Every little thing concerning the American economic system proper now feels bizarre. The hiring image is bizarre; the inventory market is bizarre; and AI infusion into work is very, very bizarre.
However right here’s a quantity that, should you suppose onerous sufficient, is stranger — a minimum of traditionally — than all the remaining: 10.4 %.
That’s the share of their disposable earnings that Individuals spent on meals in 2024, based on the USDA’s Financial Analysis Service. That’s groceries, eating places, even the occasional ill-advised 11 pm burrito supply. And all of it provides as much as a couple of dime of each greenback.
Which may sound like so much should you’ve been gazing your ever-growing grocery receipt currently or when the New York Occasions is discovering Individuals who apparently spend over 1 / 4 of their earnings on DoorDash supply. However let me put it in context.
In 1901, when the Bureau of Labor Statistics performed its first main family expenditure survey, the common American household spent 42.5 % of its finances on meals — not on meals and housing and all the things else, simply meals. At immediately’s median family earnings, that might be the equal of roughly $2,600 a month going to the grocery retailer. In 1947, Individuals had been nonetheless spending 23 % of their earnings on groceries alone — and that was earlier than accounting for eating places. As lately because the Nineteen Sixties, the determine for all meals spending hovered round 15 %.
The lengthy, quiet decline from 42 % to 10 % is without doubt one of the most consequential financial developments in American historical past, one which has as a lot to do with Individuals getting richer because it has to do with the value of meals. However nearly no person talks about it.
The person who first seen this sample was a German statistician named Ernst Engel — and earlier than you ask, no, not the Engels with Marx and the Communist Manifesto. Ernst Engel was born in Dresden in 1821; Friedrich Engels was born in Barmen in 1820. (The overlap has been inflicting confusion in econ lecture rooms for over a century.)
In 1857, Ernst Engel analyzed roughly 200 working-class household budgets from Belgium and seen one thing putting: Poor households spent 60 to 70 % of their earnings on meals, whereas wealthier households spent underneath 50 %. It appeared that the richer you bought, the smaller the share that went to consuming.
This grew to become often called Engel’s Legislation, and it stays one of the crucial sturdy empirical findings in all of economics — confirmed throughout nations, centuries, and each dataset anybody has thrown at it.
The explanation Engel’s Legislation issues a lot is that meals spending as a share of earnings is, in impact, a freedom index. Meals comes first, and if you’re spending two-thirds of your paycheck simply to eat, there’s nearly nothing left for training, well being care, financial savings, recreation — all of the issues that make life greater than mere survival. As that share falls, the remainder of life can open up.
All this occurred not accidentally, however due to one of the crucial underappreciated revolutions in human historical past: the transformation of American agriculture.
In 1940, one American farmer fed about 19 folks. At this time, one farmer feeds almost 170 folks. That’s an almost nine-fold enhance in productiveness in lower than a century. In 1850, nearly all of American employees labored on farms — immediately, it’s underneath 2 %. We produce vastly extra meals with vastly fewer folks on much less land.
Take corn, the spine of the American meals system. From 1866 to 1936, corn yields had been primarily flat at about 26 bushels per acre. Then got here hybrid corn, artificial fertilizer, mechanization, and trendy genetics. By 1950, yields had crept as much as 38 bushels per acre. At this time, they’re above 180. That’s a sevenfold enhance in what one acre of floor can produce.
The outcome? The USDA discovered that actual retail meals costs had been really 2 % decrease in 2019 than in 1980, even earlier than adjusting for the large enchancment in selection and high quality. Individuals immediately have entry to meals from each continent, in each season, at costs that might have baffled their grandparents.
And it’s not simply an American story, although America sits on the excessive finish. Globally, the sample holds precisely as Engel predicted: Nigerians spend about 59 % of their consumption expenditures on meals at residence. Bangladeshis spend 53 %. Chinese language shoppers spend about 21 %. Individuals are underneath 7 % — among the many lowest seen in cross-country information.
Sure, however what about proper now?
After all, you may suppose that’s nice, however how come a dozen eggs had been costing me $6 not that way back?
Honest. Meals costs rose 23.6 % between 2020 and 2024. Egg costs spiked 8.5 % in 2024 alone, due to avian flu. Beef and veal had been up 5.4 %. The post-pandemic inflation surge was actual, and it damage — particularly on the decrease finish of the earnings ladder, the place the lowest-earning 20 % of households spend 32.6 % of their after-tax earnings on meals, in comparison with simply 8.1 % for the highest quintile.
However right here’s the factor: Even on the peak of the 2022 meals worth panic, when headlines screamed a couple of “31-year excessive” in meals spending, the share of earnings Individuals spent on meals was nonetheless decrease than any 12 months earlier than 1991. The “disaster” was successfully a return to early-’90s costs — which themselves would have appeared miraculously low to anybody dwelling within the Nineteen Fifties.
And as Mike Konczal lately identified utilizing the newest BLS shopper expenditure information, the DoorDash panic will get the story backwards. Individuals as an entire are literally spending much less of their budgets on meals away from residence than earlier than the pandemic and extra on groceries. Individuals underneath 25 have shifted probably the most towards cooking at residence.
The mixture image just isn’t “Individuals are blowing their paychecks on supply apps.” It’s “Individuals are tightening their belts on consuming out as a result of groceries obtained costlier.”
That’s an actual affordability concern — but it surely’s a really completely different story than the one going viral on social media.
None of this implies America’s meals system is an easy triumph. The ten.4 % determine is a median, and averages disguise issues.
Begin with inequality. In 2023, households within the lowest earnings quintile spent 32.6 % of their after-tax earnings on meals. The best quintile spent 8.1 %. That’s a fourfold hole between wealthy and poor; Engel’s Legislation nonetheless at work within the trendy United States. Packages like SNAP and the Nationwide College Lunch Program considerably cushion the blow. SNAP alone served roughly 42 million folks monthly in 2023, however the underlying disparity is massive and protracted.
Then, there’s what low-cost meals is definitely fabricated from. The agricultural revolution that introduced costs down additionally made ultra-processed meals — engineered for shelf stability, comfort, and palatability — the dominant supply of energy within the American food regimen. The downstream penalties have been weight problems, Kind 2 diabetes, and heart problems, they usually’ve created prices that don’t present up in your grocery receipt however completely present up within the well being care system.
The value tag on the register doesn’t embrace what industrial agriculture does to the land, both. American farming’s environmental footprint — greenhouse gasoline emissions, fertilizer runoff that feeds useless zones within the Gulf of Mexico, biodiversity loss from monoculture cropping — represents a set of externalized prices that buyers by no means immediately pay. The impact on the billions of animals raised for meals, as Future Good has reported through the years, is unimaginably excessive. The meals is reasonable partially as a result of the environmental and welfare invoice will get despatched elsewhere.
I don’t need to reduce any of those severe issues, however I additionally don’t suppose they invalidate the core achievement. As this text factors out many times, progress and its caveats exist concurrently. The fitting response is to handle the caveats as a result of the progress has given us the assets and the room to take action.
The truth that the common American household can feed itself on roughly a tenth of its earnings — one thing that might have appeared like science fiction to Ernst Engel, poring over these Belgian family budgets in 1857 — is a real civilizational achievement. When a society spends much less on meals, it frees up assets for all the things else: for college, for drugs, for saving, for dwelling. That’s human freedom, measured one grocery receipt at a time.
A model of this story initially appeared within the Good Information publication. Join right here!
