A cost of living adjustment (COLA) is a periodic adjustment to wages, salaries, or other payments to keep pace with inflation. The COLA for 2025 has not yet been determined, but it is expected to be around 4%. This would mean that workers would receive a 4% increase in their pay to help offset the rising cost of living.
COLAs are important because they help to ensure that workers are not losing purchasing power due to inflation. Inflation is the rate at which prices for goods and services increase over time. When inflation is high, the value of money decreases, which means that workers can buy less with the same amount of money. COLAs help to offset this by increasing wages and salaries so that workers can maintain their standard of living.
