Many of you have been waiting to hear what our raise will be for 2027. As most of you already know, the pay increase, for 2026 and 2027 is tied directly to the cost of living through the Consumer Price Index (CPI). This morning the U.S. Department of Labor released the June 2026 CPI figures, and based on them our 2027 raise looks to come in at approximately 3.5%. Below is how that number is reached, and what’s driving it.

Our raises for 2026 and 2027 are spelled out in the Local 2 contract. Instead of a fixed number, those two years use a rule tied to the cost of living, with a built-in floor and ceiling:

• We will never get less than 3%.
• We will never get more than 5%.
• If the cost-of-living number lands between 3% and 5%, our raise equals that number.

 The language in the contract is as follows:

“In 2026 and 2027, the percentage increase varies between 3.00% and 5.00% depending on the CPI-U. If CPI-U is 3.00% or less, then the percentage increase is 3.00%. If the CPI-U is 5.00% or more, then the percentage increase is 5.00%. If the CPI-U is between 3.00% and 5.00%, the percentage increase will be equal to the CPI-U… The June CPI-U released in July of the preceding year will be used to determine the percentage increases in 2026 and 2027.”  – Local 2 Labor Contract (2021–2027), Art. V, Sec. 5.1(B)

So, the raise is decided by one number: the June CPI-U from the year before. June’s figure came out this morning (July 14, 2026) which locks in the raise that takes effect January 1, 2027.

 What the CPI is measuring — and who sets it

The CPI-U (Consumer Price Index for All Urban Consumers) tracks the price of a large “shopping cart” of things households buy — groceries, rent, gasoline, electricity, doctor visits, and more. Each month it measures how much more that same cart costs than it did a year earlier.

The number is produced by the U.S. Bureau of Labor Statistics (BLS), part of the U.S. Department of Labor. Its price-checkers gather tens of thousands of real prices across the country every month, weight each category by how much of a typical family’s budget it takes up, and publish the official figure. The Labor Department is the sole source of this number – our raise is set by an independent government price measurement, not by the City or our union. Neither side can move the number.

Why the Number is Higher for 2027

For 2026, the June figure came in low, so our raise landed on the 3% floor. For 2027, cost-of-living has pushed beyond the 3% range. Here is what’s actually pushing it up: 

• Energy — the biggest driver. An oil-price spike sent gas prices up about 40% over the year, with home heating oil up even more. Energy alone accounted for more than half of the most recent monthly jump.
• Housing (rent & shelter). Housing is the single largest slice of the shopping cart — more than a third of it — and rose about 3.4%. Because it carries so much weight, even steady increases move the overall number a lot.
• Food. Grocery and restaurant prices rose roughly 3.1% over the year.
• Electricity. Power bills climbed about 6%, pushed in part by rising electricity demand from large data centers.
• Imported goods. Tariffs added some upward pressure on certain products, though this was a smaller factor than energy and housing.

 Behind the monthly numbers is a trend economists have been watching closely: pay is pulling apart at the top and the bottom. Recent data from the Bank of America Institute shows wages for higher-income households rising about 3% over the past year, while middle-income growth slowed to roughly 1.5% and lower-income households to about 1.1% — a split so sharp that economists now call it a “K-shaped economy,” with one line rising and another falling from the same point.

 Wealth is concentrating even faster than wages. As Mark Zandi, chief economist at Moody’s Analytics, put it: “Household wealth is highly concentrated and becoming steadily more concentrated.” Zandi ties the long-term shift to forces that gradually weakened labor’s share relative to capital — among them globalization and the decline of unions and manufacturing.

 Not everyone frames it as decline. In a 2026 analysis, American Enterprise Institute scholar Scott Winship argued the data actually show “broad prosperity, unequally shared” — real income gains up and down the ladder, but far larger ones at the very top.

For working families, the practical lesson is the same from either view: when the cost of living climbs faster than an ordinary paycheck, ground is lost quietly, year after year. That is exactly why a contract that ties raises to the CPI matters. It is a built-in guardrail meant to keep our pay moving with prices — so members don’t quietly fall behind while the gap widens as we have in previous years.

How Our Raise Compares to Other Workers

For 2027, the major salary-survey firms — WTW, Mercer, and Payscale — expect the average private-sector raise to land around 3.5%, with most employers falling somewhere between roughly 3.2% and 3.8%. On the surface that isn’t far from our own range.

The difference is how those raises are set. For most workers, the raise has nothing to do with inflation. It’s driven by the job market — how hard it is to hire and keep people — and in a soft year an employer is free to come in below the cost of living, or skip a raise altogether. Our contract works the other way around: it makes the CPI the actual formula and guarantees we never drop below 3%, no matter what the job market does. Cost-of-living protections like that have become rare outside of union and public-sector contracts — which is exactly why this language is worth holding on to.

Many of you know I’ve been a vocal critic of Local 2 when it comes to protecting our purchasing power and securing our retirement benefits. I don’t view that criticism as a right – I view it as an obligation of membership. Holding our leadership accountable is part of the job. But accountability runs both ways, and credit is due when it’s earned. On this one, Local 2 got it right.

Be Safe!
Capt. Tim McPhillips

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