of 16-year-olds will be able to buy something at least as good as a 2009 Mustang using their own money. It remains to be seen whether anyone in the Obama Administration even wants to do this.