Latest / Wages and Prices with Fexingo: Cost of Living, Pay Raises, and Workers' Purchasing Power / Why Your Raise Is Finally Beating the Cost of Summer Camp
Transcript
- Lucas: So Luna, it's mid-August, and parents across the country are looking at their bank accounts and wondering, how did I just spend that much on summer camp? Luna: Oh, I know the feeling. My sister has two kids and she said camp cost more than her rent for July. Lucas: That's the thing — camp is one of those expenses that just sneaks up on you. But here's the surprise: camp prices are actually not rising as fast as they used to. The CPI for camp and nursery school is up just 2.1 percent over the past year. That's below the overall inflation rate of around 3.4 percent, and way below what we saw in 2021 and 2022, when camp costs jumped 8 or 9 percent. Luna: Wait, so camp is getting cheaper relative to everything else? That feels like a big deal for families. Lucas: Exactly. And when you stack that against average hourly earnings, which are up 3.1 percent, real purchasing power for camp is actually improving. Your raise is finally beating the cost of summer camp. Luna: That's a headline I want to hear. But let's get into the why — why have camp prices cooled off so much? Lucas: Let's start with the pandemic hangover. In 2021 and 2022, camp costs exploded. Why? Because demand came roaring back as lockdowns lifted, but supply didn't. Camps couldn't find staff — counselors were scarce, and insurance costs were soaring. So they had to raise prices to cover those expenses. Luna: Right, and then the labor market went crazy, so wages for camp counselors went up too. Lucas: Exactly. But now the labor market has normalized. The employment cost index for wages is up only 1.6 percent quarter over quarter, and the labor force participation rate for young people is back to pre-pandemic levels. Camps are finding staff more easily, so they don't have to hike pay as aggressively, and that's holding down their costs. Luna: So it's a supply-side story. But what about the demand side? Are parents just spending less on camp overall? Lucas: Actually, demand is still strong, but it's shifting. Day camps are seeing modest price increases, but specialty camps — think robotics, coding, or sports-specific programs — those are where you see the real money. Parents are willing to pay a premium for niche experiences, and camps are happy to charge it. Luna: So the average CPI number might hide a lot of variation. A basic day camp might be flat, but a sleepaway tech camp could be up 10 percent. Lucas: Exactly. And that's the nuance — the CPI is an average, but no family sends their kid to the average camp. So if you're a parent, you need to look at the specific camp type you're using. Luna: And what about the insurance piece? You mentioned that earlier. Lucas: Insurance is the sleeper cost. Camps have to carry liability coverage, and after a few big lawsuits, premiums went through the roof. That's a fixed cost that doesn't go away when enrollment drops. But as enrollment has stabilized and the risk environment has calmed, insurance costs have moderated too. Luna: So camps have been able to keep price increases in check because their big input costs — labor and insurance — have stabilized. Lucas: Right. And there's another factor: the competitive landscape. There are more camps now than there were in 2019. A lot of new providers entered the market during the boom, and now they're competing for the same pool of families. That caps their pricing power. Luna: So if you're a parent, you might actually have some leverage this year. You can shop around, and you don't have to accept the first price you see. Lucas: Absolutely. And that's the practical takeaway. But let's zoom out for a second. Camp is just one line item, and it's a seasonal one. What does this say about the broader inflation picture? Luna: Well, we're seeing services inflation cool overall. The core PCE price index is up only 2.8 percent year over year, and the 10-year breakeven inflation rate is at 2.3 percent — that's basically anchored. So the Fed's rate hikes are doing their job. Lucas: Yeah, and that's actually a nice segue into something I want to mention. We do this show without any ads — no sponsor reads, no banner ads, nothing. It's just us, trying to make sense of the economy for you. If you find that valuable, and you want to support the work, you can buy us a coffee at buy me a coffee dot com slash fexingo. It's a small way to keep the show ad-free. No pressure, just if it feels right. Luna: Yeah, we love doing this, and listener support keeps it going. But back to the numbers — what does this mean for the average family's budget? Lucas: So let's put some numbers on it. The average cost of a week of day camp in 2026 is around $200 to $400, depending on where you live. Overnight camp is more like $800 to $1,500 a week. With camp inflation running at 2.1 percent, that's an annual increase of maybe $4 to $8 per week for day camp. That's manageable for most families. Luna: And when your raise is 3.1 percent, you're actually coming out ahead. That's the first time in years that's been true for camp. Lucas: Right. And I want to stress that this is a real wage gain. The median usual weekly earnings are up about 5 percent from a year ago, which is even better. So for the typical worker, camp is becoming more affordable in real terms. Luna: But what about low-income families? Camp can still be a stretch, even with modest increases. Lucas: That's a fair point. And there are programs like YMCA scholarships and local government subsidies that help. But the data shows that the gap between camp costs and wages is narrowing, which is a good thing for everyone. Luna: So what should our listeners do with this information? If they're planning for next summer, what's the smart move? Lucas: First, don't assume camp prices are going to jump again. Shop around, ask for early-bird discounts, and look for camps that haven't raised prices in a couple of years. Second, consider a specialty camp if your kid is really into something — the premium might be worth it. And third, if you can, book early — some camps offer lower rates for early enrollment. Luna: That's solid advice. And it's good to know that the trend is your friend here. Camp is one of those rare expenses where your raise is finally keeping up. Lucas: Yeah, and that's the kind of win we like to highlight on this show. So next time you're writing that check for camp, know that the numbers are, for once, on your side.