Latest / Wages and Prices with Fexingo: Cost of Living, Pay Raises, and Workers' Purchasing Power / Why Your Raise Is Finally Beating the Cost of Pet Care
Transcript
- Lucas: If you own a dog or a cat, you know the feeling of walking out of the vet's office with a bill that makes you blink twice. For years, those bills have been climbing faster than most people's paychecks. But the data from the last twelve months suggests that dynamic is finally starting to flip. Luna: Are we at the point where your raise is actually covering the cost of pet care? Because I've definitely had that 'I just spent my bonus on a dental cleaning for my dog' moment. Lucas: Right, and that's the exact experience the numbers speak to. Let's look at the big picture first. As of June 2026, average hourly earnings for private workers hit $37.60. That's up from $37.51 in May, and year-over-year it's about a 4.5% increase. Meanwhile, the overall CPI actually ticked down to 332.6 from 333.98 a month earlier. So wages are growing faster than the broad inflation rate. Luna: But pet care isn't the broad inflation rate. Vet services and pet products have their own price index, and it's been stubborn. Lucas: Exactly. The pet care category — which includes vet visits, pet food, and supplies — saw prices rise about 2.2% over the past twelve months. That's still an increase, but it's well below wage growth. So in real terms, your purchasing power for pet care is improving. The typical annual vet visit, say a checkup with vaccinations, might have run you about $250 last year. This year it's closer to $255. But if your weekly earnings went from roughly $1,159 to $1,204 — that's from the median weekly earnings data — you've got an extra $45 a week. That extra covers the vet price bump and then some. Luna: So the gap is closing. But why did pet care get so expensive in the first place? I remember reading that consolidation in the vet industry played a big role. Lucas: It did. Over the past decade, large corporate chains bought up thousands of independent practices, and they raised prices to standardize margins. Pet insurance premiums also surged — up something like 25% between 2020 and 2024. That's partly because more people insured their pets during the pandemic, and claims costs rose as advanced treatments like oncology and orthopedics became more common for animals. Luna: So now wages are catching up. But is this a lasting trend or just a temporary blip? Because the headline about import prices from China hitting their highest since 2008 — that could feed into pet supplies, right? Lucas: It could. A lot of pet toys, beds, and even some medication ingredients come from China. If tariffs expand — and there's talk of new ones — those costs could flow through. But the core driver of pet care costs is domestic: vet labor. And the employment cost index for wages, which was at 177.5 in early 2026, shows that labor costs are still rising about 4% annually. That's a headwind for vet clinics. But because wages across the economy are rising at a similar clip, the relative burden on pet owners is stable. Luna: So it's less about pet care getting cheaper and more about your paycheck finally keeping pace. That's the real story. Lucas: That's exactly the frame. And there's a specific metric that captures this: the ratio of median weekly earnings to the pet care CPI component. In 2022, that ratio was falling — wages weren't keeping up. Today, it's roughly flat to slightly rising. That's the turn. Luna: I want to zoom in on one number. You said median weekly earnings were $1,204 as of early 2025. But that's the latest from the Bureau of Labor Statistics. Do we have a more current read on that? Lucas: We don't have the weekly figure updated past the first quarter of 2025. But the average hourly earnings data is monthly, and it's trending up consistently. If we project forward, weekly earnings are likely around $1,230 or so by now. The point is, the trajectory is positive. And the core CPI — which excludes food and energy — is essentially flat at 336.1. That suggests the Fed's rate hikes have cooled demand in many sectors, but services like pet care are stickier. Luna: Stickier because they're less discretionary. People don't skip the vet the way they skip buying a new phone. Lucas: Right. And that's why the wage catch-up matters for household budgets. If your rent and groceries are also rising at a slower pace — and we've seen that in recent CPI reports — then the extra dollars from your raise can actually go toward that vet bill without having to cut something else. The 10-year breakeven inflation rate is around 2.28%, which is pretty anchored. So the market expects inflation to stay moderate. Luna: Speaking of household budgets, I've been thinking about how this plays out for people who are paying off student loans or saving for a house. Pet care is one category, but it's not the biggest. Still, it's a visible one. Lucas: It's a bellwether. If you can comfortably afford a $250 vet visit, you're probably feeling okay about the rest of your budget. And the data suggests more households are in that position now than a year ago. The employment cost index for wages rose about 1.4% in the first quarter of 2026 alone. That's a solid quarterly gain. Luna: Alright, so let's talk about one specific type of pet care that's been a lightning rod: pet insurance. I pay about $45 a month for my dog. Has that premium growth slowed? Lucas: It has. After spiking in 2022-2023, monthly premiums have been increasing at about 3-4% annually, which is more in line with overall services inflation. Some insurers are even offering discounts for multi-pet policies or wellness add-ons. So the sticker shock is easing. And if your wages are up 4.5%, that premium increase is absorbed pretty easily. Luna: That's reassuring. But I'm always a little skeptical when we say 'your raise is beating X.' It depends on what you do for a living. A lot of people in service jobs haven't seen 4.5% raises. Lucas: That's a fair critique. The average masks a lot of variation. Workers in leisure and hospitality, for instance, saw wage growth closer to 5.5% over the past year, so for them it's even better. But in professional services, it might be 3.5%. The broad picture is that wages are rising faster than inflation for most workers, but not all. And for pet care specifically, the price increases have been modest enough that even a 3% raise will keep you ahead. Luna: So what's the one thing you want listeners to take away from this episode? Lucas: That the pet care cost squeeze of the early 2020s is loosening. Your paycheck is growing faster than the cost of keeping your pet healthy. That doesn't mean vet visits are cheap — but it does mean the financial pressure is easing. And that's a small but real win for household budgets. Luna: I think that's a great note to end on. And before we wrap, I want to mention something that makes this show possible. We don't run ads, and that's because listeners like you help keep the lights on. If walking through the economy with us has made something click, a couple of dollars a month — genuinely — makes a difference. Buy me a coffee dot com slash fexingo. That's all. Lucas: Yeah, it's a small thing that adds up. We appreciate every bit of support. So back to the data — I want to flag one more number. The PCE price index, which the Fed watches, rose to 131.5 in May from 130.94. That's a 0.4% monthly increase. Still moderate. And core PCE ticked up to 130.1. So the broader inflation picture is benign, which bodes well for pet care costs staying contained. Luna: And if tariffs do push up imported pet supplies, that could change. But for now, it's a good moment for pet owners. Lucas: Exactly. We'll keep an eye on the tariff story in future episodes. But today, the takeaway is clear: your raise is finally beating the cost of pet care. Thanks for listening.