Friday, June 8, 2012

Are Movie Tickets Too Expensive?

Perhaps it's human nature. Perhaps it's a sense of nostalgia. It seems when we look back at our past, life seemed simpler, and prices were far more reasonable. Today, ticket prices are higher than ever. With a struggling economy, it seems going out to see a movie is no longer a cheap date, but an expensive affair. Take a date to the Olive Garden, and expect to pay around $28 (no alcohol). For that price you get a pleasant atmosphere, good conversation, and an intimate feel. Take her out one evening to a show, popcorn and soda included, and expect to shell out over $35. For that price, you get sticky floors, no privacy, and people talking throughout the film. Now imagine taking a family of four out. But is it nostalgia, or the truth? Are ticket prices less affordable now than when we were young?

Unfortunately, I am no economist. So I can not factor in the subtle nuances of inflation, supply & demand, population growth, or the myriad of other factors that go into determining the cost of what a ticket price should be. However, it seems foolish to assume a default attitude of "they're just trying to rip me off." Indeed, theaters must make money, but they must also compete for your dollar. Theaters offer entertainment, and they recognize that entertainment isn't as high a priority as say paying bills, buying food or clothes, or purchasing gasoline. So their prices have to be reasonable, right?

Still, even without being an economist, one can attempt to gauge a reasonable picture of ticket prices and determine if they are indeed too much. We'll make comparisons to average ticket prices vs minimum wage, plus factor in other concerns such as unemployment rates, recessions, and poverty levels.

We'll start with the year I saw my first movie, Star Wars. Truth be told, I probably seen others before Star Wars, but that's the film I have full recollection of seeing.

1977: The average ticket price was $2.23. Minimum wage(mw) was $2.30. That meant for someone working a minimum wage job, it would take them slightly less than an hour's wage to earn a movie ticket. Unemployment in the country was around 6.9% at this time.

1984: The average ticket price was $3.36. That's a $1.13 increase, or a 50% hike. Minimum wage increased to $3.35. That's a $1.15 increase in (mw), or a 34% hike. Unemployment at this time was 7.5%, an increase of 0.6%, or an 8.7% hike in the unemployment rate. 

In this 7 year span, we see an increase in unemployment, and wage earnings increase by 34%, but ticket prices soar by 50%. Indeed, consumers are feeling the pinch. Also notice that with an hour's labor at (mw), a movie goer comes up just a bit short. Ticket prices surpass an hourly wage.

1991: The average ticket price is $4.21. That's a $0.85 increase, or a 25% hike in ticket prices. Minimum wage at this time was $4.25. That's a $0.90 increase in (mw), or a 26.8% hike. Unemployment at this time was 6.8%, a decrease of 0.7%, or a 9.3% drop in the unemployment rate.

This 7 year span seems a bit prosperous. Unemployment is at the lowest since 1977. The minimum wage worker can afford a movie ticket again with just an hour's labor. Still, notice the rate at which ticket prices rise. They seem on par with the overall increase in earnings. Essentially, the pinch is still there because the increase in earnings only slightly overtake the increase in cost.

1998: The average ticket price is $4.69. That's a $0.48 increase, or 10.2% hike in ticket prices. Minimum wage at this time was $5.15. That's a $0.90 increase in (mw), or a 21% hike. Unemployment at this time was  4.5%, a decrease of 2.3%, or a 33.8% drop.

This 7 year span seems very, very prosperous. Unemployment is at an all time low. The rate that wages increase is more than double the rate movie tickets have increased. Finally, the pinch is weakening. Many Americans are working, and wages seem to allow for prosperity. The (mw) earner can afford a movie in less than an hour's work.

2005: The average ticket price is $6.41. That's a $1.72 increase, or a 36.6% hike in ticket prices. Minimum wage at this time is $5.15. That is 0% growth in wages. Unemployment at this time is 5.1%, an increase of 0.6%, or a 13.3% rise in unemployment rates.

This 7 year span we see a turn for the worst. 0% growth in earnings and an increase in people out of work. Yet ticket prices rocket to the top. The (mw) earner now has to work close to 1.25 hours just to afford a ticket.

2012: The average ticket price is $7.92. That's a $1.51 increase, or a 23.5% hike in ticket prices. Minimum wage at this time is $7.25. That's a $2.10 increase in (mw), or a 40.7% hike. Unemployment at this time is 8.2%, an increase of 3.2%, or a 62.7% rise in unemployment rates.

This 7 year span is a bit more hopeful, but ultimately disappointing. Wages increase faster than ticket prices do. Yet the (mw) earner still cannot afford a movie ticket after an hour's labor. Americans out of work is shockingly high.

So, what are the overalls? 

From 1977 to Present (2012), wages have increased by $4.95, or 315%. Ticket prices have increased by $5.69, or 355%. Overall, ticket prices have increased at a rate exceeding the growth rate of income. There are, of course other things to consider. In 1977, 11% of the populous was living at, or below, the poverty line, some 25 million Americans. By 2009, it has increased to 14.3%, some 43.6 million (if the numbers seem off, take into consideration population growth).

In fact, it is said the value of today's minimum wage is 29% lower than it was in 1979. So even if the (mw) increased, its value hasn't. Ultimately, we face a high unemployment rate, and those that are working are working low wage jobs. Yet ticket prices keep on rising. 

So, are ticket prices really ripping us off? Not really. Sure, the margin of affordability seems to be widening, but it's not at an egregious amount. The (mw) worker still labors for about an hour (give or take a few minutes) to earn his ticket. Still, movie tickets seem more outrageous than ever before. Perhaps it isn't soaring ticket prices, but maybe our dollar just doesn't stretch as far as it used to. 

For those curious, in 1977, gas prices were on average $0.65 a gallon. 2012, it has averaged $3.60. That's a $2.95 increase, or 553%. Clearly, gas prices are more out of control than ticket prices.

Editorial on minimum wage, value, and poverty:

Gasoline Prices:

Unemployment Rates

Movie ticket prices by year:

depatment of labor, minimum wage statistics:

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