CPI fails to account for the financial challenges middle- and working-class households face.
“ CPI consistently understates inflation, leading to erroneous cost of living adjustments for benefits, pensions and financial-aid programs. ”
Additionally, CPI tracks costs of medical procedures instead of actual premiums and out-of-pocket expenses. As a result, the CPI consistently understates inflation, leading to erroneous cost of living adjustments for benefits, pensions and financial aid programs. It’s important to adjust this correctly because this would change the payout for recipients. It would be a profound breach of good faith and fair dealing for Social Security to not adjust correctly and pay out less than it promised by hiding behind an inappropriate definitional sleight of hand.
This striking difference is not an isolated incident but rather a longstanding pattern. When comparing the total pension pay over the last 20 years, it becomes evident she lost more than $103,000 from 2001 to 2021 due to the CPI’s underestimation. There are many ways in which middle-class Americans could use $103,000, from a down payment on a house to securing college for the next generation, to just using a bit of it to actually enjoy life and save the rest.
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