Union Leaders Again Reach for COLA --- Inflation Boosts Cost-of-Living Adjustments' Allure
COLA is creeping back.</br></br>The percentage of unionized workers covered by cost-of-living-adjustment clauses, which had declined in recent years, is rising again as inflation heats up. What's more, many observers expect that this year's higher inflation rate will move COLA clauses back onto the bargaining table. And existing COLA clauses are starting to be worth more in labor contracts.</br></br>"Generally, if the Consumer Price Index is going up, it will be a topic in more and more settlements. Workers would like some compensation in addition to wages," says Fehmida Sleemi, an economist with the Bureau of Labor Statistics.</br></br>Higher inflation also means bigger COLA payouts, especially in cases where payouts begin only after inflation hits a certain level. Last year, payouts under cost-of-living clauses made up 26% of overall union wage increases, compared with 16% of such payouts in 1987. This year, that figure is likely to rise.</br></br>Over the past three years, a typical COLA clause that provided for a one-cent-an-hour increase for every 0.3% increase in the CPI would have yielded a total of $1.05 an hour. Over the next three years, assuming that inflation rises an average of 4.8% a year, that same COLA clause would yield $1.76 an hour. The calculations are based on changes in the CPI, which uses 1967 as a base of 100. That figure stood at 354.3 at the end of 1988.