Honesty in Consumer Price Index Reporting Act

Beginning in 1975, Congress required Social Security retirement benefits to automatically increase annually in order to provide a cost-of-living adjustment (COLA), based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI–W, a data set issued by the Bureau of Labor Statistics.

The Social Security Administration website correctly explains that the purpose of the COLA is “to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation”.

The CPI–W data set published by the Bureau of Labor Statistics has come under criticism, as the BLS has made repeated changes in the methodology for calculation, particularly since 1980, so that it no longer measures maintaining a constant standard of living by reflecting changes in price of a fixed market basket of goods and services, but rather reflects the consumer substitution of less-expensive products and services as prices rise.

In general— The Bureau of Labor Statistics shall regularly and routinely report an additional data set designed to replicate the Consumer Price Index for Urban Wage Earners and Clerical Workers or CPI–W set reflecting a fixed market basket of goods and services, omitting consideration of substitution of goods and services due to changes in individual consumption patterns caused by price increases, utilizing the methodology that was employed by such Bureau in 1980.

Construction— Nothing in subsection (a) shall prevent the Bureau of Labor Statistics from making changes in the market basket employed in the new data set required to be created under subsection (a) that are necessitated by technological changes which are fully disclosed to the public prior to making such changes.

Termination— The requirement in subsection (a) shall terminate if the Bureau of Labor Statistics ends its reporting of CPI–W.