Many children look forward to October for Halloween. Lots of Americans eagerly anticipate the month for the change in season. But retirees especially like October for another reason.
The Social Security Administration (SSA) plans to announce the 2023 cost-of-living adjustment (COLA) for Social Security recipients within the next few weeks. How big will your Social Security increase be? SSA doesn't know yet. It's now in the hands of this little-known government agency.
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Statistically speaking
Several federal agencies are household names. Millions of people are familiar with the Federal Bureau of Investigation (FBI) thanks to numerous TV shows and movies featuring the organization. Most Americans know all too well about the Internal Revenue Service (IRS) because they must pay taxes.
But you might not know about one federal agency that plays an important role in determining your annual Social Security increase. I'm referring to the U.S. Bureau of Labor Statistics (BLS).
The BLS, as its name indicates, is responsible for tracking statistics related to the U.S. workforce. This agency, which is part of the U.S. Department of Labor, measures a wide range of data related to labor market activity, consumer prices, productivity, and working conditions.
It's relatively small compared to many U.S. government agencies. The BLS employs around 2,400 people. Roughly half of them are economists or statisticians.
The BLS' job is strictly to report the facts and nothing but the facts. However, the small organization has a sense of humor about this mission. On its website, the BLS poses the old question, "Is the glass half empty or half full?" The agency's response: "At BLS we see an 8-ounce glass containing 4 ounces of liquid."
The small bureau's big day
What does the BLS have to do with your Social Security increase? The agency reports the key inflation data needed to calculate the annual COLA.
Every month, the BLS releases consumer price index (CPI) information for the previous month. The CPI for All Urban Consumers (CPI-U) typically receives the most attention in the press. It's the number that's usually provided as the U.S. inflation level.
However, the BLS also gives an update each month on another inflation metric called the CPI for Urban Wage Earners and Clerical Workers (CPI-W). And it's the number used to determine the Social Security increase.
The BLS will soon have what's arguably its biggest day of the year. The agency will announce CPI data on Oct. 13, 2022, including the CPI-W for September. This number is the only missing variable needed to calculate the average inflation level for the third quarter of this year. The difference between the average CPI-W in Q3 2022 and the average in the same quarter of 2021 will be used to set the Social Security COLA for 2023.
High expectations
The SSA hasn't officially given the specific date in October when it will announce the Social Security increase amount for next year. However, it won't take long to crunch the numbers once the BLS releases the September CPI-W data. Therefore, Oct. 13 is probably the big day that Social Security recipients anxiously await.
Expectations are high for this year's COLA. It's likely to be around 8.7%, based on the inflation data that's already available. But we won't know for sure until the BLS fulfills its critical role of reporting just the facts.
