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Monday, October 05, 2015

Real Inflation at Lozano's Car Wash in Mountain View, California

You can get an idea of why the US economy is growing so slowly with this look at inflation at my local car wash.

Over the past two years, the lowest price for a "car wash" went up $4 or 31%  at "Lozano's Car Wash" in Mountain View, California.  (Map)

Lozano's is on the corner at the city limit of Mountain View with Los Altos across El Camino Real and Palo Alto across Del Medio Avenue.
Lozano's Car Wash Coupons

Over the last two years, the CPI-U index for inflation went from 233.396 in July 2013 to 238.654 in July 2015.  This is a gain of 5.258 or 2.3%, roughly 1.15% a year.
Inflation Data
If you applied this 2.3% inflation to the $12.99 price of a car wash in 2013, it would be $13.29.

What happened?  Is:

  • the government lying about inflation?
  • the owner of Lozano's greedy and charging what the market will bear when so many won't use their valuable water during the drought to wash their cars?
  • the owner of Lozano's paying more generous wages?
  • the owner of Lozano's passing on higher costs not represented by the CPI-U index?
  • All the above?
Also note that the major costs at a car wash are
  1. Labor
  2. Energy
  3. Water
They recycle the water but I imagine much is lost due to evaporation.  Energy prices are down so I think the biggest reason for the higher prices is higher labor costs.

Mountain View's minimum wage is currently $10.30 per hour with a goal of $15 per hour by 2018. See Mountain View boosts its minimum wage to $10.30, with $15 goal by 2018

The minimum wage was $9 per hour before so my guess is most of the higher car wash prices are the costs to comply with Obama Care.  

It is good that workers have health insurance but it is not free.  We all pay for it.  I find I go much longer between car washes these days and I wash my cars more often at home.  If everyone does this due to the higher price, it is possible there are fewer jobs at the car wash than before helping explain why the economy isn't growing as fast as it has in past recoveries.

What do you think?  Feel free to comment below or on my facebook page.

More coupons to show the price progression:

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