Blog Post

AEIdeas

Thanks to ongoing advances in energy-saving technologies, the chart above shows the significant increases in the energy efficiency of five common home appliances based on historical data from the Association of Home Appliance Manufacturers (AHAM) for the years 1981 to 2013. The dramatic improvements in energy efficiency that have taken place over the last three decades translate into significant energy cost savings for American households.

For example, the average refrigerator manufactured in 1981 consumed 1,278 kilowatt hours (kWh) of energy per year and those manufactured in 2013 consumed only 444 kWh of energy per year – a decrease in energy consumption of 65.3%! Similarly, the average annual energy consumption for clothes washers has declined by 74.2% since 1981, for dishwashers by 52.3%, for freezers by 23.1%, and for room air conditioners by 30.1%.

The efficiency of appliances can also be measured by their “energy factors,” which are standard industry and government metrics that measure an appliance’s overall energy efficiency. In 1981, the energy factor (EF) of a typical home refrigerator was 5.59, and by 2012 the EF increased more than three-fold to 17.25, for a 217.5% improvement in energy efficiency over the last 33 years (see chart above). The other four home appliances tracked by the AHAM also had significant improvements in energy efficiency since 1981 based on the increases in their EF ratings. Compared to 1981, the energy efficiency of the average room air-conditioner has increased by 46.4%, today’s freezers are 63% more efficient, and modern washing machines and dishwashers are more than twice as energy-efficient (see chart above). As one example of how technology has improved the energy efficiency of home appliances, today’s dishwashers consume less than half the energy of a 1981 model because of advances in soil sensors that minimize water usage, and the increased use of stainless interiors that accelerate drying time.

If the energy efficiency of the average dishwasher more than doubled since 1981, what has happened to its price, measured in “time-cost” — the number of hours a typical American would have to work at the average hourly wage to earn enough pre-tax income to purchase a standard model? The time-cost of a modern dishwasher today is remarkably only one-third the time-cost 30 years ago, as the comparison and analysis below will show.

In 1981, the 24-inch built-in dishwasher pictured above from a 1981 Wards Christmas catalog sold for $359.88. The average hourly wage then was $7.42, meaning that it would have taken 48.5 hours of work at the average hourly wage for a typical American to earn enough income 34 years ago to purchase the Wards dishwasher above.

The new Sears Kenmore 24-inch built-in dishwasher pictured above is currently listed on the Sears website at a price of $349.99. At the current average hourly wage of $20.74, the typical American today would only have to work slightly less than 17 hours to earn enough pre-tax income to buy today’s energy-efficient dishwasher, which is 65% lower than the 48.5 hour time-cost for the 1981 model. Here’s another way to compare the difference in time-cost: a typical American in 1981 would have had to work more than a week — six 8-hour days — to earn enough income to buy the Wards dishwasher displayed above, whereas an American today would only have to work for slightly less than two days to earn the income required to buy a modern Sears Kenmore dishwasher.

Bottom Line: Today’s modern household appliances are not only cheaper than ever before, they are the most energy-efficient appliances in history, resulting in additional savings for consumers through lower operating costs. The average dishwasher today is not only more than twice as energy-efficient as a comparable 1981 model, but the time cost of a 1981 dishwasher (48.5 hours) was about three times more expensive than today’s model (17 hours), measured in hours worked at the average hourly wage. Put those two factors together, and the average American’s dishwasher today is about six times superior to the dishwashers of the early 1980s.

Stated differently, if the time-cost of dishwashers hadn’t fallen by 65% since 1981, and if dishwashers hadn’t improved in energy efficiency by a factor of more than two times, Americans today would be paying about $1,000 for a basic dishwasher (48.5 hours of work at $20.74 per hour) instead of only $350, and it would take more than twice as much energy to operate. Likewise, we would expect comparable large decreases in the time-cost of the other four appliances, along with significant reductions in their operating costs due to the dramatic increases in energy efficiency since the early 1980s.

Put it all together and American consumers have never been better off when it comes to the standard home appliances that we all own and take for granted. Modern home appliances are cheaper, better, and more energy-efficient than ever before. Today’s affordable and energy-efficient household appliances are part of the ongoing, but under-appreciated “miracle of manufacturing.” Thanks to advances in technology and worker productivity, American consumers get cheaper and better manufactured goods (appliances, cars, clothing, food, and household furnishings) year after year, which translates into a higher standard of living for all Americans, especially for lower and middle-income households. If we wanted to identify a “golden era” of prosperity for middle-class America based on the affordability of owning and operating common household appliances, today’s consumers are many times better off than the consumers of any past decade, including the 1950s that Paul Krugman and others wax so nostalgic about. The “good old days” for most American consumers are happening right now.