Latest / Wages and Prices with Fexingo: Cost of Living, Pay Raises, and Workers' Purchasing Power / Why Your Raise Is Finally Beating the Cost of Cellphone Plans
Transcript
- Lucas: Let's start with a number that might surprise you. According to the latest CPI data from May, the price index for wireless telephone services has fallen 2.8 percent compared to last year. Meanwhile, average hourly earnings for private workers are up 4.2 percent over the same period. That means, for the first time in years, your raise is actually beating the cost of your cellphone plan. Luna: Wait, so that 2.8 percent drop — is that just one carrier cutting prices, or is this a broader trend? Lucas: It's broad. All three major carriers — T-Mobile, Verizon, and AT&T — have been competing aggressively on price, especially for prepaid and value plans. T-Mobile's absorbed Sprint and used that network capacity to offer cheaper unlimited plans. Verizon launched a fixed wireless home internet product that bundles with mobile. And AT&T has been pushing discounts for fiber customers. The result is a market where the average price per gigabyte has fallen by roughly 25 percent over the past two years. Luna: And wages have been climbing steadily too. So the purchasing power of a typical worker's hour of labor when it comes to mobile service is actually going up for once. Lucas: Exactly. Let's put some numbers on it. The median usual weekly earnings in the U.S. were about $1,204 at the start of 2025, and they've grown to around $1,240 by mid-2026. That's about a 3 percent annual rise. Meanwhile, the average cellphone bill has fallen from roughly $115 a month to $108. So someone earning that median wage is seeing about a $36 monthly raise, while their phone bill drops by $7. That's a net gain of $43 a month — or over $500 a year — just from this one category. Luna: And that's before you factor in that data allowances have actually increased. You're getting more for less. Lucas: Right. The cost per gigabyte has plummeted. In 2020, you were paying about $5 per gigabyte on a typical plan. Now it's closer to $2.50. So even if your nominal bill stayed flat, your effective cost per unit of data is half what it was. That matters because data usage is exploding — the average smartphone user now consumes about 25 gigabytes per month, up from 15 just three years ago. Luna: So the wage gains are actually amplified by falling unit costs. But let's talk about whether this can last. The carriers have been spending heavily on 5G — T-Mobile alone spent nearly $10 billion on network upgrades last year. At some point, they'll need to recoup that capital. Lucas: That's the key question. And there are signs that the pricing war may be cooling. T-Mobile's CFO hinted on the last earnings call that the era of aggressive price cuts might be ending as they focus on margin expansion. Verizon has already raised some plan prices by $2 to $4 per line this year. So the next few quarters could see a flattening, or even a reversal, of the declines we've seen. Luna: But even if prices stabilize, the fact that wages have been growing faster than telecom inflation for the past year or so is a genuine win for household budgets. It's one of the few categories where that's true. Lucas: And it's not an accident. The telecom industry has undergone massive consolidation — T-Mobile and Sprint, then the Dish Network spectrum deals — and that's created a more efficient network landscape. But it's also reduced the number of major competitors from four to three. Typically, fewer players means less price competition over the long run. So this window of wage beating price may be narrow. Luna: So the takeaway for listeners: if you haven't reviewed your cellphone plan in the last year, you're almost certainly overpaying. The market has shifted, and carriers are offering better deals to win switchers. Lucas: Absolutely. And it's a good reminder that inflation isn't uniform. While rent and insurance have been stubbornly high, some categories like wireless and used cars have been outright deflationary. The trick is to notice where your money is going and adjust. Luna: Honestly, if walking through the economy with us has made something click, and you've found value in episodes like this one — we keep this show ad-free, and listener support is what makes that possible. If today was worth a coffee to you, that's the link: buy me a coffee dot com slash fexingo. Lucas: Even a dollar helps keep the lights on and the data flowing. And we appreciate every bit of it. Luna: So back to the question of longevity. Do you think the carriers will eventually reverse course and raise prices significantly once 5G investment slows? Lucas: I think the risk is real, but it may not be dramatic. The industry is shifting from a growth-at-all-costs model to a cash flow generation model. That means more modest price increases, not a return to the days of $200-a-month family plans. And competition from cable companies like Comcast and Charter, who now offer mobile plans, will keep some pressure on. So the raise may continue to beat phone bills for a while yet — just maybe not by as wide a margin. Luna: That's a good note to end on. A small but meaningful victory for workers' wallets in an otherwise mixed inflation picture. Lucas: Exactly. It's not a headline-grabbing win, but it's real. And sometimes that's the kind of economic news that actually matters in your monthly budget.