Latest / Wages and Prices with Fexingo: Cost of Living, Pay Raises, and Workers' Purchasing Power / How Your Raise Is Finally Beating the Cost of a Plane Ticket
Transcript
- Lucas: You know how we've been tracking this slow-motion victory lap for American workers — the one where pay raises finally start pulling ahead of specific costs? Well, today we're looking at plane tickets. Luna: Plane tickets? That's a big one. After the last few years, flying has felt like a real budget buster. Lucas: Exactly. According to the Bureau of Labor Statistics, the average hourly wage for private employees hit thirty-seven dollars and sixty cents in June. That's up about two and a half percent from a year ago. Meanwhile, airfare prices, as measured by the CPI, have actually fallen roughly five percent over the same period. So your raise isn't just beating the cost of a plane ticket — it's lapping it. Luna: That's a pretty dramatic swing. I mean, just a couple years ago, flying felt like a luxury that kept getting more expensive. Lucas: Right, and a lot of that had to do with jet fuel costs and post-pandemic demand. But what we're seeing now is a combination of moderating fuel prices — despite recent headlines about oil — and increased capacity. JetBlue and Southwest have been adding routes, and that competition is keeping a lid on fares. But the real story is wages. Even in industries that traditionally don't keep up with inflation, like retail and hospitality, wage growth has been surprisingly resilient. Luna: So is this a trend that's likely to continue? Or could it reverse if oil spikes again? Lucas: That's the big question. The breakeven inflation rate on ten-year Treasury bonds is at two point two six percent, which suggests the market expects inflation to stay relatively tame. But we just saw a headline that Singapore tightened monetary policy because of rising oil prices. If that spreads, airlines could start raising fares again. But for now, the data shows that the average worker can afford about one more round-trip ticket per year compared to 2022. That's real purchasing power improvement. Luna: Huh. So the vacation you've been postponing is finally within reach. Lucas: For many people, yes. And it's not just domestic flights. International fares have also come down, especially to Europe and Asia, because carriers added capacity. So your raise is literally shrinking the globe. Luna: Let's talk numbers. You mentioned average hourly earnings at $37.60. What about the median weekly earnings? Lucas: Good question. The most recent figure from early 2025 puts median usual weekly earnings at one thousand two hundred and four dollars. That's up about three point nine percent from the prior year. And the Employment Cost Index for wages hit one hundred seventy-seven point five in early 2026, up from one hundred seventy-six point two three. So compensation is clearly trending up. Luna: Meanwhile, the CPI actually dipped. The June reading was three hundred thirty-two point six, down from three hundred thirty-three point nine eight in May. Core CPI was essentially flat. Lucas: Exactly. That combination — rising wages and falling or stable prices — is what economists call 'real wage growth.' And it's spreading beyond just plane tickets. But plane tickets are a good bellwether because they're discretionary, big-ticket, and sensitive to both supply and demand. Luna: Are there any risks on the horizon? The headlines about tariffs and import prices — costs from China hit their highest since 2008 in June. Could that bleed into travel? Lucas: It could, indirectly. If tariffs push up the cost of goods, consumers might have less to spend on travel. But so far, the data shows that wage growth is keeping pace with the overall CPI, which is actually down. The PCE price index ticked up a bit, but core PCE is still modest. So the purchasing power story is holding. Luna: Let's bring this back to the worker. If I'm making forty thousand a year and got a three percent raise, how much more flying can I do? Lucas: Rough math: a three percent raise on forty grand is twelve hundred dollars extra. With average domestic round-trip fares now around three hundred dollars — that's maybe three hundred and fifty in summer — that's three or four extra trips a year if you're disciplined. But even one extra trip is meaningful. Luna: That's assuming you spend all the raise on travel. Most people probably spread it around. Lucas: Of course. But the point is that the option is there. And that's a big change from two years ago when real wages were still negative. Now the typical worker can do something they couldn't before: take a flight without guilt. Luna: Speaking of flights, I've been looking at summer fares to Europe. They're actually down about ten percent from last year. Lucas: Yeah, transatlantic capacity is back above pre-pandemic levels. Ryanair and Norse Atlantic are pushing fares down. So if you've got a raise, that's a great use of it. Luna: Let's switch gears a bit. The Federal Reserve is watching all this. Kevin Warsh recently said some interesting things about how the Fed interprets wage data. What's your take? Lucas: Warsh is focused on three phrases: 'services inflation,' 'labor market tightness,' and 'wage growth sustainability.' The concern is that if wages keep rising, companies will pass costs on to consumers, reigniting inflation. But so far, productivity gains have absorbed some of that. And with CPI cooling, the Fed has room to hold steady. Luna: So the wage vs. price battle isn't over, but for plane tickets, the worker is winning. Lucas: For now, yes. And it's a nice story to tell. But keep an eye on oil and tariffs. We'll track it. Luna: You know, Lucas, if walking through the economy with us has made something click — maybe you'll think about that next time you buy a coffee. Lucas: Funny you mention that. We do this show ad-free, and listener support is what keeps it that way. If today's episode was worth a coffee to you, the link is buy me a coffee dot com slash fexingo. That's it — no pressure. Luna: And it genuinely helps us keep digging into these numbers. So thanks to anyone who does. Lucas: Alright, back to the data. One last number: the Russell 2000 — which tracks smaller companies — is down about one point three percent over the past five days. That could signal some caution about the broader economy. But for the worker with a raise, the immediate picture is bright. Luna: So pack your bags, but maybe watch the oil futures. Lucas: Exactly. This is Lucas. Luna: And this is Luna. See you next time.