Bureau of Labor Statistics Commissioner Janet L. Norwood denied yesterday that politics influenced her controversial decision to change the computation of the consumer price index--a revision that could reduce cost-of-living increases and Social Security benefits for many American workers and retirees.
But Norwood's statement was challenged by United Auto Workers union economist Lydia Fischer, who said the proposed change "is a statistical sleight of hand to make inflation appear lower than it really is."
The conflict stems from Norwood's announcement Oct. 27 that the BLS will use a "rental equivalence" measure--actual rents and what owner-occupied homes would rent for--in computing housing costs. Those costs now are computed according to home purchase prices and interest rates paid by homebuyers in a given month.
Under the old system, housing costs accounted for 25 percent of the CPI. The new method would reduce the housing share of the index to 14 percent, BLS officials said.
The exchange between Norwood and Fischer came before the House subcommittee on labor-management relations, which held hearings yesterday on the potential effects of budget cuts on the BLS--the Labor Department agency responsible for compiling statistics on employment and unemployment, prices, wages, productivity rates and other key economic indicators.
The budget discussion also produced disagreement. Norwood said her agency has been forced to make "difficult choices among priorities and needs" to comply with President Reagan's request for an additional 12 percent, across-the-board federal budget cut for fiscal 1982. But she said that the BLS could live with the difference.
Fischer called the 12 percent cut "unacceptable and shortsighted" and said it would undermine statistical programs "important to labor." She also said the BLS' push for the CPI changes, scheduled to take effect in 1983 and 1985, is "unconscionable" in "the current budgetary climate." The money could be better spent on "useful and well-established programs that are being pushed down the drain" by federal austerity, she said.
Norwood said the CPI changes were influenced solely by professional judgments and changes in the financial markets. "New types of mortgage instruments involving variable rates, shorter financing terms, and other special arrangements have developed so that the standard, long-term, fixed-rate mortgage in the CPI no longer seems representative of the mortgage market," she said.