Inflation and Cost-of-Living Adjustment Clauses
نویسنده
چکیده
Inflation and the Current Bargaining Climate With inflation rates high and recovery rates low, it should not be surprising that many unions are interested in improving their COLA clauses. The most common COLA formula calls for a wage-rate increase of one cent per hour for each 0.3 point change in the price index. Under such a formula it may be impossible to prevent erosions in real wages. Suppose that the base wage in an industry were $5.00 per hour and that the price index were equal to 100. If prices rose 9 percent, bringing the price index to 109, the wage rate would have to rise 9 percent, or to $5.45 per hour, to keep pace. The COLA formula would only provide a wage rate of $5.30, however; to attain a 70
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