What is Cost of Living Adjustment?

Whether you're a beginner or an expert, you will find this Glossary useful.

Cost of living adjustment definition (COLA)

Cost of living adjustment is an increase in income pay that is tied to some measure of economic activity and keeps up with the cost of living.

It's often applied to wages, salaries, and benefits which include union agreements, executive contracts,and retiree benefits.

How is COLA calculated

COLA bases its increases on the Consumer Price Index. That's the federal government's official measurement of inflation and is triggered when prices go up.

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