Agenda - Council - 12/22/1981 - Laserfiche WebLink

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'1 ! USA NOV tSISI . .'\ .-.:?.. ' 81-45 November 6, 1981 The Washington iNATIONALCONFERENCEONCPISCHEDULED I I I I Scene The U.S. Chamber of Commerce has scheduled a National Conference on the Consumer Price/ndex (CPI) in Washington on November 13. Experts from the Bureau of Labor Statistics (BLS), aca- demia, and business will gatl~er to discuss the CPI and its significance to business as well as other sectors of our economy. Last week, the BLS announced a change in calculating the CPI which will result in replacing the present home ownership component with a rental equivalent, commencing in January 1983 (TWIR 10/30/81 ). BLS estimates that 40% of the adult population is affected in some fashion by changes in the CPI; thus, this decision has special significance to the nation as a whole. Many organizations and business associations have expressed views on the need to change the meth- odology for calculating the CPI. For example, the U.S. Chamber, while expressing some reserva- tions about the BLS announcement, said "We are optimistic that today's announcement marks a beginning to the solution of the many problems associated with the current construction of the CPI. We, as one user group of the CPI, look forward to working with the BLS to develop an accurate measure of inflation in the near future." I I I I I I I CPI As a Wage Determinant The CPI was originally designed during World War I as a guide in determining salary adjustments for shipyard employees. Today, 5.4 million union employees are covered by cost of living adjustment clauses (COLA's) in collective bargaining agreements which use the CPi as a basis for adjusting wages and benefits. Millions of other workers also receive wage adjustments based on changes in the index. Social Welfare and Other AdjustmentS In 1972 the law governi0g "cost of living" adjustments in Social Security benefits was amended to provide for automatic changes based on the CPI. In June 1980 the annualized CPI increase was 14.3%, which increased the annual Social Se. curity payments by $17 billion. Other transfer payment programs using the index for a~ljustments ir~clude the: · Food Stamp program, covering 20 million recipients . · School Lunch program, providing meals to 25 million children.