Latest / Wages and Prices with Fexingo: Cost of Living, Pay Raises, and Workers' Purchasing Power / Why Your Raise Is Finally Beating Home Internet Costs
Transcript
- Lucas: So we talk a lot on this show about which bills are finally getting easier to handle as wages creep up. Rent, tuition, healthcare — we've covered a bunch. But there's one household line item I bet most of us just pay without thinking twice, and it turns out that might actually be a good thing for once. Luna: Let me guess — internet? Because mine went down three bucks last month and I genuinely thought it was a mistake. Lucas: Not a mistake. Home internet is one of those rare categories where prices have actually dipped on a per-megabit basis, and in raw dollar terms they've been essentially flat while everything else went up. The latest CPI data for internet services shows the index barely budged over the past year — up less than half a percent. Luna: Meanwhile, average hourly earnings for private workers went from $37.51 in May to $37.60 in June. That's not a huge jump, but it compounds. And median usual weekly earnings are now over $1,200. Lucas: Right. So when you compare the two, the typical worker's paycheck is buying more internet than it did a year ago. And that's a pretty nice feeling when so many other categories — car insurance, rent, even coffee — are still squeezing budgets. Luna: Why is internet different? I mean, we all complain about our provider. Is there actually more competition now? Lucas: There is, but it's uneven. The big story is fiber. Companies like Alphabet's Google Fiber — though they paused expansion a while back — and a bunch of regional players have been laying fiber at a pretty aggressive clip. According to the Fiber Broadband Association, fiber now passes over 40 percent of U.S. homes, up from maybe 25 percent five years ago. Luna: And where fiber goes, cable companies have to respond. I remember when my neighborhood got fiber — my cable bill dropped by 20 bucks without me even asking. Lucas: Exactly. That's the competitive dynamic. When a fiber provider enters a market, the incumbent cable company typically cuts prices by 10 to 15 percent within a year. And those cuts stick because the threat is real. The result is that average broadband prices have actually fallen in real terms over the last couple years. Luna: So wages going up plus internet prices basically flat — that's a double win for the household budget. But I wonder how many people are actually seeing the benefit, because not everyone has access to competitive options. Lucas: That's the catch. The FCC's broadband maps still show that roughly 20 million Americans have only one wired provider available. If you're in a monopoly area, you're probably not seeing the price cuts. Your bill might even be going up. Luna: So the wage beating internet story is really a story about where you live. And about policy, too — the Affordable Connectivity Program ended last year, and that was a $30 monthly subsidy for low-income households. Lucas: Huge impact. When that program lapsed in 2024, millions of households saw their effective internet cost jump by that full amount overnight. So even though list prices are stable, the net cost for lower-income families went up. The wage growth story helps if you're employed and earning more, but it doesn't help everyone equally. Luna: Let's zoom out to the broader labor market, because wages are rising but the jobs picture is getting a little fuzzy. The June payrolls report showed only 57,000 new jobs — that's a big miss versus expectations. And the unemployment rate ticked up to 4.2 percent. Lucas: Yeah, that's a noticeable softening. And the labor force participation rate fell to its lowest level outside the pandemic era. That means fewer people are working or even looking for work. So the wage growth we're seeing is partly a composition effect — lower-wage workers dropping out, pulling the average up. Luna: Still, for people who are working, real wages are positive. Average hourly earnings are up about 4 percent year-over-year, while headline CPI is running around 3.3 percent. So the typical worker is gaining a little ground. Lucas: And internet is one of the places where that ground shows up most clearly. The Bureau of Labor Statistics data on internet services actually shows prices dipping slightly over the past year. When you combine that with wage growth, the typical worker can buy about 4 percent more internet service than they could a year ago. Luna: That's a tangible win. Not a huge one — we're talking maybe a couple bucks a week — but it's in the right direction. And it's a category where the trend might continue if competition keeps spreading. Lucas: That's the open question. Fiber buildout is expensive, and the big telecom companies have been pushing back on municipal broadband initiatives. There's also the whole issue of the digital divide — even if prices stay flat, if you can't afford the device or the installation, the wage story doesn't matter. Luna: But for the typical listener who's maybe frustrated with their monthly bills, it's at least one bill that's not getting worse. And if you can shop around, you might actually get a better deal now than you would have a couple years ago. Lucas: Right. So the advice I'd give is: check what's available at your address. If fiber has rolled into your area, call your current provider and ask for a promo rate. They'll often match or beat the new entrant just to keep you. A 10-minute phone call could save you $20 a month. Luna: That's a pretty good return on time. And speaking of returns — Lucas, if someone found today's episode helpful, and they want to support the show staying free and ad-free, there's a simple way. Lucas: Yeah, honestly, if today was worth a coffee to you, that's the link — buy me a coffee dot com slash fexingo. It's the smallest possible ask, and it genuinely makes a difference in keeping this podcast going. Luna: We don't do sponsors, we don't run ads, so listener support is what keeps the lights on. No pressure, just if it felt worth it. Lucas: Exactly. And back to the internet story — one more trend to watch: the infrastructure bill from 2021 allocated $65 billion for broadband expansion. Most of that money is still being deployed. So over the next few years, we could see competition increase in areas that currently have none. Luna: That could make the wage beating internet story more universal. But it takes time. In the meantime, the lesson is: your raise is finally beating your internet bill, if you live somewhere with choices. Lucas: And if you don't, there's reason to hope that might change. For now, it's one of those rare bright spots in the cost of living picture — small, but real.