The price of flour...

DeLong's analysis starts with the fact that in 1500 the average family lived not far above subsistence. They could do little more than feed themselves with their labor--DeLong estimates that three-fourths of what the medieval economy produced was foodstuffs. If 7500 calories represents subsistence for four people for one day, then it can be inferred that it took rougly three days for the family to work to produce that amount of calories, which are contained in one five-pound bag of flour.

DeLong then asks how much one would have to work today in order to obtain one bag of flour. He then notes that if today's family of four in the United States earns an average of $100 a day, then a day's pay can purchase roughly 145 bags of flour, which should be multiplied by three to obtain what could be produced with three days' labor.

I like to put it like this: in 1500, if you were the average laborer who worked three days, cashed your paycheck (so to speak), walked into the local Safeway (so to speak), and emptied your wallet, you could have walked out with one five-pound bag of flour. Today, if you work three days, and you spent three days' pay on flour, you could walk out of the grocery with 430 five-pound bags.

What was it that enabled us to get from the point where we had to work three days to produce one bag of flour to the point where three days' work yields 430 bags of flour? The best answer, to a first approximation, is that we learned how to do it. We learned how to grow wheat more efficiently, how to use machinery to harvest, how to build railroads and trucks to transport grain, how to use electric power and automation to manufacture flour, and how to manage logistics and inventories to deliver flour to the shelves of stores.

With this cumulative knowledge, we freed people from the farms. As recently as 200 years ago, over half of the American labor force was in agriculture. Today, just 2 percent of the population can produce enough to feed the rest, with food leftover for export.

From roughly 1800 through 1950, the excess agricultural labor pool came to the cities, where it became the manufacturing workforce. For the past fifty years, another labor migration has been taking place--out of the factories and into services, such as marketing and middle management. As with food, we continue to produce manufactured goods, but with fewer workers--the fraction of the population on the production lines has fallen dramatically.

From http://arnoldkling.com/econ/book/growthintro.html

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