IdaGriz01
Well-known member
Not exactly sure how the "Employment Cost Index" works, but a quick review strongly suggests that it's a better measure of how much it costs to maintain a particular life-style than the official "Cost of Living Adjustment" (COLA).Cuervohola said:... PL 101-194
"Revises the method for computing annual cost-of-living increases for certain executive, legislative, and judicial positions by using the most recent percentage change in the Employment Cost Index."
It doesn't matter if they choose not to take the raise, it was passed that they get the raise annually.
In case you wondered, the official COLA does not measure "Inflation" in the conventional (old-fashioned) sense. But you'd be hard put to get an official number that states the actual different between COLA and real-world inflation (I tried, FWIW) ... but it is clearly significant. (If you use Quicken or another decent checkbook program, just compare your monthly expenditures for "ordinary" stuff -- like food -- to those five or ten year ago).
FYI, the government COLA calculation has this wonderful "out" called "substitution." From Investopedia (but you can find it in many place):
As most of you probably know, the calculation is based on what they define as a "basket" of typical consumer goods -- food (mostly), cleaning products, over-the-counter meds, etc. But just to be totally clear, "alternative products" includes "a lesser cut of meat" or even "ground beef" in place of, say, filet mignon or even (God forbid) round steak. They do not attempt to define an alternative when you can't even afford ground beef any more. My point: COLA does not define the amount of money you need to maintain a reasonably level standard of living. It probably does indeed reflect how people actually run their lives, but the measure is fundamentally dishonest, because it forces us to degrade our way of life ... or spend more money (adjusted for true inflation).... a cost of living indicator would factor in changes in consumer buying that stem from economic conditions, adjustments in spending, and habits that people make, such as using alternative products when a product becomes prohibitively expensive. [my emphasis]