By Jim Cline and Kate Kremer
The “All-Cities” index is published monthly and the “Seattle” and other regional indices are published every other month but of all those reports, it is the “June” numbers that are the most watched for their potential impact on contract negotiations. While some CBAs look towards the inflation report for different months, the vast majority of contracts that specifically apply CPI use the June numbers because they come out in mid-July about the time most negotiations are launching.
We have been anticipating a higher than normal June number this time but the spike in inflation caught us by surprise, as it apparently did most economists. While we had been expecting June CPI numbers near 4% for Seattle and between 4.5 and 5% for the “All Cities” national number, the W index for both numbers exceeded 6%. (The less used “U” indices were a bit lower, in the mid 5s.
The annual CPI graph shows the progression that led to this unusually high number.
This chart shows these CPI indices alongside some other CPI indices.
Inflation is traditionally an important and at times conclusive factor in contract negotiations. The Washington Interest arbitration statute specifically identifies the cost of living as a relevant factor that arbitrators must consider. In economic terms, an employee’s “real wage” is considered the nominal wage they are paid as controlled by inflation. In other words, if the cost of living rises 6% but your wages only rise 3%, there’s a 3 point reduction in your wage.
This inflation report is one of a number of important recent developments that we expect to drive settlements higher. In our next issue, we’ll discuss the potential trajectory of inflation and how it may impact your current or upcoming negotiations.
For current and historic CPI data, follow the path to the Cline and Associates Premium Website. For those not having a Website subscription, find more information here about what’s included and how to subscribe. Wage and wage settlement reports across the State are also available on the premium website.
