U.S. to Broaden the Base Of Consumer Price Index

WASHINGTON, April 5—The Labor Department, in devising modernized version of the Consumer Price Index, has decded to use the “spending patterns” of a broader segment of the population than in the past because 50 million persons now have their incomes pegged in whole or part to the index.; The disclosure of the 50‐million figure—an entirely new estimate—came in a statement today by Julius Shiskin, Commissioner of Labor Statistics, explaining the change in the index that he plans. The new index will not be published until April, 1977.

Woodcock Criticism

The change was sharply, attacked at a Congressional, hearing today by Leonard Woodcock, president of the United Automobile Workers. Mr. Woodcock told a subcommittee of the Joint Economic Committee that the new index should be limited, as the present one is, to the spending patterns of urban wage and clerical workers.

He expressed concern that the new index might tend to show less inflation than the present one. This would mean smaller automatic wage increases for the U.A.W., which was a pioneer in the cost‐ofliving escalator clause.

Smaller rises for other persons with income tied to the index would also be likely.

Of the approximately 50 million people whose incomes or payments are affected, by movements in the index, Mr. Shiskin said, only 5.1 million are unionized workers with wage escalator clauses in their contracts. Other categories include the following:

¶As a result of a 1972 change in the law, 29 million recipients of Social Security now have automatic increases in benefits as the Consumer Price Index rises.

¶The same is true for 2 milmillion retired military and Federal Civil Service employes and 600,000 postal workers.

¶Because of a change in the law last year, food stamp benefits, now received by 13 million persons, also rise with the Consumer Price Index.

¶Many rental contracts now have escalator clauses tied to the index.

¶The same is true for an unknown number of alimony, child support and similar private agreements.

Uncertainty for Negotiations

Mr. Shiskin decided early this year to have the revised index reflect the spending habits of about 80 per cent of the population — including the elderly, the unemployed, professional workers, salaried execufives and the self‐employed. Now the index shows the spending habits of 55 per cent of the population represented by urban wage and clerical workers. The present index was computed more than 10 years ago.

The Consumer Price Index, which has been issued on a monthly basis for more than 50 years, is the most widely used measure of inflation. Its basis of measurements has been changed every 10 to 15 years to reflect changing consumer patterns.

Mr. Woodcock complained that the broader composition of the index including spending patterns of the relatively affluent would tend to give less weight to items such, as food, which have risen the most in price in recent years. Thus, he argued, the new index would tend to show less inflation than the present one.

He said his own union's bargaining in 1976 “would be carried on in a state of uncertainty, confusion and lack of credibility” because workers would not be sure that the index duo in 1977 would accurately reflect changes in their own cost of living.

Mr. Shiskin said in a telephone interview today that he had “no quarrel” with the viewpoint of Mr. Woodcock and others in organized labor. He said he would be glad to publish two indexes In the future —one on the old basis and one on the new—provided, he was given more money and more personnel.

He estimated that publishing two indexes would cost an additional $1.5‐million to $2‐million a year. This is a tiny sum in the huge Federal budget, but for various reasons increases, for statistical improvements have always been difficult to obtain from Congress and sometimes from the Office of Management and Budget, the White House budget agency.

The Census Bureau, working in this instance for the Bureau of Labor Statistics, has already completed its spending pattern survey of 17,000 households but has not finished its tabulations. Under the old concept of the index, the Bureau would have thrown out of the sample all but urban wage and clerical workers.