9 Using the CPIU table on the website wwwblsgov look up the

9) Using the CPI-U table on the website www.bls.gov , look up the CPI-U index for April 2018 (all items). The CPI-U index for April 1990 was 128.9. If the starting salary of an engineer in April 1990 was $30,000, how much would that starting engineer likely make today?

Solution

The CPI-U index for April 2018 was 250.5. The CPI-U index for April 1990 was 128.9.

Therefore, the % change in the CPI-U index from April 1990 to April 2018 is (250.5 - 128.9)/128.9 * 100 = 121.6/128.9 * 100 = 0.9434 * 100 = 94.34%

Therefore, the salary of the engineer is expected to increase by 94.34% in the same period. So, the expected increase in the salary is = 94.34% * $30,000 = $28,302

So, the starting salary of the engineer is likely to be $30,000 + $28,302 = $58,302.