CONSUMER PRICE
INDEX

1982-84 = 100
1775 = 7.6
1778 = 13.8
1783 = 10.6
1793 = 9.9
1800 = 12.6
1810 = 12.3
1814 = 17.6
1825 = 9.9
1844 = 7.5
1854 = 8.4
1860 = 8.3
1865 = 16.3
1873 = 12.0
1878 = 10.0
1890 = 9.1
1900 = 8.4
1913 = 9.9
1918 = 15.1
1920 = 20.0
1922 = 16.8
1929 = 17.1
1933 = 13.0
1937 = 14.4
1940 = 14.0
1942 = 16.3
1945 = 18.0
1947 = 22.3
1948 = 24.1
1958 = 28.9
1964 = 31.0
1967 = 33.4
1971 = 40.5
1975 = 53.8
1978 = 65.2
1981 = 90.9
1983 = 99.6
1987 = 109.6
1989 = 124.0
1990 = 139.7
1996 = 156.9
1999 = 166.2
1995 = 152.4
2000 = 172.2
2003 = 184.0
2004 = 189.0
2005 = 195.0
2006 = 201
2007 = Est.208

Source: U.S. Bureau of Labor Statistics

A few years after the Civil War in 1873, the United States Post Office Department issued postal cards with the one cent postage prestamped on the upper right hand corner. They were designed for "quick messages" from one person to another and sold for one penny each.

At this point the line of demarcation must be made between the prestamped "postal cards" sold by the Post Office and "post cards" created and sold by others that require a stamp for postage. In 2006, a total of six billion postcards - most of them presorted for reduced postage - were mailed. That compares with nearly one billion mailed in 1913. Most of those six billion cards mailed in 2006 were sent by advertisers to addresses or "box holders," not to named recipients.

In recent decades, the price of those "penny Postal Cards" sold by the Postal Service has become a reference point to illustrate the rate of inflation.

The cost increased from a penny in 1873 to two cents in 1952 to three cents in 1958 to 26 cents in mid-2007. The Consumer Price Index (CPI) increased from 12 in 1873 to an estimated 208 in 2007 or over 17 times the 1873 level.

The costs of providing person-centered services such as education, police protection, the delivery of health care, the parish ministry, the sale of prescription drugs, and most forms of entertainment have increased at a faster rate than the rise in the cost of producing manufactured goods. Another example is the cost of producing wheat, corn, eggs, and oats has climbed more slowly than the increase in the Consumer Price Index. Other prices are too complicated to describe in simple terms. By the late 1990s, for example, the price of one gram of cocaine had dropped from $600 in the early 1980s to $200. In 2005, the street price of a gram of cocaine was down to $25 in New York and $65 in Los Angeles . One explanation is competition. Another is the reduced risk of being killed by another drug dealer.

Is the New Cycle Permanent?
Between 1775 and 1945, Americans were taught prices go up and prices go down. Economic recessions follow waves of inflation. Wars produce an economic cycle of inflation followed by deflation. Those 17 decades taught the wisdom of "saving for a rainy day."

That lesson has been replaced by a new lesson that states the economic cycle is high inflation followed by low inflation followed by high inflation. The American dollar, which became the basic unit of currency in the United States 1792, had the same purchasing power in the marketplace in 1828, 1837, 1887, and 1911 as it had enjoyed in 1786. One exception came in 1966 when, for the first time in history, the Consumer Price Index was double that earlier peak of 16.3 of 1865. In other words, it took 101 years for the CPI to double!

Here, the old saying, "It's easier the second time," became relevant. The CPI doubled between 1865 and 1966, it doubled again between 1966 and 1978, it doubled again between 1978 and 1990, and is on the road to doubling again between 1990 and 2015. The big barrier in that road is the federal government now calculates two rates for the CPI. One uses the same methodology as was used in calculating that base number of 100 for the 1982-84 era. The second measures the "core rate" of inflation and excludes changes in the prices of energy and food.

The Other Side of the Ledger
That unprecedented decline in the purchasing power of the dollar has been more than offset by an unprecedented rise in personal incomes. During the half century from 1947 to 1997, the Consumer Price Index increased nearly 7 1/2 times from 22.3 to 160.5, but the median family income before taxes increased nearly 15 times from $3,031 to $44,565! Two-thirds of all the persons living in America in 2007 were born during that 1947-97 era. They were born and reared in an era of growing affluence. A shorter timeframe from 1980 to 2004 revealed that, after allowing for inflation by converting all dollar figures into 2004 dollars, the median income of married couples rose from $50,245 in 1980 to $63,630 in 2004. If the focus is limited to married couples with the wife in the paid labor force, the total family income in 2004 was $76,814, up from an inflation-adjusted $58,362 24 years earlier. Part of that increase, of course, was in 2004 women had access to more higher paying jobs than in 1980.

If we shift the focus from families to individuals and use a 45-year timeframe, the median per capita personal income in the United States increased slightly over 15 times from $2,277 in 1960 to $34,554 in 2005, while the CPI increased 6.6 times from 29.6 to 195 in 2005.

What Are the Implications?
By this point, many readers will be eager to shift the discussion from dry statistics to, "What does that mean for our congregation?"

The most obvious implication is the price of pastors in the ecclesiastical marketplace has increased more rapidly than the increase in incomes. That is consistent with the increase in the costs of person-centered services mentioned earlier. In 1955, for example, the recent seminary graduate often began as a full-time resident parish pastor with a cash salary in the $2,600 to $3,400 bracket plus the free use of a church-owned house. The fringe benefits may have included a couple of hundred dollars per year for car allowance, but the pastor usually paid for utilities, books, subscriptions, and continuing education experiences. The congregation may have contributed a modest sum to a denominational pension system. Frequently, a physician refused to charge for his care as a "professional courtesy." The total cost to the congregation, including maintenance of that parsonage, usually came to $4,000 or less. That would be the equivalent of the median annual income as an American household in 2007 before taxes of approximately $56,000. The actual annual cost to the congregation in 2007 for a recent seminary graduate typically adds up to $65,000 to $70,000, including cash salary, a housing allowance, pension payments, health insurance, and reimbursement for travel and professional expenses.

A far more costly consequence has been a product of rising expectations. The combination of (1) the increased productivity of the American worker thanks due partly to modern technology, (2) that continued increase in the adjusted-for-inflation median per capita after tax personal income that nearly tripled from $9,735 in 1960 to an estimated $29,000 in 2007, (3) greatly enhanced benefits for retirees, (4) the relatively slow increases in the prices of food, clothing, and shelter that take a smaller proportion of a family's income today than was true in the 1930s, and (5) the demands of modern consumerism have transformed the American economy. Together, these five factors explain why the "Depression ethnic" of the first half of the 20th century has been replaced by adjustments to this new age of abundance.

One consequence is the larger the congregation and/or the larger the proportion of constituents born after 1950, the greater the demand for higher quality and more choices. Back in the early 1930s, for example, "Old First Church Downtown" with an average Sunday morning worship attendance of 700 usually was able to pay all the bills for the operating budget with receipts from member contributions of $40 to $50 times the average worship attendance. The inflation-adjusted equivalent for 2007 was about $750 times the average worship attendance plus missions and capital expenditures, but actual total expenditures often came to $2,500 times the average worship attendance. For most small neighborhood and rural congregations, the treasurer was able to pay all bills every month in 1933 if the total of member contributions averaged out to $10 to $15 times the average worship attendance.

One consequence is the midsized-to-large Protestant congregation of the 1930s usually depended on fewer than a dozen income streams-pledged income, designated contributions for missions, the loose offering, the building or mortgage fund, and "profits" from a dinner provided several times a year by the ladies of the church were among the most common income streams.

In today's donor-driven competition for charitable contributions, larger Protestant congregations often identify 20 to 50 income streams in the annual financial report.

The Denominational Perspective
For those responsible for funding denominational budgets, the cultural shock has been far greater! A common denominational response back in the 1920s to the competition between congregations and denominational agencies and among the denominational agencies was to create a unified budget for these denominational causes. This system turned out to be a remarkable success story for at least six or seven decades in those high-commitment religious traditions that expected every member to return a tithe of their income to the Lord via the denomination's ministries. Congregations funded their budget from financial contributions from their members over and above the tithe.

In that far larger number of American religious bodies in which the financial contributions of members were directed to the congregation's treasury rather than to the denominational headquarters, this system worked in that era of scarcity from 1920 to the late 1950s. Gradually, however, the leaders who invented and won acceptance of this "trust headquarters" approach, as well as most of the loyal laity had been born in the 1880 to 1920 era and supported that "depression ethic" system, began to disappear. As the decades rolled by, most of their replacements were churchgoers born after 1940 who grew up in an era of growing economic abundance. The 1960s taught these younger generations three lessons: (1) don't trust anyone over 30, (2) faceless institutions should be identified as the enemy, not as an ally or partner, and (3) local control is better than a top-down system of governance. (One consequence was the birth of thousands of nondenominational Protestant churches since 1960, with most designed to reach, attract, and serve the generations born in that post-1950 era of rising expectations.)

Concurrently, the number of charitable dollars to be contributed rose in a curve paralleling that increase in per capita personal income. That reinforced the commitment of the post-1940 generations plus many of the most generous contributors from earlier generations to donor-directed gifts rather than to a pot of money allocated by "faceless bureaucrats at headquarters." Hospitals, institutions of higher education, museums, and creators of new civic ventures also recognized that today charitable dollars flow most easily along a channel of trust based on interpersonal relationships rather than simply institutional loyalties or obligations.

Can your congregation or your denominational system compete effectively in the distribution of today's charitable dollars?

Copyright 2007 by Lyle E. Schaller