Dateline: 'Washimore' By 1998, U.S. to fuse wide area for CPI

April 09, 1995|By Kim Clark | Kim Clark,Sun Staff Writer

MARTINSBURG, W.Va. -- Roger Barnhart prices the gourmet smoked turkeys in his supermarket's coolers by undercutting tony stores in Washington, D.C. But when it comes to pricing the smoked pig ears next to the turkeys, he considers locals' $6-an-hour jobs at the nearby Charlestown Racetrack.

One hundred miles away, economist and professional shopper Maria Antonakas drives from her Columbia home to buy her family's groceries in East Baltimore. Her research shows that Washington commuters inflate prices in Howard County, while the poor job prospects in Baltimore keep prices farther north lower.

Few people in this corner of West Virginia, where shoppers carefully check the price of canned hominy, consider themselves part of an economic community stretching to towns like Havre De Grace in Harford County and to Queen Anne's County across the Bay Bridge, where neighbors discuss the price of blue crabs.

But they all are connected economically by their proximity to and reliance on Washington -- at least according to the federal government.

And next week, the government is set to announce yet another link that will bind far-flung communities in Maryland, Virginia and West Virginia to the nation's capital.

The Bureau of Labor Statistics is preparing a new consumer price index (CPI) for the region.

Starting in 1998, it will replace its separate Baltimore and Washington consumer price indexes with one all-encompassing "Washimore" number for an area that sprawls over nearly 7,000 square miles from Culpeper County, Va., in the south to Harford County in the north.

Many economists and business people say the decision to eliminate the separate city indexes -- which have been published since 1914 -- reflects a slow spreading of Washington's economic influence throughout the region.

But, they warn, it may result in an almost useless number, since the three-state region is so vast, and its 4.3 million residents so diverse.

There are many pockets where Washington's inflationary influence hasn't been felt.

Nevertheless, the decision may be a partially self-fulfilling prophecy. Not only can the appearance of unity create its own reality, but by publishing one regional CPI, the federal government actually will help reduce differences in everything from wages to rents across the region.

Many businesses use the local CPI index, along with private wage surveys, to help decide how much of a cost of living raise to give employees, for example.

And many area renters have signed leases that peg increases to the local CPI.

Just by changing the statistic, the government will make some prices in Baltimore behave more like those in Washington, said Ben Frederick III, who manages commercial real estate around Baltimore.

Since Washington's inflation tends to be higher than Baltimore's, the new index will mean bigger rent increases for Mr. Frederick. "I'll make more," because his contracts call for automatic CPI-indexed raises, he said.

But others aren't as thrilled.

R. Bruce Campbell, who owns several medical office buildings and strip malls around Baltimore, said that while his rents will go up more, so will his costs. Some of his cleaning and elevator contracts, for example, are also pegged to the CPI, he said.

"There is a fairness issue," said Mr. Campbell, who predicted plenty of renegotiations once the new statistics are published.

Economist David Walker, who follows the Mid-Atlantic region for DRI-McGraw Hill in Lexington, Mass., questioned the new CPI's usefulness.

"It's too large of an expanse" to be a reliable indicator of the true inflation of either Baltimore or Washington, he said.

Mr. Walker, who sells his regional economic reports to businesses, doesn't plan to follow the government's lead because his clients prefer more city-specific information. Including data from Washington will tend to make places like Baltimore and West Virginia look more expensive than they really are, he said.

At the same time, it would make Washington look cheaper.

Ms. Antonakas, who oversees the four professional price-checkers who tally Baltimore's inflation each month, said she's of two minds about the decision.

When she's at home in Columbia, she feels part of a Washington-oriented community, she said.

But her many price-checking trips to areas north and east of her home have persuaded her that Baltimore has a separate economy.

The BLS shoppers, who visit several hundred stores a month from Harford to Frederick counties to check price movements on everything from automobiles to Valencia oranges, have shown that Baltimore's overall cost of living has lagged significantly behind Washington's in the last 13 years.

"There is a uniqueness to Baltimore" that will be harder to describe without a separate statistic, she fears.

L But BLS officials say they have little choice in the matter.

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