## Thursday, August 27, 2009

### Paper-Route Economics

I think my paper route had an average of about 20 customers, varying from about 17 to 23. The below account statement, for the four-week period that ended on December 11, 1964, records that I delivered about 19 daily (Monday through Saturday) and 18 Sunday newspapers during that period.

(Larger sizes of this image can be seen here.)

Let's do the arithmetic for a four-week period when a paperboy delivered to 20 customers who subscribed to the daily and Sunday newspapers. The Agency Carriers' Collection and Billing System included the following Price Schedule:

In order to apply the simplest arithmetic, we will use the third column, labeled "Both" (i.e. both daily and Sunday deliveries) and we will use the bottom part, labeled "FOR THE 4-WEEK PERIOD".

The row labeled "Your collect" indicates that the paperboy collected \$1.50 from each customer. Since the paperboy had 20 customers, he collected a total of (\$1.50 * 20 customers = ) \$30.00 for the four-week period.

The row labeled "Your cost" indicates that the paperboy had to pay \$1.08 to the delivery manager for each customer. Since the paperboy had 20 customers, he paid a total of (\$1.08 * 20 customers = ) \$21.60 for the four-week period.

The row labeled "Your profit" indicates that the paperboy earned a profit of 42¢ for each customer. Since the paperboy had 20 customers, he paid a total of (42¢ * 20 customers = ) \$8.40 for the four-week period.

Since the paperboy earned a profit of \$8.40 for a four-week period comprising 28 days, he earned about 30¢ a day, which was an average of about 1½¢ for each newspaper he delivered.

I estimate that I spent about 1.5 hours delivering the newspapers every day, so my hourly earnings were about (30¢/day @ 1.5 hours/day = ) 20¢ per hour.

In addition to the time that I spent delivering the newspapers, though, I also spent time collecting money from my customers and spent time trying to get new customers. Therefore I probably earned 15¢ or less per hour.

According to the Agency Carriers' Collection and Billing System, the paperboy was supposed to pay the delivery manager within the seven days following the end of the four-week period. You can see from the account statement at the beginning of this article that the four-week period ended on December 11, 1964, and that I paid on December 19, 1964, so I paid one day late on that occasion. I don't think there was a monetary penalty for paying late, but if a paperboy paid late chronically, then the delivery manager might eventually fire the paperboy.

Continuing with the hypothetical case where a paperboy delivered to 20 customers who subscribed to the daily and Sunday newspapers, the paperboy would have to pay \$21.60 to the delivery manager within seven days after the four-week period. Since each customer paid \$1.50 for such a subscription, the paperboy would have to collect from at least 15 of his 20 customers within those seven days in order to pay the delivery manager the \$21.60 on time (\$1.50 * 15 = \$22.50).

The paperboy would be able to collect some of the money while deliverying his route. If the lights were on in a customer's house when he was delivering, he could knock on the door and collect. Mostly, though, the paperboy would ride to his customers' homes during the afternoons, evenings or weekends to collect. Often during such trips, the customers would not be home or perhaps they did not have the money available, and so the paperboy would have to make several attempts to collect the money. Therefore a paperboy normally spent three or four hours a week collecting the money.

The paperboy recorded the customers' payments with collection cards.

The collection card, along with instructions, can be seen in larger sizes here.

The card was about nine inches long and made of light-yellow paper, a little stiffer than a playing card. The paperboy made a pair of identical cards for each customer. He filled in his own name and address on the top and his customer's name and address along the left side of each card. He gave the customer one of the pair of cards and kept the other of the pair for himself. The paperboy kept all his collection cards, in customer-delivery-order on a large, metal ring that he carried with him when he collected. When he collected the money from a customer, the paperboy would use a paper punch ...

... to punch a hole in the space marked with the date that ended the four-week period. He would punch a hole in the customer's card and in his own card.

Practically all my customers always paid in cash. I carried a drawstring money bag to hold the collected money and to be able to make change. My money bag was something like this ...

... but, of course, it did not have a dollar sign on it. My money bag was made of soft, green cloth and it had a white drawstring.

After I had collected enough money to pay my bill, I went to home of Seward's delivery managers, Austin and Josephine Neihardt, who lived next to the water tower. Josephine received all the payments from the paperboys. When she counted a paperboy's money, she was extremely slow and fussy. She carefully straightend out each bill. She put the bills into piles by denominations -- one pile for the one-dollar bills, one pile for the five-dollar bills and so forth, and she piled all the coins by denomination likewise. Then she used a big, old-fashioned adding machine to do all the multiplications and additions and subtractions, writing each calculation carefully on a sheet of paper.

Then Josephine would slowly and carefully write an account statement, like the one at the beginning of this article, as a receipt for the paperboy. In the above receipt she calculated that I delivered 456 daily papers and owed her 2.92 cents for each one, totaling \$13.32, and she calculated that I delivered 71 Sunday newspapers and owed her 13.5 cents for each one, totaling \$9.59 -- with a grand total due of (\$13.32 + \$9.59 = ) \$22.91.

Watching Josephine do this procedure so slowly was maddening for every paperboy. Another unpleasant element of the procedure was that Josephine did not have any teeth, just gums, and she often licked her thumb to count through the bills. A couple of paperboys got checking accounts just so they could write her an exact check.

I did not have a checking account while I was a paperboy, but I did open a savings account at Cattle Bank, which looked like this:

I tried to put five dollars in my saving account every month, which left me about four dollars to spend. I loved to figure out arithmetically how much money I might eventually earn in interest. If I deposited five dollars every month, then the total deposits would amount to \$60 at the end of one year. If my account earned about 3.5% interest, then I would earn \$2 in interest. At the end of two years, I would have about \$122 in my account, and I would earn more than \$4 in interest. At the end of three years, I would earn more than \$6 in interest. And so forth.

These projected interest earnings were fantastic, but my fantasies went really wild when I imagined my accumulation of savings and interest if I could get a lot more customers in my route.

Robert Sylwester wrote:

Interesting. I just figured out that I made about \$3.50 an hour during 1964 as a Concordia professor -- with a doctorate and a family of nine to support. It comes out to maybe 40-cents an hour per person in our family. So given the circumstances, you didn't do too badly with 15 cents an hour. As I recall, it cost maybe 50 cents for an adult to see a film at the Rivoli Theater.

Gene Meyer wrote:

Loved your description of the lady who collected the money. I can still see her licking her fingers and counting and arranging the dollar bills. I only subbed for Steve Roettjer and Jim Hardt…it was way too cold in the winter for me.

What’s 20 cents per hour worth day?

Per this site:

In 2008, \$0.20 from 1960 was worth:

\$1.45 using the Consumer Price Index

\$1.17 using the GDP deflator

\$1.81 using the value of consumer bundle

\$1.73 using the unskilled wage

\$3.26 using the nominal GDP per capita

\$5.49 using the relative share of GDP

\$4.53 using the nominal GDP per capita

\$7.40 using the relative share of GDP