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December 1998, Vol. 121, No. 12

Labor month in review

The December Review
Marking to market more often
Fewer injuries and illnesses at work

The December Review

How much do we have to work and what do we buy with what we earn at work are two important questions we ask as economic actors. How do we best measure such things as the length of the workweek or the prices of energy are important questions we ask as economic statisticians. In this month’s Review, we wear both masks.

In our role as consumers, Geoffrey D. Paulin details the way our expenditures on food at home have changed in response to changing tastes, consumer characteristics, and distribution channels between 1980 and 1992. Paulin combines data from the BLS Consumer Expenditure Survey and the Department of Agriculture Diet and Health Knowledge Survey to analyze the impact of nutritional awareness on the consumption patterns of specific demographic groups.

In our role as statisticians, Katherine A. Klemmer and Joseph L. Kelley analyze the validity of the Bureau’s producer price indexes for the price-volatile group of energy commodities at various stages of processing. Their comparisons of trends in the energy PPIs and trends in alternative energy price measures failed to reject the null hypothesis that the trends in the series were essentially the same.

Jerry A. Jacobs lets us play both roles at once. As workers, we are interested in the hours per week we work; as economic statisticians, we are interested in what method of measurement best captures the workweek. Jacobs finds that the self-reported hours measures, such as those BLS uses in the Current Population Survey, are reasonably reliable indicators of the broad range of time workers are employed.

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Marking to market more often

The Bureau of Labor Statistics (BLS) will update the consumption expenditure weights in the Consumer Price Index for all Urban Consumers (CPI-U) and the CPI for Urban Wage Earners and Clerical Workers (CPI-W) to the 1999–2000 period to calculate the indexes for January 2002. CPI expenditure weights will be updated at 2-year intervals subsequent to the 2002 updating. Thus, for example, CPI expenditure weights will be updated to the 2001–02 period effective with release of CPI data for January 2004. As a result of this change, expenditure weight data will be, on average, "2 years old" when introduced into the CPI, and 4 years old when replaced. By contrast, the 1993–95 weights in use now were, on average, 3½ years old when they were first used in the indexes for January 1998, and they replaced weights that were about 15 years old.

In June 1997, in a paper prepared for the Chairman of the Joint Economic Committee, BLS said that it was considering a more frequent schedule of updates to follow the planned January 1998 update. In an August 1997 response to a General Accounting Office report, BLS indicated that more frequent updates would be preferable, that the future schedule was under review, and that the decision would be based on a consideration of what frequency would yield the most accurate CPI and best support the many uses of the index. The review is now complete and is the basis for the policy announced above.

In the BLS view, the goal in employing more current expenditure weights is to make the CPI reflect, as much as possible, the inflation currently experienced by consumers. More specifically, the use of current weights will help to ensure that the relative importance of CPI item categories, such as food away from home, college tuition, or medical care services more accurately reflects how consumers are allocating their spending. Furthermore, BLS does not view the choice of update frequency as a means of addressing the problem sometimes referred to as "upper-level substitution bias" in the CPI. Although it has been argued that using more current, more frequently updated, weights would lower the index’s rate of growth by reflecting consumer response to changes in the relative prices, there is little evidence of any systematic link between the CPI’s growth rate and the age of its expenditure weights. It is more likely, based on the Bureau’s research, that incorporating new weights more frequently will have a small upward effect on the index in some years and a small downward effect in other years.

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Fewer injuries and illness at work

A total of 6.1 million injuries and illnesses were reported in private industry workplaces during 1997, resulting in a rate of 7.1 cases per 100 equivalent full-time workers. The rate for 1997 was the lowest since BLS began reporting this information in the early 1970s. The number of cases was about the same as in 1996, although hours worked increased 3 percent. As a result, the case rate declined.

The incidence rate for injuries and illnesses was 8.5 cases in 1993, but has fallen each year since then. The decline in the case rate was reflected in both the goods-producing and service-producing industries. The injury and illness incidence rate for goods-producing industries was 9.9 cases per 100 full-time workers in 1997, down from 11.9 in 1993. The service-producing sector reported an incidence rate of 5.9 cases per 100 workers in 1997, down from 7.1 percent 4 years earlier. For additional information, see news release USDL 98–494, Workplace Injuries and Illnesses in 1997.

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Communications regarding the Monthly Labor Review may be sent to the Editor-in-Chief at 2 Massachusetts Avenue NE, Room 2850, Washington, DC, 20212, or faxed to (202) 691–5899.

News releases discussed above are available at: http://www.bls.gov/bls/newsrels.htm

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