Latest / Wages and Prices with Fexingo: Cost of Living, Pay Raises, and Workers' Purchasing Power / Why Your Raise Is Finally Beating Car Repair Costs
Transcript
- Lucas: So I got my car back from the shop yesterday. Needed a new alternator, and the bill — let's just say I had to sit down before I opened the envelope. Luna: Oh no. Was it as bad as you feared? Lucas: Worse. But here's the thing — when I looked at the receipt, I realized something. The labor portion actually felt reasonable. It was the parts that killed me. And that got me thinking about a trend that's been quietly shifting in the background. Luna: Which is? Lucas: Vehicle repair and maintenance costs have been one of the stickiest inflation categories for years. But the May 2026 data just dropped, and for the first time in a while, wage growth is actually outpacing that specific bucket. Average hourly earnings hit $37.50 in May, up from $37.41 in April. Meanwhile, the CPI for vehicle maintenance and repair rose at a much slower pace. Luna: Wait — so my brake job is finally becoming less painful relative to my paycheck? Lucas: Exactly. Let's put some numbers on it. Over the past twelve months through May, average hourly earnings are up about 3.9 percent. Vehicle repair costs? They've risen around 3.2 percent. That gap — roughly 70 basis points — is the first real breathing room we've seen since before the pandemic supply chain mess. Luna: Okay, but 3.2 percent is still above the overall inflation rate. Core CPI is running at about 2.8 percent year-over-year. So repairs are still getting more expensive — just not as fast as our paychecks are growing. Lucas: Right. And that's the distinction we've been tracking all season. It's not that prices are falling — they're not. But the gap is narrowing. And for a category that's been a real thorn in household budgets, that matters. Luna: Why has car repair been so stubborn? I feel like every time I take my car in, the estimate starts at a thousand dollars and goes up from there. Lucas: A few reasons. First, the average age of vehicles on the road in the U.S. is now over twelve years. That's a record high. Older cars need more repairs, and they're often more labor-intensive. Second, the chip shortage that roiled new car production also hit replacement parts. If you need an electronic control module for a 2018 sedan, that part is still scarce and expensive. Luna: And mechanics' labor rates have gone up too, right? Lucas: They have, but that's actually the part that's stabilizing. The employment cost index for wages in the auto repair industry rose about 4.1 percent over the past year — but that was largely catching up from a period where mechanics were underpaid relative to other trades. Now that's leveling off. Meanwhile, the parts cost inflation has cooled from double-digit rates in 2022 and 2023 to around 2.5 percent recently. Luna: So the parts pipeline is untangling. Lucas: Slowly. And there's another factor: the shift to electric vehicles is changing the repair mix. EVs have far fewer moving parts — no oil changes, no transmission fluid, no timing belts. That's starting to pull down the overall maintenance cost index, even though ev specific repairs like battery pack replacements are still eye-wateringly expensive. Luna: But most of us don't drive EVs yet. So for the average person with a gas-powered car, what does this actually mean? Lucas: It means that if your raise this year was around 4 percent — and the median weekly earnings data from 2025 showed that median usual weekly earnings rose to $1,204 — then you're finally getting ahead of that specific cost. Not by a lot. But it's a real improvement. Three years ago, repair costs were rising at 8 or 9 percent a year while wages were crawling at 3 percent. That was a squeeze. Luna: So we've gone from losing ground to treading water to maybe — maybe — gaining a few feet. Lucas: Exactly. And that's the story of this entire recovery for a lot of household categories. It's not a victory lap. It's a slow, uneven crawl back to normal. But for car repairs, we're now in positive territory. Luna: Let me ask you this — does the data differentiate between independent shops and dealership service centers? Because my experience is that dealers are way more expensive. Lucas: The CPI doesn't break it out that cleanly, but industry surveys from groups like the Automotive Aftermarket Suppliers Association show that independent shop labor rates average about $110 per hour, while dealerships are closer to $160. And dealers are more likely to use OEM parts, which have seen bigger price increases than aftermarket parts. So if you're going to the dealer, the 'raise beating repair costs' math might not apply as much. Luna: That's a good caveat. So the headline 'wages beat car repairs' is more true if you're using an independent mechanic. Lucas: For now. And it also depends on what kind of repair. Routine maintenance like oil changes and tire rotations — those prices have actually been pretty flat. It's the big-ticket items, the ones that require complex electronics or disassembly, where the savings are most noticeable. Luna: So what's the one number a listener should take away from this episode? Lucas: The gap. Wage growth at 3.9 percent versus vehicle repair inflation at 3.2 percent. That 0.7 percentage point difference is the margin of relief. Small, but after years of being in the red, it's green. Luna: And speaking of margins that matter — we get a lot of notes from listeners saying these episodes help them make sense of their own budgets. And honestly, if today's episode was worth a coffee to you, that's the link. Buy me a coffee dot com slash fexingo. It's the smallest way to keep this show ad-free and independent. Lucas: Yeah, we don't run sponsors, so listener support really is what keeps us going. And we appreciate every single one. Now — one thing I want to flag about that repair cost data. It's national averages. If you live in a high-cost area like San Francisco or New York, your local repair prices might be 20 percent higher. The wage data also varies regionally. Luna: Right, the national average masks a lot of variation. For instance, the headline we saw this week about Nevada being a hot job market — that suggests wage growth there might be even stronger, which could make the repair cost gap wider in that state. Lucas: Exactly. And there's another layer: the used car market. When new car prices were through the roof in 2022 and 2023, people held onto their cars longer. That drove up repair demand. Now that new car inventory is recovering and prices are stabilizing, some of that pressure is easing. Luna: So the repair cost slowdown is partly a symptom of the new car market healing. Lucas: Precisely. And that's the kind of interconnection we try to highlight. Your alternator bill isn't just about a part that failed. It's about chip supply chains, labor markets, and consumer behavior going back years. Luna: So what should listeners do with this information? Other than feel slightly better about their next repair estimate? Lucas: I'd say two things. One, if you're budgeting for a major repair, the trend is your friend — wait a few months if you can, because the price trajectory is moderating. Two, shop around. The difference between dealer and independent shop rates can be fifty dollars an hour. That's real money. Luna: And maybe learn to change your own oil. Lucas: I tried that once. Let's just say I paid a professional more to fix what I broke than I would have spent on three oil changes. So not always the best strategy. Luna: Fair enough. So bottom line: wages versus car repairs — we're winning, but it's a photo finish. Lucas: Exactly. And that's the kind of win we'll take. For now. Next week we'll look at a category that's still giving wages a run for their money — so stay tuned.