GOVERNMENT: Out of Plumb

When the Bureau of Labor Statistics announced last week that the cost of living index had risen another 0.5% in the month ending Sept. 15, it added a comforting note. The price of food, said BLS, went down 0.2%. But consumers, who have noticed no discernible drop in food prices, had reason to wonder: How accurate is the index? Last week, stocky, rumpled Ewan Clague, commissioner of Labor Statistics confessed that consumers have a point. The BLS index is out of plumb, and he has started to true it up.

Since the basis for computing the index was revised ten years ago, there has been a great change in the income and spending habits of the U.S. consumer, said Clague. The average family income has risen from $1,500 to nearly $3,000. As a result families now spend a smaller proportion of their incomes for food, a bigger share for recreation, medical care and automobiles. Clague was well aware 18 months ago that his measuring stick, compiled from prices of 200 items in 34 cities, was no longer as accurate as it should be. He started a fresh study of family spending habits.

When the Korean war started shooting prices up, Clague decided to speed up his schedule, especially since union contracts covering more than 1,000,000 workers in over 100 companies have tied wages directly to Clague’s cost of living index.

This week BLS field workers and economists are hard at work collecting figures on consumer buying in seven test cities to see which new items should be put in the index. Clague has already decided to add frozen foods, home permanents, television sets (one family in three in cities where TV is available now owns a set, says BLS). Soft drinks will count more in the statistical weighting because they are “now a part of national life.” More weight will be allowed for mechanical refrigeration, less for ice. The proportion for rent will be increased because of the fading of rent control. Among new items that may be added next year: beer and a toy doll.