...Chapter 24 Measuring the Cost of Living Introduction 1931 – Year of Great Depression in the USA. But in spite of this fact some people contrived to earn $80 000, it was famous baseball player Babe Ruth. Even the President Herberd Hoover had a lesser salary of $75 000. When Ruth was asked if he thought it was right that his salary was higher than President’s he replied that he had a better year. Year of 2007 describes a different picture. The average baseball player gets paid $4.8 million. We consider the fact that the cost of living, products and services has grown in recent decades. But it does not give us any explanation if Babe Ruth had a better standard of living than the average baseball player now, because prices for goods and services were significantly lower than nowadays. The quantity of produced goods and services within the state shows the GDP. But how to measure the total cost of living? To answer this question we need to find out how to turn dollar into consumer price index (a relevant unit which measures the overall cost of goods and services purchased by a customer) to be able to compare cost of living over the time. Inflation – situation when total cost of goods and services increases. In this way expenditures of the average family increase in order to maintain the same standard of living. Inflation rate – changes in price level from the earlier terms in percentages. The better way to measure the inflation rate is to use the CPI (consumer price index)...
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...calculation is used to calculate Cost of Living Index (CoLI). Index Number: An Index number is a single figure that shows how the whole set of related variables has changed over time or from one place to another. Some commonly used indices are –Consumer Price index, producer price index, Stock market indices etc. In particular, a price index reflects the overall change in a set of prices paid by a consumer or a producer, and is conventionally known as a Cost-of-Living index or Producer's Price Index as the case may be. Price Index Numbers can be classified as simple price index number (mainly for one commodity) or composite index number (consisting of more than one commodity). Calculation of Composite price index is carried out by two methods :- 1. Un-weighted aggregative method (Only prices of multiple commodities) 2. Weighted Aggregative method (Prices and Quantities of multiple commodities). For calculation of CoLI which considers multiple commodities weighted aggregative method is used. Three universally accepted price indices which depict the Cost of Living are :- 1. Laspeyres Price index : This is a fixed basket weighted price index calculated using quantity weights from a historical period. This has an inherent upward bias since it does not consider the substitution commodities whose prices have increased in turn the quantity is substituted by a lesser priced commodity. Hence this acts as an upper bound on cost of Living. 2. Paasche Price index:...
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... it is essentially like stepping onto a car dealer’s lot. They immediately start trying to sell the military to the potential recruit, informing them of all the pay and benefits that come along with being in the Armed Forces. One of those benefits is a steady pay raise each year to account for the increase in the cost-of-living. According to the Social Security Administration, the cost of living for the past three years has increased by 1.5%, 1.7%, and 3.6% for the years 2013, 2012, and 2011 respectively (Cost-of-Living Adjustments, n.d.). In the past, Congress has taken that increase in the cost-of-living into account and increased military pay accordingly. The military pay increases for the past three years were 1.7%, 1.6%, 1.4% for the years 2013, 2012, and 2011 respectively according to Navy CyberSpace (U.S Military Basic Pay History, 2014). So, with the exception of 2011 where the pay increase was over 2% less than the cost-of-living increase, the pay increases and cost-of-living increases have been fairly similar. For any possible recruit thinking about the long term, knowing that they will get a pay raise each year to help offset the increase in living costs is appealing. According to Military.com, more than 180,000 people enlist in the Armed Forces each year (10 Steps to Joining...
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...Consumer Price Index EC 601 – Fall 2010 December 3, 2010 Consumer Price Index (CPI) According to Mankiw the Consumer Price Index is a measure of the overall cost of the goods and services bought by a typical consumer. The Department of Labor’s subordinate branch the Bureau of Labor who is in charge of providing the Consumer Price Index of states that the Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a “market basket” of consumer goods and services. Some background into how the Consumer Price Index came about. The Consumer Price Index was initiated during World War I, when rapid increases in prices, particularly in shipbuilding centers, made an index essential for calculating cost-of-living adjustments in wages ("United states consumer," n.d.). To provide appropriate weighting patterns for the index, so that it would reflect the relative importance of goods and services purchased in 92 industrial centers in 1917-1919("United states consumer," n.d.). Periodic collections of prices were started, and, in 1919, the Bureau of Labor Statistics began publication of separate indexes for 32 cities ("United states consumer," n.d.). Regular publication of a national index, the U.S. city average began in 1921, and indexes were estimated back to 1913 using records of food prices ("United states consumer," n.d.). Because people's buying habits had changed substantially, a new study was made covering expenditures...
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...Total Rewards System Proposal: Managing a total rewards program Create a brief overview of the company requirements for a total rewards system. Herizon is the largest telecommunications and broadband companies in the United States. We employ 20,000 employees in 17 different countries. We have a very diverse workforce with 2,000 management-level individuals who speak a variety of languages. We at Herizon believe having the right talent, at the right cost is what keeps our company striving. Our total rewards program delivers values that attract, retain and engage a mixture of talent across the globe while maintain a solid value for cost. As a leading telecommunications company we take pride in not only serving our customers but, our employees too. This is why we take great pride in our total rewards program. We want to make sure that we attract the best to work for our company, by offering the best. Our total rewards system is geared towards all of our employees. We have structured a program that will meet the needs of everyone, our total rewards program offers diversity. We have developed a plan that will offer great compensation, along with career development, retirement planning, profit sharing, and work life balance. We want our employees to know that we are a one stop shop. Our total rewards program is geared to keep our employees and to grow them within our organization. We care about your future and we take pride in knowing that our people are taken care...
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...Panamanian Possibilities If you find yourself ready to escape the high cost of living in a country or city that is only getting more expensive by the month, you would not be alone. Cities all across North America are seeing the middle class being pushed out or into poverty. The good news is you have a few choices. You can make it big in business, win the sweepstakes, inherit a ton of money, find buried treasure or move to another country. More and more people are looking at taking the latter option and moving outside their native land. Weighing in are big factors like less financial stress and more carefree living. It's important to ask yourself if staying where you are is worth the stress of living month to month on a fixed income...
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...CPI, consumer price index, is used to measure the cost of living or what amounts to the same thing. CPI also measures the change in the amount of money that people need to spend to achieve given standard of living. The CPI is not a perfect measure of cost of living for two reasons. CPI does not measure all the changes in the cost of living. The cost of living rises in a certain product, but only the price of the product increases the CPI and not the quantity. The reason CPI does not calculate the quantity because the market basket is fixed. So part of the increasing in spending does not show up as an increase in CPI. Certain parts of the cost of living that are measured by the CPI is not always measured accurately. The reason for that...
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...From, Cost of Living Allowances (COLA) to Employee Incentives . . . What Have You Done For Me Lately? L`Jada Storm Parker MHR 6751 Labor Relations and Collective Bargaining Abstract The cost of living allowances (COLA), was a portion of benefits, that was at one time, a reactions, to the action of inflation that all U.S. employees felt the impact of, however looked forward to seeing on their pay check stubs, and as part of a benefit to subsidize for the lack of pay raises, as the economy yearly increased on its services and goods to the public. The term cost of living allowances was a yearly incentive to all who were employed, being that prices of all services and goods increased year after year, however the employee paycheck failed to keep up with the rising cost of increased to live. Employers began to become a bit more creative in assisting employees with various offset incentives that were pleasing to employees as the COLA began to phase out. More attractive to the employee was the opportunity to be compensated more often than once a year with an ineffective form of benefit as COLA. In all actually, the COLA was a contradiction to its name and purpose. Cost of living payouts were not equally proportioned with the Cost of living increase. As a result employees began to question the employers with “What have you done for me lately?” As I began to ponder the actions and reactions to the payments of the cost of living allowances (COLA), when compared...
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...many details below are a few key points that will help that will help to reveal the flaws and deceptions regarding Boskin’s determination. Wrong Market Basket The BLS conducts a survey every ten years on consumer behavior in order to set up a weighted “market basket of goods and services” that is supposed to represent outlays of the average citizen and is adjusted for any changes they find in lifestyle. These adjustments only consider two lifestyles the CPI-W which represents living conditions for lower middle class and poor urban household getting their income from wages and salaries as clerical non-executive workers, and the CPI-U which represents non-wealthy urban consumers inclusive of wage earners, salaried workers, self-employed, and the unemployed. The current CPI-W does not paint an accurate picture of the standard of livings for the poorer classes and is actually the opposite as these inner cities crime rates have gone up causing these areas to deteriorate. As the CPI-U only tracks living patterns of the lower eighty percent of the population it leaves out over fifty percent of national...
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...THE LIVING WAGE AND ITS EFFECT ON THE ECONOMY INTRODUCTION The topic of our study investigates the living wage and its effect on the economy. A survey will be distributed asking questions about wages, cost of living, and making ends meet. Our conclusions and recommendations on the topic of living wages will result from this survey. BACKGROUND The definition of living wage is “a term used to describe the minimum hourly wage necessary for a person to achieve some specific standard of living. This means a person working forty hours a week, ”should be able to afford housing, food, utilities, transportation, health care and recreation” at a basic level. (Wikipedia.org). Currently, a living wage is set by local municipalities based on a local cost of living assessment, and applies only to government employees and/or contractors. This is different from minimum wage, which is set by law through the Federal government. The federal minimum wage is the minimum amount that a worker can be paid an hour and this law applies to nearly all workers. In Michigan, the minimum wage is currently $7.40 an hour. Minimum wage does not always meet the requirements of a living wage. (Wikipedia.org). For example, in 2008, East Pointe, MI paid its employees a living wage of $10.40/hr , while Detroit, MI paid its employees and contractors $8.25/hr, both with health benefits in comparison to $7.40/hr Federal minimum wage.(laborstudies.wayne.edu/ According to the Economic Policy Institute...
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...variety of low-, moderate- and high-cost locations. Although private sector pay often reflects the local cost-of-living, military basic pay tables do not vary based on location. To help offset the effects of higher cost areas, military servicemembers may be eligible for a Cost-of-Living Allowance (COLA). COLA is designed to compensate As a servicemember, you can expect to be stationed virtually anywhere in the country. During your career, you are likely to be assigned to a variety of low-, moderate- and high-cost locations. Although private sector pay often reflects the local cost-of-living, military basic pay tables do not vary based on location. To help offset the effects of higher cost areas, military servicemembers may be eligible for a Cost-of-Living Allowance (COLA). COLA is designed to compensate As a servicemember, you can expect to be stationed virtually anywhere in the country. During your career, you are likely to be assigned to a variety of low-, moderate- and high-cost locations. Although private sector pay often reflects the local cost-of-living, military basic pay tables do not vary based on location. To help offset the effects of higher cost areas, military servicemembers may be eligible for a Cost-of-Living Allowance (COLA). COLA is designed to compensate As a servicemember, you can expect to be stationed virtually anywhere in the country. During your career, you are likely to be assigned to a variety of low-, moderate- and high-cost locations. Although private sector...
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...Living in Hampton VA. Differs from Living in Newsoms, VA. By Christopher G. Evans Professor Diana Martin English 93-O1W 09 March 2013 OUTLINE Thesis: Living in Hampton, VA. Differs from living in Newsoms, VA. in environment, people, and cost of living. I. First, they differ in environment. A. Hampton 1. Variety of structure 2. Scenery 3. Atmosphere B. Newsoms 1. Variety of structures 2. Scenery 3. Atmosphere C. Conclusion sentence. II. The second comparison is the people A. Hampton 1. Occupations, recreation and leisure 2. General characteristics B. Newsoms 1. Occupations, recreation and leisure 2. General characteristics C. 1. Conclusion sentence. III. The final comparison is the cost of living A. Hampton B. Newsoms C. Conclusion sentence. EVANS 1 Living in Hampton, VA. Differs from Living in Newsoms, VA. in environment, People, and Cost of Living. ...
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...calculation is used to calculate Cost of Living Index (CLI). What methods of Index Number calculation is used to calculate Cost of Living Index (CLI). ------------------------------------------------------------------------------------------------------------------------------------ Cost of Living Index is a theoretical price index ,or general price index, showing the difference between the living cost between cities. The cost of living for the base city is expressed as 100 , The cost of living in the destination is then indexed against this number .The major cities in India are having cost of living index below the reference cities ,like Delhi having 63 ,Bangalore 62 and Kolkata having 42 in the list. The interpretation is like ,if a city is having CLI as 120 it is 20% more expensive than the base city. So ,on a broader note CLI gives a picture as to how costly a city is compared to other cities. Items contributing to consumer price index are generally: * Food * Clothing * Fuel and Lighting * Housing * Miscellaneous. The Cost of living is indexed because : * CLI numbers are used for adjustment of dearness allowance to maintain the same standard of living. * It helps in framing suitable policies . * It also reveals trends and tendencies . * The numbers are useful in deflating. * Its helps in measuring purchasing power of money. The consumer price index (CPI) is the primary measure of the cost of living. Now to compute the CPI we...
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... alterations are necessary to keep patient's healthier, safer, and living longer than ever. New policies are essential to making these changes possible, but although they are generally beneficial to the patients, sometimes it may increase stress on the facility that must adhere to these policies. This is the case when it comes to small, privately run senior care facilities. Such a policy impacts these businesses, including the nurses working for the facility, greatly, due to the increasing roles and responsibilities on both parts in caring for those who are chairfast. Overall though, the policy does increase clientele for the facilities, and improve client satisfaction. On October of 2013, the chairfast...
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...Comparative Essay: Country or City Living Try to picture in your mind the perfect place to live. Did you visualize living in a fast paced or laid back place? How about a place where you know and have a relationship with your neighbors? How about having the basic conveniences and amenities close by? By thinking on these questions you have categorized your choices into two categories: country or city living. Which would you choose? Many believe that city living has more benefits than country living, however, there are some that believe that country living is a real life dream. In order to make a firm decision, a comparison between the two types of living should be conducted as living in either location has both advantages and disadvantages. Some of the similar factors to consider for living in the country or living in the city are the routine, the people’s characteristics, and the life conditions. On the other hand, some of the differences to consider in living in the country compared to living in the city are the cost of living, the relationship with neighbors the basic conveniences and luxury amenities. Living in the country and living in the city share some similarities such as a routine, the people’s characteristics, and life conditions. In living in either place, a routine is developed that usually revolves around the work life. For persons in the city, they normally wake up very early at the same time every morning for work and return home in the later afternoon...
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