Kevin Bemel ·
The CPI is Irrelevant
About the source date and illustrations
The date is transcribed from Posts – Sunday 2023. The original publication date has not been independently verified. Historical figures, links, and event announcements are preserved as written.
Some illustrations from the source document are not reproduced here.
The cover photograph is illustrative. Photo: Pixabay on Pexels · CC0.
4-½ minutes to read.
Job prospects and wages for teenagers are strong this summer. Anecdotal evidence of huge increases in hourly rates exists for fun jobs. Before we get into the details, let’s dive into inflation.
Consumer Price Index – Urban vs. Rural
Inflation as measured by the Consumer Price Index (CPI) increased 0.1% in May 2023. For the 12-month period from June 2022 to May 2023, it increased 4%. This seems low, doesn’t it? So why are you feeling like it’s more expensive to live? The devil is in the details.
The CPI usually reported by the media is for All Urban Consumers (CPI-U), which covers 93% of the U.S. population. According to the Federal Reserve Bank of New York, inflation was as much as 2% higher in rural America between mid 2020 and the end of 2022 and only dropped below the level of urban areas in late 2022.
Source illustration not reproduced.
If you live in the 7% of America not covered by the CPI-U, it’s not taking your situation into account. Why pay attention to it?
What Do You Buy?
The CPI-U is based on the purchase of “a basket of good,” meaning the impact of goods and services is based on a typical percentage of monthly expenditures. For May 2023, major categories break down as follows:
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If your spending allocations differ, the way inflation affects you will also be different. In urban southern California, where shelter typically makes up more than 35% of spending, higher prices in this category will cause a bigger increase in the cost of living unless they are offset by a drop in prices in the other categories.
This makes the issue of inflation complicated and opaque. Not only do our spending patterns differ from those used to calculate the CPI, but how prices also change varies from region to region and city to city. Like with the unemployment rate, your experience will almost surely be different from the CPI, which is essentially a national average.
If you want to get a better idea of how inflation impacts you and your family, download the monthly Consumer Price Index News Release from the Bureau of Labor Statistics (BLS) website: https://www.bls.gov/cpi/news.htm. Then scroll down to Table 2 and look at the percentage changes of the detailed categories that make up most of your spending. It’s more work than reading the CPI-U, but at least you’ll have an idea of what’s really going on.
Maybe someday someone will have a website feature that calculates a personalized CPI. You can try the one at Candace Shira Associates, LLC, though I didn’t find it to be particularly accurate.
If your cost for groceries, gas, clothes, rent, health care, or insurance is going up faster than your income, then inflation is eroding your standard of living. It’s irrelevant how high or low the CPI is.
Carpe Officium
Because of the shortage of workers, employers are hoping teenagers will fill the gap this summer.
According to The Wall Street Journal, with 10.1 million open jobs and only 5.7 million adult job-hunters, businesses are looking for teens to fill the 2 million openings in entertainment, food service, and retail. The downside: job postings for internships are about 15% lower than last year.
The percentage of people ages 16-19 participating in the labor force has been increasing since about 2011. This summer will be the highest since 2009. Still, at 37%, the rate now is less than two-thirds of the peak teen labor force participation rate of 59.3% in 1978.
Wages for teens appear to be increasing. Jobs scooping ice cream and teaching swimming pay $15 to $20 per hour and more, representing increases of 25% to 30% from last year. Over two summer months, a teen could make $1200 to $1600 working just 10 hours a week.
Given the high demand for teenage employees and the relatively low number in the labor force, times are excellent for your teen to get real world experience this summer.
Where are you on your professional and financial journey? Have you set your goals?
How can I help you? Call, text, or email me.
Courage at all times,
Kevin
(310) 994-6385
P.S. Don’t miss this week’s episodes of The WAY to WOW Shows:
Monday, June 19, 10:00 a.m. PT / 1:00 p.m. ET – Trusts & Estate Weekly with guests Matt & Kimmy Schimek, https://www.eventbrite.com/e/633479212377
Tuesday, June 20, 11:00 a.m. PT / 2:00 p.m. ET – Business Lessons from the Military,
https://www.eventbrite.com/e/633485571397
Wednesday, June 21, 12:30 p.m. PT / 3:30 p.m. ET – People Making Money with guest Jeff Brown,