There is no cost-of-living index provided by the US government; it uses the consumer price index to determine living costs of the general population. The CPI is the data accumulated over time about what the urban consumers pay for a basket of goods and services. It ruminates on the prices paid by the urban consumers for items like insurance, housing, gas, and food. The Bureau of Labor Statistics uses a geometrical mean formula to calculate it in the basic indexes. This method of calculation isn’t comprehensive as it does not take into consideration the consumer substitution for an item in the index.
To help you understand, if one of the items is beef and its price rises, the consumers might substitute it for chicken. This consumer substitution is unaccounted for when calculating the consumer price index. It is difficult to take into account the lifestyle changes, pricing, and consumer preferences; hence, the Bureau of Labor Statistics takes a survey of the number of families cost-of-living under urban conditions to calculate the CPI, which in turn, decides the raise that you get.
The Bureau of Labor Statistics issues an occupational outlook handbook, which provides information about the education required for a particular job, the earnings, and the job prospects. An employer uses this handbook as a road map to determine the raise in the US economy. Over the years, it has witnessed an average growth of 3.2 to 3.9%. The government decides once a year to raise its percentage for the social security check, and it has gone up considerably over the past 25 years.
The Social Security Administration recently announced a 1.5% rise in social security checks for retirees for the year 2014. The increase in 2013 was by 1.7% to the social security benefits. In 2013, due to the economic uncertainty, the raise was not great for many industries, but whatever increment the employees got was more than welcome under the prevalent market conditions.
- The New York State Teachers’ Retirement System (NYSTRS) has announced that the cost-of-living adjustment (COLA) for 2014 – 2015 will remain at the current 1.0%, effective from September 2014.
- The healthcare industry has predicted that no substantial raises will be given out for the year 2014.
Some health establishments in these times of credit crunches have indicated that there will be no increase in the existing cost-of-living that they offer to their employees. If you are thinking about asking for a pay raise from your boss, better be equipped with industry-specific data from the BLS that predicts the occupational outlook of your industry.