Difference Between CPI-U and CPI-W

Consumer Price Index (CPI) is a parameter measured by the United States to calculate the price difference experienced by urban customers. The Bureau of Labor Statistics (BLS) is the department that looks into the matter of this index. CPI is measured for different reasons and purposes. And these different CPI indexes have been published by the department every month since the year 1919.

CPI-U vs CPI-W

The main difference between CPI-U and CPI-W is that the CPI-U index calculates the price difference experienced by the urban consumers, and in the United States, approximately 80% or more of the population is constituted by them while comparatively, on the other hand, the CPI-W index calculates the price difference experienced by the clerical workers and the wagers and approximately 37% of the population is covered by them.

CPI U and CPI W

CPI-U is the index that calculates the price difference among urban consumers. The index was determined by the BLS Department or the Bureau of Labor Statistics Department. The monitoring of the index was first started in the year 1978, and since then the approximately 80% of the population of the country has been monitored under the index.

CPI-W or the Consumer Price Index of clerical workers and wagers. The respective index notes down the expenses done by any daily wage earners, clerical workers, craft workers, laborers, etc., on the daily needs. The categorization of the index focuses more on the transportations, food, and clothing rather than the healthcare, medicine, recreational, etc., mode.

Comparison Table Between CPI-U and CPI-W

Parameters of ComparisonCPI-UCPI-W
What is itConsumer Price Index for the urban consumerConsumer Price Index for urban wager
Population80% and more37%
EffectOn a broader and large group of peopleSubset of CPI-U
WeightGoods and consumersTransport, clothing, and food
IncludesUnemployed, self-employed, professionals, part-time, retiredCraft, clerical, sales, laborers, workers

What is CPI-U?

CPI-U, or Consumer Price Index for urban consumers, was started by the Bureau of Labor Statistics (BLS) Department of the United States of America. The index provides a rough idea about the expenses on a daily basis done by the urban consumers over day to day lives.

From the total population of the United States of America, the urban consumers constitute approximately more than 80% of the people that are exposed under the index of Consumer Price Index of Urban Consumer. As almost the entire population is covered under the respective index, thus the categorization of it is done on a broader and on a larger group of perspectives.

The main focus of the index emphasizes more on the goods, healthcare sector, medicines, house security, etc. The people coming under the respective index are – unemployed, self-employed, part-time workers, retired, professional workers, etc.

What is CPI-W?

CPI-W or Consumer Price Index for clerical workers and wagers was started by the Bureau of Labor Statistics (BLS). The States decided that calculating the expenditure of people on the daily household products may provide the idea of inflation or deflation.

From the total population of the United States of America, approximately about 37% of the people are exposed under the index of Consumer Price Index of Clerical workers and wagers. Being lower population under the index, it is considered as the subset of the Consumer Price Index of urban consumers. The respective index was meant to calculate the cost benefits paid to social security.

The respective index is renewed and refurbished after every month by the BLS department. The people listed under the index are – Craftworkers, clerical workers, sales workers, laborers, workers, daily wage earners, etc. The minimum requirement of being eligible to be under the respective index the sole earner of the family must be working for 37 weeks or more.

Their main aim is to know the expenditure of a daily wage earner, and their main focus is on the daily needs like food, transport, clothing unlike, the recreational, medical, housing sector. The important factor under the index is that the individual working in the military or such institution is not considering a part of it.

 Main Differences Between CPI-U and CPI-W

  1. The CPI-U is the index for calculating the difference in price experienced by the urban consumers while comparatively, on the other hand, the CPI-W is the index that measures the difference in prices experienced by the urban wagers. 
  2. The population constituting the CPI-U is approximately about 80% and more while comparatively, on the other hand, the population constituting the CPI-W is approximately about 37% in total.
  3. The index of CPI-U categorizes the effects of price change, but the difference is that it focuses on the broader sense and is for large groups while comparatively, on the other hand, the index CPI-W also calculates the same purpose, but unlike CPI-U, it is said to be its subset.
  4. The CPI-U index prioritizes the use of goods and consumers as its basis, while comparatively, on the other hand, the CPI-W index prioritizes the food, transport, and clothing as the basis.
  5. The individuals working as unemployed, self-employed, retired, professional, or part-time workers are considered as eligible to be in the CPI-U index while comparatively, on the other hand, the individuals including or eligible to be under CPI-W are the ones who are laborers, clerical jobs, craft workers, sales workers, or service workers. 

Conclusion

To summarize the topic given above, this can be concluded that both indexes have the same purposes. The Bureau of Labor Statistics (or BLS) of the United States of America generates a report every month calculating the different experiences of the people living on purchasing the household items. The department has issued many index report ever since its establishment in 1919.

The reason behind measuring the price difference is the increase in frequent prices of household products during the time of World War 1 (WW1). Thus, the State decided to measure it to guess the approximate price or cost required by any labor or wager for living. There has been a keen eye over the measurement through continuous surveys, and the government eventually saw the different patterns of changes and later, by the 1970s, the specific index was introduced that is CPI-U and CPI-W.

References

  1. https://ecommons.cornell.edu/handle/1813/78118
  2. https://heinonline.org/HOL/LandingPage?handle=hein.journals/month131&div=36&id=&page=
  3. https://www.bls.gov/cpi/additional-resources/chained-cpi-introduction.pdf
  4. https://heinonline.org/HOL/LandingPage?handle=hein.journals/month117&div=54&id=&page=
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