Alternation in CPI Could Trim Gains In Benefits, Pay: CPI Change Could Reduce Social Security, Pa...
The Labor Department announced yesterday that it will change the computation of the consumer price index, a move that could reduce Social Security and wage increases for millions of workers and retirees.</br></br>The changes, scheduled to take effect in 1983 and 1985, were attacked immediately by groups representing retired persons and organized labor, whose members have the most to lose by the new system.</br></br>The Bureau of Labor Statistics, which has authority to define how the CPI is calculated, will start using a different method for determining rises in housing costs, Commissioner of Labor Statistics Janet L. Norwood said at a press conference yesterday.</br></br>Housing costs make up approximately 25 percent of the current CPI. Under the change, the housing component will be reduced to approximately 14 percent of the index, according to BLS officials.</br></br>Initial reaction on Capitol Hill was generally favorable, primarily because of the potentially large budget savings involved. Some congressional analysts pointed out, however, that strong opposition could develop if labor and groups representing retired persons start a major lobbying campaign against it. Congress does not have to authorize the change, but it could pass legislation specifying how the CPI must be computed, BLS officials said.