Comparing the costs of generations

How purchasing power has changed over time

While it may not always feel like it, Americans today have more purchasing power than they did in the 1970s. Since 1973, the national median income has grown far faster than inflation. In 1973, the median income was $4,141. Today, it's $46,190 — a 1,015% increase. Over the same period, the consumer price index (CPI), a common measure of inflation, has risen by 586%.

On paper, today’s dollar goes further, allowing more room for nonessential spending. But as the next section shows, the cost of essentials like housing and education has skyrocketed. These rising expenses have chipped away at the gains in purchasing power, which helps explain why many Americans still feel financially strained.

How much have housing prices risen since the 1970s?

Perhaps the most dramatic difference between the cost of living in the 1970s compared with the 2020s is the cost of owning a home. About 69% of consumers say they are concerned about the cost of housing, Pew Research Center reported  — not a surprise given that the median home sales prices have increased over 1,000% since the 1970s. While the 30-year fixed mortgage rate in 2023 was roughly the same as the mortgage rate in 1973, wages simply haven’t kept up with the price of housing, making it difficult for first-time homebuyers to break into the housing market and find a mortgage lender.

But even compared with a few years ago, home prices are significantly higher. “Price increases, coupled with interest rate hikes since 2019, mean buyers would pay approximately twice the monthly mortgage payment if they bought the same house today compared to five years ago,” said Michael Coon, an associate professor of economics at the University of Tampa. “Not to mention homeowners insurance premiums, which are up by over 23% since 2019.”

It’s not just the cost of buying a home that has increased since the 1970s; today’s renters also face a more expensive market, with rent increasing by 54% since the 1970s. With single-family homes more costly than ever to rent, those hoping to buy may not have as much left over after rent is due to save for a down payment.

The rising cost of college tuition

The cost of college tuition has also risen significantly since the 1970s. Baby boomers paid an inflation-adjusted average of $3,519 for tuition at a public college, compared to $9,750 in 2023 — a 177% increase. The cost of private college tuition has also risen by 158%, from $13,639 in 1973 to $35,248 five decades later.

Beyond that, student loans have further increased the financial burden of getting a higher education — the average student borrows over $30,000 to get a degree from a public university in 2025, according to EducationData.org.

How gas prices have fluctuated since the 1970s

One surprising perk that Gen Z has over baby boomers in their 20s? The cost of gas. Inflation-adjusted gas prices actually decreased by 9% between 1973 and 2023. However, there is no clear downward trend in prices from 1973 onward. Adjusted for inflation, average gas prices have hovered between approximately $3.50 to $4.

Several factors impact the cost of gas, including disruptions to the crude oil supply or refinery operations. A notable example of supply disruption is the oil crisis of 1973 to 1974. After the U.S. provided emergency aid to Israel during the Yom Kippur War, the Organization of Arab Petroleum Exporting Countries retaliated by halting oil exports to the U.S.

Although the embargo ended in 1974, inflation-adjusted gas prices remained above $4 until 1978. Baby boomers may remember the long lines at gas stations and state-mandated rationing caused by the oil crisis — a hardship younger generations haven’t had to endure.

Bottom line

While Gen Z has more purchasing power than baby boomers did in their 20s, today’s young adults face a host of financial challenges — particularly when it comes to essentials like housing and education. The dollar may stretch further than it did in the 1970s, but the rising cost of necessities has made it harder for many to get ahead.

Methodology

The ConsumerAffairs Research Team analyzed various metrics to compare the cost of living for baby boomers in their 20s (1970s) to the experience of Americans in their 20s today. These metrics include:

• Median income (1973-2023): Historical income figures were adjusted for 2023 inflation to allow for direct comparison. Data is from the U.S. Census Bureau.
• Average consumer price index (CPI) (1973-2023): Data is from the U.S. Bureau of Labor Statistics.
• Purchasing power (1973-2023): Purchasing power is calculated by dividing the nominal income by the average annual CPI.
• Average unemployment rate (1973-2023): Data is from the U.S. Bureau of Labor Statistics.
• Median home price (1973-2023): Historical home prices were adjusted for 2023 inflation. Data is from the Federal Reserve Bank of St. Louis.
  • Because data was unavailable for 1973 and 1974, these values were estimated using CPI inflation adjustments based on 1975 data.
• Median monthly rent (1973-2023): Historical rent prices were adjusted for 2023 inflation. Data from 1973 to 2009 was sourced from the U.S. Census Bureau’s American Housing Survey, while data from 2010 to 2023 was sourced from the Census’ American Community Survey.
  • For years when data was unavailable (including gaps every other year from 1982 to 2008 and in 2020), values were estimated using CPI inflation adjustments based on the previous year's data.
• Average tuition for public and private colleges (1973-2023): Historical tuition costs were adjusted for 2023 inflation. Data is from the National Center for Education Statistics.
• Average gas prices (1973-2023): Historical gas prices were adjusted for 2023 inflation. Data is from the U.S. Bureau of Labor Statistics. 
  • Because data was unavailable for 1973-1975, values were estimated using the CPI for all gas.

All inflation adjustments were calculated using CPI data to reflect 2023 dollars, ensuring consistency across metrics and time periods.

For questions about the data or if you'd like to set up an interview, please contact acurls@consumeraffairs.com.

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