Cost of Living Allowances (COLAs)

Let’s take a closer look at the use of COLA’s (Cost of Living Allowances) by our government. COLA’s supposedly guards benefits like Social Security or Disability from the ravages against inflation. The idea is it’s fair that if inflation goes up by 3%, so should one’s wages.

Aside: That’s not even counting for things like rent increases or increases in our medical bills.

Sounds good – right? Let’s look at the numbers.   

 In one case, a man earns $1000 a month on Social Security. An average COLA increase might be 3%. 3 percent of that 1000 equals $30. Over a years time, his wages rise from $12,000 to $12,360 a year – a $360 increase in annual income.

In a second case, a US congressman’s starting annual salary is $174,000. 3 percent of this equals $5220. This raises his annual salary to $179,220. According to the economists who created this concept, the congressman deserves his $5220 per year increase as much the poor guy on Social Security who gains only $360 a year more.

Do they think we’re that stupid?

 

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