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Does inflation affect a highly paid worker the same as an average worker? This feels nuanced. If you consider housing, perhaps it does. BLS/CPI inflation doesn’

Does inflation affect a highly paid worker the same as an average worker? This feels nuanced. If you consider housing, perhaps it does. BLS/CPI inflation doesn’t include that right? Somebody making $100k may be minimally affected by rising food and goods costs. Somebody making $50k may be very affected. A 1% raise for $100k worker is $1000 which may help food cost. A 2% raise for $50k worker would do the same. Are these hypothetical affects included when thinking about inflation?

mariojv 4y ago
CPI inflation includes housing in the form of rent and owner's imputed rent, see question 10 here: https://www.bls.gov/cpi/questions-and-answers.htm https://www.bls.gov/cpi/questions-and-answers.htm > The CPI represents all goods and services purchased for consumption by the reference population (U or W). BLS has classified all expenditure items into more than 200 categories, arranged into eight major groups (food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services). Included within these major groups are various government-charged user fees, such as water and sewerage charges, auto registration fees, and vehicle tolls. This outlines the breakdown: https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.htm https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an... Owner imputed rent is basically what an owner thinks they would receive if they rented out their primary residence. IMO it's a flawed metric, but it is a necessary adjustment upward from current cost of ownership since most owners are paying mortgages on home prices from when they bought, so asking them what they currently pay does not accurately reflect the cost of someone newly moving into a housing situation. To your broader point though, yes, higher earners will be less impacted by inflation in certain areas because there's only so many dollars you can spend on food per year. Would be interesting to see a statistical breakdown of this.

mariojv 4y ago

CPI inflation includes housing in the form of rent and owner's imputed rent, see question 10 here: https://www.bls.gov/cpi/questions-and-answers.htm https://www.bls.gov/cpi/questions-and-answers.htm > The CPI represents all goods and services purchased for consumption by the reference population (U or W). BLS has classified all expenditure items into more than 200 categories, arranged into eight major groups (food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services). Included within these major groups are various government-charged user fees, such as water and sewerage charges, auto registration fees, and vehicle tolls. This outlines the breakdown: https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.htm https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an... Owner imputed rent is basically what an owner thinks they would receive if they rented out their primary residence. IMO it's a flawed metric, but it is a necessary adjustment upward from current cost of ownership since most owners are paying mortgages on home prices from when they bought, so asking them what they currently pay does not accurately reflect the cost of someone newly moving into a housing situation. To your broader point though, yes, higher earners will be less impacted by inflation in certain areas because there's only so many dollars you can spend on food per year. Would be interesting to see a statistical breakdown of this.