Rep. Kevin Brady, chairman of the Congressional Joint Economic Committee (JEC) today introduced a new monthly economic index titled the “Working Family Stress Index”. It is designed to create a truer measure of stress on America’s working families based on wages and costs of food, fuel, health care and college.
The index is based on monthly data compiled by the federal government’s Bureau of Labor Statistics since 1997. The new index is being released along with a new JEC staff analysis entitled Measuring Working Family Stress in Relation to the Cost of Living: Constructing a Beta Version of a Working Family Stress Indexthat describes the methodology used to construct the index.
“While the Federal Reserve and other economists assure us inflation is low, their tools don’t tell the complete story. Rising costs of key items affecting working family budgets, along with years of inert paychecks, are the true source of rising stress on working families,” Brady said.
“The index measures the difference between rising prices for key items and the growth of working family pay. The higher the index, the higher the accumulated stress on working families,” Brady added.
“What it shows is that due to stagnant wages and prices on key family items outpacing paychecks, the true stress on America’s working families is close to where it was during the 2008 financial crisis. Working families are being left behind in this disappointing economic recovery”, says Brady.
Because the index takes a 15-year view, Brady hopes it will provide policy makers across the political spectrum useful information in formulating policies that help working Americans build better lives for their families.
“It is imperative that Congress and the President focus on implementing policies that will help working families by creating more jobs with higher pay”, saysBrady. “Our families aren’t asking for a handout, they just want an opportunity to struggle less every month to put food on the table, fill up their vehicle, educate their children and afford medical care.”
In October the Working Family Stress Index stood at 29.4 – not far from the record highs. Over the past year, the index has declined by 2.5, primarily reflecting recent declines in the price of gasoline. Gasoline prices declined by 3.0% in October and have declined by 5.0% over the past twelve months.
The index utilizes a special price index calculated for the JEC by staff at the Bureau of Labor Statistics (BLS) that is comprised of four items: (1) food at home, (2) gasoline, (3) college tuition and fees, and (medical care). For the earnings component the index utilizes an index of average weekly earnings of production and nonsupervisory employees on private sector payrolls. This earnings measure was chosen because it reflects earnings of working class Americans.
The construction of the Working Family Stress Index is described in detail in the Staff Analysis released today by Brady. The Staff Analysis is available on the JEC Chairman’s website at: jec.senate.gov/republicans.