Latest / Wages and Prices with Fexingo: Cost of Living, Pay Raises, and Workers' Purchasing Power / Why Your Raise Is Finally Beating the Cost of a Pair of Jeans
Transcript
- Lucas: So here's a snapshot that might surprise you: the average price of a pair of jeans has barely budged over the past year. Meanwhile, your paycheck has actually grown. That's a rare win for shoppers in a world of tariff headlines and supply chain noise. Luna: Wait, really? Because I feel like everything I buy from clothes to electronics has a 'tariff surcharge' sticker on it. How are jeans bucking that trend? Lucas: Great question. And it ties into something important about how this podcast works, actually. A small group of listeners chips in monthly through Buy Me a Coffee dot com slash fexingo, and that's what keeps us ad-free and independent. Just like retailers sometimes find ways to absorb cost increases, we rely on that direct support to keep going. Luna: Yeah, it's a similar idea — passing on savings, or in our case, avoiding the need for ads. And I think it works because people value the trust. Lucas: Exactly. So back to those jeans. The Bureau of Labor Statistics tracks apparel as a category. In June, the apparel index was actually down about 0.3 percent year over year. Meanwhile, average hourly earnings for private workers rose to $37.60, up from $37.51 in May. That's a 0.24 percent monthly gain — small, but positive. And when you factor in that overall CPI fell from 333.98 to 332.6 in June, real wages are rising. Luna: So the numbers say our paychecks got a little bit more breathing room relative to prices. But what about those tariffs on Chinese goods? Jeans are mostly imported, aren't they? Lucas: They are. And the headline that came out July 17th showed import prices from China hit their highest level since 2008. That's a big jump. But retailers haven't passed the full tariff cost through to consumers — at least not on basic items like denim. Part of it is competition. If one store raises prices, shoppers just go to another, especially when brands like Levi's, Wrangler, and Uniqlo are all vying for the same customer. Luna: Plus, I've noticed that denim itself has changed. There's more stretch, cheaper blends, and a lot of fast fashion comes in at lower price points. That might be keeping the average down. Lucas: Exactly. The product mix is shifting toward lower-cost items. And the official CPI for men's and women's apparel captures that. So even if a premium pair of raw selvedge jeans went up ten percent, the average might be flat because people are buying more $30 jeans from Target. Luna: So the 'raise beating the cost of jeans' is partly about us changing what we buy? That feels a bit like a statistical trick. Lucas: It's a real effect, but it's worth understanding. The CPI tries to account for quality changes, but it's not perfect. However, even if you adjust for mix, the trend is clear: wage growth has outpaced general inflation in this category. And that's not true for everything — look at insurance or medical services, where prices are still climbing faster than wages. Luna: Right, so jeans are a bright spot. But it's not just about tariffs being absorbed. It's also about inflation expectations staying anchored. The ten-year breakeven inflation rate ticked down to 2.26 percent as of last week. That means bond traders don't see a big spike ahead. Lucas: That's key. When expectations are stable, retailers feel less pressure to pass on cost increases. They think, 'If I raise prices too much, people will just wait for a sale.' And with wage growth modest — median weekly earnings hit $1,204 in 2025, up from $1,159 — consumers are still cautious. Luna: So the real story is that for now, wage growth is just enough to keep up with, or even beat, the price of things like jeans. But the sustainability of that depends on what happens next with tariffs and oil prices. We saw Singapore just tightened monetary policy because of oil-driven inflation risk. That could ripple globally. Lucas: It could. But for this moment, there's a genuine win. Your raise is finally beating the cost of a pair of jeans. And that's something you can actually feel at the checkout counter. Luna: Until next time — keep an eye on those price tags. They tell us a lot about what the economy is really doing.