By Jim Cline and Kate Kremer
In our last newsletter we discussed the most recent inflation report from CPI. It shows the All-Cities “W” index inflation had decelerated to 2.9% and the corresponding Seattle inflation index had dropped to 3.6 (down from 4.5% just in April). The less commonly relied upon Seattle “U” index was notch higher at 3.8%. Other West Coast indices were close in line with the All-Cities numbers.
BLS reports on national inflation monthly and other “regional” indices (such as Seattle) bi-monthly. What is it is that is more noteworthy about the “June” release? That’s the topic we will discuss today.
Cost of living trends are a significant factor used by parties in negotiations and arbitration. When the cost of living rises, your members hope that their wages will keep up. Of all the periodic indices we place particular importance on the June inflation report simply because the timing of the report makes it the once most used in negotiations and contracts.
This impact is especially true for interest arbitration eligible bargaining units. The statute sets July 1 as the technical open date for most interest arbitration negotiations. The mid-July release date for the June numbers makes it especially timely as contracts are ramping up and proposals are being prepared. While the national numbers are reported monthly, the regional numbers such as Seattle are bimonthly and the next bimonthly inflation report — the “September” numbers — are not released until mid-October. Reliance on these June numbers to define what the prevailing inflation conditions are is simply more practical and, therefore, is the most often used.
When negotiated agreements include a CPI index to determine our yearly wages, most often it is one of the June indices that are incorporated. That use of the June number then directly impacts the settlement trends for those comparable contracts you may be looking at.
In the next couple of issues, we’ll discuss how these developments may impact bargaining and what direction we see with the heavily relied upon but recently unpredictable Seattle index.
