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 Ownership
Transcript
- Lucas: So we've spent a lot of episodes lately on how wages are finally beating specific cost categories — groceries, dining out, medical costs, even auto insurance. And one thing that keeps coming up in listener mail is: what about pets? Luna: Yeah, I've seen that too. People are asking: 'My dog's vet bill went up 15 percent last year — is my raise actually keeping up?' Lucas: Exactly. And the short answer is: it depends on the category, but overall, yes — for the first time in years, wage growth is outpacing the cost of owning a pet. Let me give you the numbers. Luna: Walk me through it. Lucas: Okay, so average hourly earnings for private workers hit $37.50 in May, up from $37.41 a month before. That's about a 2.8 percent annualized gain over the last few months. Meanwhile, the overall PCE price index — that's the Fed's preferred inflation gauge — is at 131.5, up about 2.4 percent year over year. So wages are beating the broad basket. Luna: Right, but pet costs have been running hotter than the broad basket. The Bureau of Labor Statistics has a pet and pet products category that's been up around 5 to 6 percent annually. Lucas: That's the key. Pet care inflation has been sticky — veterinary services especially. Vet costs have been rising at roughly 6 percent a year for the last three years. But wage growth for the median worker — median weekly earnings are now $1,204 — has been accelerating. So the gap is closing. Luna: Let's talk about the specific drivers. What's been pushing pet costs up? Lucas: Two big ones. First, there's been a structural shift in how people treat their pets — they're more like family members now. That means more expensive vet care, more diagnostics, more surgeries. And second, the pet food industry has moved toward premium, subscription-based models. Think fresh-food delivery services, raw diets, grain-free formulas. Luna: And those subscriptions have sticky pricing. Once you sign up, you're not likely to switch. So companies have pricing power. Lucas: Right. But here's where the wage story gets interesting. If your income is growing at 3 to 4 percent and pet costs are growing at 5 to 6 percent, you're still losing ground — unless you're in the bottom half of earners, where wage growth has been even stronger. Luna: That's a good point. The tight labor market has really boosted wages for lower-wage workers — service workers, retail, hospitality. Those are often the same households that might feel pet costs most acutely. Lucas: Exactly. And there's a second factor: pet insurance. It's become much more common. Premiums have been rising — about 8 to 10 percent a year — but they're still small relative to a big, unexpected vet bill. The calculus has shifted. Luna: So the net effect is that your raise may not cover every vet visit, but over the course of a year, the typical worker's income growth is now matching or exceeding the average increase in pet-related expenses. Lucas: That's the headline. And it matters because pet ownership is expensive — the American Pet Products Association estimates the average owner spends about $1,500 a year on a dog, $1,000 on a cat. That's a real chunk of a household budget. Luna: And those numbers are from a couple years ago. I'd guess it's closer to $1,800 and $1,200 now. Lucas: Probably. But again, median weekly earnings are $1,204 — that's over $62,000 a year. So pet costs as a share of income have actually declined slightly for the median worker since 2022. Luna: That's a great way to frame it. It's not that pet costs are cheap — it's that the denominator, your paycheck, is finally getting bigger. Lucas: Right. And that's the story we've been seeing across so many categories this year. The inflation shock of 2022–2023 is fading, and wage growth has momentum. Luna: Before we move on — and this ties in — a quick thought. You know, this kind of analysis is exactly why we do this show without any ads. We want to be able to dig into the data without having to sell you something in the middle. Lucas: Yeah, we keep it ad-free because we think the information should stand on its own. If you find it useful and want to support that, there's a simple way — buy me a coffee dot com slash fexingo. No pressure, just an option. Luna: And it genuinely helps. Every little bit goes toward keeping the research and production going. Okay, back to pets. Lucas: So let's talk about one specific cost that's been a pain point: pet medications. Flea and tick preventatives, heartworm meds — those have been going up faster than almost anything else. Luna: I've noticed that. My dog's monthly preventative went from $18 to $24 over the last two years. That's 33 percent. Lucas: And that's partly because these are branded products with little generic competition. But again, if your wage is up 5 percent over two years, you're still feeling that squeeze. The good news is that more employers are offering pet benefits — pet insurance as a voluntary benefit, discount programs. Luna: And some companies are even including pet care in their flexible spending accounts for veterinary expenses. That's a new trend. Lucas: Right. So the picture isn't uniformly rosy, but the direction is positive. For the first time in a while, the average worker's purchasing power for pet-related expenses is improving. Luna: What about pet food? That's a recurring cost that everyone sees. Lucas: Pet food inflation has been around 4 percent annually — still above headline CPI, but decelerating. And again, wage growth is now above that. So if you buy the same bag of kibble you bought last year, your raise covers the difference and then some. Luna: Unless you upgraded to the fresh-food subscription. Then you're paying double. Lucas: That's a choice, though. The point is that the baseline cost of keeping a pet is becoming more manageable relative to income. That's a structural shift worth noting. Luna: So what's the takeaway for our listeners? Should they feel better about their pet budget? Lucas: I think cautiously optimistic. If your raise has been around 3 to 4 percent and your pet costs have been growing at 5 percent, you're still behind. But if you're in the bottom quartile of earners, where wage growth has been 5 to 6 percent, you're actually gaining ground. Luna: And for everyone else, the gap is narrowing. That's progress. Lucas: Exactly. And it's a good reminder that the macro picture — wage growth beating inflation — is starting to filter down to specific line items in our budgets. Pets included. Luna: Alright, next episode we'll look at another category that's been stubborn — maybe renters insurance or something like that. Lucas: We've got a list. Until then, keep an eye on your paycheck vs. your pet's food bill — the math might surprise you.