How Cost of Living Adjustments Are Set
Published by Instant Press on behalf of Fight For A Living Wage. A cost of living adjustment is a formula, not a judgment call. For Social Security, the Social Security Administration compares average consumer prices in one third quarter against the same quarter of the previous year a COLA took effect, and the percentage difference becomes the increase. No one votes on it. The 3.6 percent COLA for 2027 came out of that arithmetic, and the arithmetic is public. Understanding the mechanism matters because most American wages have no such mechanism, and the contrast explains a good deal about which incomes keep pace with prices and which do not. The index doing the work Social Security COLAs run on the Consumer Price Index for Urban Wage Earners and Clerical Workers,…




