CPI-U vs CPI-W: Difference and Comparison

The consumer Price Index (CPI) is a parameter the United States measures 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.

Key Takeaways

1. CPI-U measures inflation for all urban consumers, while CPI-W targets urban wage earners and clerical workers.
2. Social Security cost-of-living adjustments (COLAs) use the CPI-W as a benchmark, whereas CPI-U is more widely utilized for economic analysis.
3. CPI-U covers a broader population (approximately 93% of the US), while CPI-W represents about 29% of the US population.

CPI-U vs CPI-W

The difference between CPI-U and CPI-W is that the CPI-U index calculates the price difference experienced by urban consumers. In the United States, approximately 80% or more of the population is constituted by them. In contrast, 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 is the index that calculates the price difference among urban consumers. The BLS Department or the Bureau of Labor Statistics Department determined the index.

The monitoring of the index was first started in the year 1978, and since then, 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, labourers, etc., on the daily needs.

The categorization of the index focuses more on transportation, food, and clothing rather than the healthcare, medicine, recreational, etc., modes.

Comparison Table

Parameters of Comparison	CPI-U	CPI-W
What is it	Consumer Price Index for the urban consumer	Consumer Price Index for urban wager
Population	80% and more	37%
Effect	On a broader and large group of people	Subset of CPI-U
Weight	Goods and consumers	Transport, clothing, and food
Includes	Unemployed, self-employed, professionals, part-time, retired	Craft, 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 urban consumers over their day-to-day lives.

From the total population of the United States of America, urban consumers constitute approximately 80% of the people exposed under the Consumer Price Index of Urban Consumers.

As almost the entire population is covered under the respective index, thus the categorization of it is done on a broader and on larger group of perspectives.

The index’s main focus emphasises the goods, healthcare sector, medicines, house security, etc. The people coming under the respective index are unemployed, self-employed, part-time, retired, professional, 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 daily household products may provide the idea of inflation or deflation.

From the United States of America’s total population, approximately 37% of the people are exposed under the Consumer Price Index of Clerical workers and wagers.

Being a lower population under the index, it is considered the subset of urban consumers’ Consumer Price Index. 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, labourers, workers, daily wage earners, etc.

The minimum requirement for being eligible to be under the respective index is that the family’s sole earner 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 daily needs like food, transport, and clothing, unlike the recreational, medical, and housing sectors.

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 urban consumers, while comparatively, on the other hand, the CPI-W is the index that measures the difference in prices experienced by 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 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 labourers, clerical jobs, craft workers, sales workers, or service workers. 

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=

Last Updated : 13 July, 2023