Saturday, June 18, 2011
Cost of Living Adjustment to SS & CPI-W
Been working on tracking down whether the rumor I'd heard about the "cost of living" surveys the gummint makes do not include the prices of transportation (like gasoline) and staying alive (like food).
The story thus far: Proper terminology is Consumer Price Index(es-or indices) or CPI. And there are lots of 'em, calculated by the Bureau of Labor Statistics.
The most comprehensive (biggest "shopping basket"-ful) of them is the CPI-U--Consumer Price Index for all Urban Consumers. It appears that this includes gasoline and food prices. The Social Security Administration uses CPI-W, a subset of CPI-U. Here's what the BLS FAQ has to say about the CPI-W:
I'm not sure whether a price index that is based on one third of the population is apposite to the cost of living encountered by those receiving social security payments. What I am sure of is that I've never heard about these hair-splitting decisions from anyone in "the modalities" of communication (formerly known as media, but I'm tired of that--and I think modalities is a more precise/accurate definition).
This is akin to the official unemployment rate monthly reports, and whether the modalities should be reporting "U-3" (the official rate) or "U-6," the total rate, or what I call the real unemployment rate. The U-3 for May, 2011 is 9.1%, the U-6 is 15.1%. And no longer is this called an unemployment number. Now it's Underutilization of Labor. Gotta love it.
Which index is the "Official CPI" reported in the modalities? (The BLS web site is fairly useful. It certain reveals that there is a whole galaxy there of sliced and diced statistics, and to find out what's actually going on, you have to discover the right solar system, then the right planet some other agency has fastened on as the peg for its cost of living adjustments.
As the BLS frequently-asked page notes: