Good morning. Yesterday's issue was about what you pay your suppliers. This one is about what your customers and your crew pay — and the headline number hides the only line on it that actually moves a service business.
Top story — The 3.4% that isn't your 3.4%
Consumer prices rose 0.4% in August and 3.4% over the twelve months to August, the Bureau of Labor Statistics reported on Friday (USDL-26-1496). Strip out food and energy and the twelve-month figure is 2.4%, down from 2.5% in July. On paper, that is a calm number.
Now open the energy page. Gasoline rose 3.9% in the month — more than a third of the entire all-items increase on its own — and is up 27.4% over the year. Fuel oil is up 52.0%. And the CPI line that carries diesel, "other motor fuels," is up 44.0% over the twelve months to August and rose 9.6% in August alone (CPI series, not seasonally adjusted).
So the index that governs your customer's sense of "things are getting expensive" says 3.4%. The index that governs what it costs to put a truck on the road says something between 27% and 44%. Both are true. Only one of them is in your pricing.
Quick hits
Your crew's raise was real — theirs mostly wasn't. Average hourly earnings for construction employees hit $39.59 in August, up 5.1% on a year earlier (BLS Current Employment Statistics, not seasonally adjusted, preliminary). Against CPI-W at 3.5%, that is a genuine gain of roughly a point and a half. Across the wider private economy it went the other way: real hourly pay for production and nonsupervisory workers fell 0.1% over the year to August, and for all private employees it fell 0.3% (BLS Real Earnings, seasonally adjusted, USDL-26-1497). Trades pay is outrunning inflation while most pay isn't — which is exactly why your techs keep getting called.
The replace-or-nurse-it read is softer than you'd think. Shelter is up 3.0% over the year and owners' equivalent rent 3.1% — steady, not scary. Household furnishings and operations rose just 2.0%, and appliances are flat, +0.1% (CPI series, NSA). Electricity is up 3.8% and piped gas 4.4%, both of which fell in August. Translation: the "your old unit is costing you a fortune in power" pitch is working against a smaller bill increase than it was a year ago. Lead with reliability and repair spend, not running cost.
The truck got cheaper. The fuel didn't. Motor vehicle insurance is down 5.1% over the year and fell 0.8% in August; used cars and trucks are down 2.3%; new vehicles are up just 0.6% (BLS release and CPI series). If you have been quoting fleet replacement off 2024 assumptions, both the metal and the policy have moved in your favor — and only the tank has moved against you.
The Tip — Run the real number before the pay conversation
Fourth-quarter reviews are close, and "we gave you 4%" is a different sentence depending on whose number you put next to it. The honest benchmarks are on the table now: consumer prices for wage earners +3.5%, construction hourly earnings +5.1%. A 3% raise this year was a pay cut in real terms. A 4% raise was roughly flat and still a point behind what the trade paid. Work it out per person this week, before anyone else does. If you cannot fund 5%, say so plainly and put the difference somewhere it shows — a tool allowance, a fuel card, a certification paid for. Techs leave over feeling shorted far more often than over the number itself.
Tool watch — [Not sponsored]
CPI is a monthly rear-view mirror. EIA's Gasoline and Diesel Fuel Update is free, published every Monday, and broken out by region and state. As of the week ending 7 September, US on-highway diesel was $5.967 a gallon — up 36.8 cents in one week and $2.201 on the year; California was $7.764. That is the number to index a fuel surcharge to, because your customer can look it up and argue with the government instead of with you: eia.gov/petroleum/gasdiesel.
That's the callout. See you next time.
The Callout — the business brief for the trades. We label every commercial placement: [Sponsor], [Affiliate], or [Not sponsored]. Today's Tool watch is our own honest read — no one paid for it. 231J Ramparts Road, Te Anau 9600, New Zealand · Unsubscribe anytime.