What is Consumer Price Index For Urban Wage Earners And Clerical Workers (CPI-W)?
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is a variation of the consumer price index, as complied by the Bureau of Labor Statistics (BLS) in the United States, that measures the changes in consumer prices certain workers are exposed to. The index is primarily used on an annual basis, to reflect changes in the costs of benefits paid to Social Security beneficiaries.
The Consumer Price Index for Urban Wage Earners and Clerical Workers is updated monthly, usually with a one-month lag.
The Consumer Price Index
Understanding the Consumer Price Index For Urban Wage Earners And Clerical Workers (CPI-W)
The CPI-W is calculated using the same data collected by the Bureau of Labor Statistics, but includes information from only certain demographics: those households with at least 50 percent of the household income coming from clerical or wage paying jobs, and at least one of the household's earners must have been employed for at least 70 percent of the year.
The CPI-W is used as a benchmark for many benefit plans to reflect changes in the cost of benefits, but it can also be used in calculating future contract obligations.
History of The Consumer Price Index for Urban Wage Earners and Clerical Workers
In 1974, the BLS considered abandoning the CPI-W in favor of the broader CPI-U population. However, labor union leaders, members of Congress, and members of other organizations who were CPI data users objected—they didn't oppose the new index, but they did have a problem with replacing the CPI-W. They worried that the broader index would no longer be “firmly grounded in the experience of low- and middle-income workers.” Instead, they promoted the creation of a separate index covering the additional workers.
As a result, when BLS introduced the CPI-U in 1978, it continued calculating the CPI-W. Of course, the CPI-W was not discontinued after three years after all—but the funds for conducting an independent survey of prices for both official populations were. As a result of these budget cuts and because little difference was seen between the CPI-U and CPI-W measures during this period, BLS discontinued the separate but overlapping samples of individual items and outlets maintained from 1978–1980 for the CPI-U and CPI-W.
BLS economists now track spending and prices by using the CPI-U sample of geographic areas, outlets, items and prices. The CPI-W is then derived by adjusting the weights for various spending categories, reflecting that the spending habits of the wage earner population differ somewhat from the all urban consumer population.