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Happy Labor Day!

September 4, 2006 | Author: Ibex Marketing

Today is a holiday in the USA, in part to honor the working men and women of the country. And instead of taking the day off (well, not the whole day), I got to thinking about working folks and HDTVs.

According to the US Bureau of Labor Statistics, the average hourly wage in June 2005 was $18.62, and the average worker clocked 35.7 hours per week. That’s about $665 per week. For the sake of this discussion, I’m going to assume that not much has changed in a year.

According to the Tax Foundation, Tax Freedom Day was June 3 this year. This means that the average US citizen worked until June 3rd this year to pay all the federal, state, and local taxes for the year. That’s 22 weeks, leaving 30 weeks in the year for after tax earnings. Assuming that the average person doesn’t take any unpaid vacation, that means that there’s less than $20,000 left after the taxes. Out of that comes food, rent or mortgage, transportation (at $3 per gallon for gas), clothing, utilities, and other necessities. And in many instances, there are children or other dependents counting on getting a share of that $20,000. Spread over a year, that’s less than $400 per week. Remember that we’re talking averages here; for every worker making more than average, someone is making less than average.

About the least you can spend for a 32″ LCD HDTV — which is the smallest size that is practical for viewing with others — is $700. (According to Pacific Media Associates, the average advertised price for a 32″ LCD in July was close to $1,400.) The question is how many workers can afford to spend two weeks of their after-tax earnings just on a television? My guess is that it is not many of them. At $100 per month or more for HDTV service, it’s unlikely that these people will spend another three weeks’ earnings per year for HD signals.

From where I sit, it looks to me as though HDTV is not going to sweep the nation this year, or next year, or probably for some time to come. I expect that it will remain out of reach for many hourly wage earners. They will make the switch to digital TV in 2009 — probably getting a converter for their existing sets — but I don’t expect this large segment of the US population will be moving to HD any time soon. The good news in all this is that prices continue to come down, and each time another $100 is chopped off the cost of a flat panel TV, it becomes available to a large number of people who could not otherwise afford it.