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Using the American Community Survey: Benefits and Challenges
the problem is a lack of subnational price indexes for specific items, such as housing value, rent, and different utilities or other housing costs. For income amounts, the problem is that incomes are not prices: income (in total and by component, such as wages or pension income) may increase faster (or slower) than inflation. A possibility to investigate in this context is to use estimation methods that are appropriate by type of income. For Social Security and Supplemental Security Income, it would be appropriate to use the applicable national CPI to which these payments are indexed by law. For property and self-employment income, it might be more appropriate to use an average interest rate, whereas, arguably, some types of income—specifically, public assistance and other retirement income—should not be inflated at all unless it is known that a jurisdiction has increased such payments. For wages, it could be possible to use changes at the county level in average quarterly wages for employees covered under state and federal unemployment insurance programs. These data, which are part of the BLS Quarterly Census of Employment and Wages, are released each quarter about 6–7 months after data collection.
It might be possible to develop simpler models to estimate latest-year amounts by using the published multiyear estimates. For example, by examining how well the trends in BLS county wage data estimate 1-year period income from the 5-year period estimates for large counties, a user might be able to develop a procedure for estimating latest-year incomes from the 5-year period estimates for small counties.
To determine how to produce the most helpful data on income, housing costs, and housing value, the Census Bureau should initiate a two-part discussion with users. The Census Bureau should first clearly illustrate to users the nature of the current inflation adjustment procedures. Then it should ascertain users’ needs for income and housing amount information, the resultant implications for what adjustment procedures can best serve most users, and what steps to take to assist users whose needs are not satisfied by the standard procedures. Finally, the Census Bureau should consider providing tables that reflect unadjusted dollar amounts whenever it provides adjusted amounts. So doing will make clearer to users the effects of inflation and enable them to determine if another kind of adjustment would better suit their purposes.
Recommendation 4-11: The Census Bureau should provide users with a full explanation of its inflation adjustment procedures and their effects on multiyear ACS estimates of income, housing costs, and housing value. It should consult with users about other kinds of income and housing amount adjustments they may need and conduct research on appropriate estimation methods (for example, methods to produce latest-year amounts from multiyear averages). It should consider pub-