All the things 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, in the event you suppose exhausting sufficient, is stranger — at the very least traditionally — than all the remainder: 10.4 %.
That’s the share of their disposable earnings that Individuals spent on meals in 2024, in accordance with 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 few dime of each greenback.
That may sound like so much in the event you’ve been observing your ever-growing grocery receipt currently or when the New York Instances 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 price range on meals — not on meals and housing and every part else, simply meals. At at present’s median family earnings, that will 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 likely one of the most consequential financial tendencies 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 virtually no one talks about it.
The person who first observed 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 observed one thing placing: 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 known as Engel’s Legislation, and it stays probably the most sturdy empirical findings in all of economics — confirmed throughout international locations, 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 virtually 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 by chance, however due to probably the most underappreciated revolutions in human historical past: the transformation of American agriculture.
In 1940, one American farmer fed about 19 folks. At the moment, one farmer feeds practically 170 folks. That’s a virtually nine-fold enhance in productiveness in lower than a century. In 1850, nearly all of American staff labored on farms — at present, 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 basically flat at about 26 bushels per acre. Then got here hybrid corn, artificial fertilizer, mechanization, and fashionable genetics. By 1950, yields had crept as much as 38 bushels per acre. At the moment, they’re above 180. That’s a sevenfold enhance in what one acre of floor can produce.
The end result? The USDA discovered that actual retail meals costs had been really 2 % decrease in 2019 than in 1980, even earlier than adjusting for the huge enchancment in selection and high quality. Individuals at present have entry to meals from each continent, in each season, at costs that will 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 house. Bangladeshis spend 53 %. Chinese language customers spend about 21 %. Individuals are underneath 7 % — among the many lowest seen in cross-country information.
Sure, however what about proper now?
In fact, you would possibly 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 harm — 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 few “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 most recent BLS client expenditure information, the DoorDash panic will get the story backwards. Individuals as a complete are literally spending much less of their budgets on meals away from house than earlier than the pandemic and extra on groceries. Individuals underneath 25 have shifted essentially the most towards cooking at house.
The mixture image will not be “Individuals are blowing their paychecks on supply apps.” It’s “Individuals are tightening their belts on consuming out as a result of groceries acquired costlier.”
That’s an actual affordability concern — nevertheless it’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 cover issues.
Begin with inequality. In 2023, households within the lowest earnings quintile spent 32.6 % of their after-tax earnings on meals. The very best quintile spent 8.1 %. That’s a fourfold hole between wealthy and poor; Engel’s Legislation nonetheless at work within the fashionable United States. Applications like SNAP and the Nationwide Faculty Lunch Program considerably cushion the blow. SNAP alone served roughly 42 million folks monthly in 2023, however the underlying disparity is giant and protracted.
Then, there’s what low cost meals is definitely made 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, and so they’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 fuel emissions, fertilizer runoff that feeds useless zones within the Gulf of Mexico, biodiversity loss from monoculture cropping — represents a set of externalized prices that customers by no means straight 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 partly as a result of the environmental and welfare invoice will get despatched some other place.
I don’t need to reduce any of those severe issues, however I additionally don’t suppose they invalidate the core achievement. As this article factors out repeatedly, progress and its caveats exist concurrently. The appropriate response is to deal with the caveats as a result of the progress has given us the sources 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 will 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 sources for every part else: for college, for medication, 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 e-newsletter. Enroll right here!
