and What I’m Still Learning About Raspberry Picking
Do you remember your first job? Mine was picking raspberries at the farm down the street from where we lived. Mrs. Linton owned the farm and was a tough supervisor. Raspberries are surprisingly hard to find on a bush. They hide well underneath the leaves and are tricky to get in between the thorns. You have to work pretty hard and get down very low to find them all. One day I picked a patch and brought in the pints I had filled. Mrs. Linton was surprised that I didn’t have very many. When I came in the next day she informed me that after I left, she went out and brought in 5 more pints from the patch I had “finished.” I realized then that she’s a magician. I didn’t know how you could get 5 pints from that patch before I had picked it, much less after. You could call that a lesson in thoroughness for my teenage self.
There are great life lessons to learn from each job you have, especially those early ones. And, looking from a financial point of view, there are economic lessons too. You can see inflation in action when you look back at what you made and then what the same job is paid today. I had this job in 1986. I made $1 per pint of berries picked. I don’t know what they pay for berry picking today so I’ll look at the cost to buy the berries. Back then a pint of raspberries cost $4. The current price at the same farm where I worked is now $8 per pint of raspberries. There’s inflation. Over 30 years it doubled.
I wondered if there was something unusual going on in berry prices so I looked for another measure of inflation – movie tickets. According to NATO (National Organization of Theatre Owners), the average cost of a movie ticket in 1986 was $3.71. In 2016 it was $8.65. That’s more than the doubling that berry prices experienced.
Making sure my movie ticket and berry inflation numbers weren’t outliers, I checked the national inflation rate and found that the cumulative rate of inflation from 1986 to 2017 was 123.3% according to Coin News Media Group. In other words, something that cost $20 in 1986 costs $44.67 today.
So what do we make of the berry and movie inflation numbers? We all know inflation happens, and you can really see it when you look back several years and think about how much things used to cost. It has a good side too. Inflation works on salaries resulting in higher pay over time. As an investor preparing for the future, inflation is something to stay in front of. It’s a pretty sure bet that things will cost more in the future, especially in a future when our nest egg is supporting us and not a salary anymore. Fortunately, a well done financial plan will build in inflation and a well-designed portfolio will help manage the risk of paying for higher costs in the future. If you have questions about how this works, please send us a line or give us a call.
And while you’re at it, please write to me – I’d love to hear about your first job, and if you remember what you were paid. It will be fun to see what your inflation numbers are.