DMI Blog

Corinne Ramey

The Christmas Price Index, or the Economics of the Partridge in a Pear Tree

As you shop for your true love this holiday season, will you be buying two turtle doves, twelve drummers drumming, or eight maids-a-milking? What about that ever elusive partridge in a pear tree? If you're like most Americans, your holiday purchases aren't likely to include any of the items in the "Twelve Days of Christmas" song, unless your gift list this year includes five golden rings.

However, if your pocketbook feels squeezed and you're dreaming of after-Christmas sales, maybe it's time to take a look at the CPI. No, not the Consumer Price Index, but the Christmas Price Index. The Christmas Price Index, according to PNC Wealth Management, is "an index of the current costs of one set of each of the gifts given by the True Love to the singer of the song 'The Twelve Days of Christmas'." This tongue-in-cheek index tends to mirror the U.S. Bureau of Labor Statistics' Consumer Price Index fairly closely; in 2007, the Consumer Price Index has increased by 3.5% so far and the Christmas Price Index increased by 3.1%. The CPI puts the total cost of the twelve gifts at $19,507 this year. Although there have been minor discrepancies between the two CPI's -- the Christmas index got hit a lot harder by Avian flu than the Consumer index, for example -- the two CPIs have tended to follow each other fairly closely.

So what does this mean for your Christmas shopping, and more generally for the middle class? Why should you even bother thinking about the price of three French hens or seven swans-a-swimming? It turns out that the CPI (yes, the Christmas one) has a lot to say about the economy at large.

Take those eight maids-a-milking, for starters. This was a big year for the maids-a-milking, as they received their first pay raise since 1997. In the CPI the maids receive minimum wage, which increased from $5.15 to $5.85 this past summer, and will increase to $7.25 in 2009. Jim Dunigan, managing executive of investment for PNC Wealth Management, said, "The good news is, if you're a maids a-milking, they will also see an increase in 2008 and 2009." If the maids lived in Maryland, though, they'd be making even more. As DMI's Year in Review says,

"The law joins more than 120 living wage laws in effect in cities and counties across the nation. The new law applies only to government contractors and subcontractors and requires them to pay a “living wage” of $11.30 to their employees in urban areas and $8.50 to employees in rural areas, where the cost of living is lower. The wage levels were calculated based on what it costs for a family of four to achieve self-sufficiency. In addition to reducing poverty, the law is projected to benefit business by increasing productivity and reducing employee turnover."

If by chance the maids-a-milking have been facing employment discrimination, they may also benefit from the Lilly Ledbetter Fair Pay Act. The Act, an anti-discrimination law which clarifies when discriminatory practices have to occur to fall under the category of unlawful employment practices, came about when Lilly Ledbetter sued her former employer, Goodyear Tire Company, for having been paid hundreds of dollars less than male colleagues for years. According to the Year in Review, "The Court ruled that she had no recourse within the law because she failed to register her complaint within 180 days of her first paycheck." Luckily for Ledbetter, the lost lawsuit resulted in the new anti-discrimination law.

The maids aren't the only laborers in the CPI. The educated performers in the index, like the ten lords a-leaping and the 11 pipers piping, saw a cost increase as well. These higher wages are lucky for the lords and pipers, who may have large student loans to pay off. If the lords and pipers lived in the Maine, though, they could have benefited from Opportunity Maine, an innovative program that offers income tax credits to students who graduate from college in the state and then continue to live in Maine. The initiative works to prevent "brain drain" from the state while helping students to pay off their student loans. The Year in Review says, "Supporters predict that the long-term investment in a skilled workforce will eventually pay for itself as higher paying jobs for educated workers are generated and retained in the state." It seems possible we may see more Maine-educated drummers drumming and ladies dancing remaining in that state.

The five golden rings were also one of the reasons for the rising CPI this year. “The cost of the Gold Rings in this year’s Christmas Price Index reflects the general trend of increasing commodity prices in the Consumer Price Index, including gold,” said Dunigan. “In addition, increased fears about inflation and the value of the dollar may have led investors to turn to gold as a safer place to invest their money.” The price of the golden rings increased 21.5% over 2006 prices, to $395.

Commodity prices also increased this year, as shown by the increase in price for the six geese-a-laying. Increases in commodities such as food (whether you prefer six geese a-laying, three French hens, or just a partridge in a pear tree is up to you) added to the squeeze already felt by an American middle class struggling with the subprime mortgage crisis and rising health care costs. Although the government had a chance at reducing health care costs with the State Children's Health Insurance Bill, Bush vetoed the bill -- twice. So much for those 4 million uninsured children that could have actually received health coverage.

Overall, the CPI shows that although the cost of Christmas is rising a bit, it's certainly in line with the rest of the economy, which was effected by its share of good policies and bad policies as well. So things look good for Christmas this year, whether or not a partridge in a pear tree shows up underneath your tree on Christmas morning.

Corinne Ramey: Author Bio | Other Posts
Posted at 1:10 PM, Dec 24, 2007 in Economy
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