The Motley Fool Discussion Boards

Previous Page

Investing Education / Terms, Definitions, & Jargon

URL:  https://boards.fool.com/ltlti-need-the-correct-definition-of-a-cola-vs-11362581.aspx

Subject:  Re: COLA vs Pay Raise Date:  10/12/1999  11:06 AM
Author:  TMFSelena Number:  386 of 2244

<<I need the correct definition of a COLA vs a Pay Raise. I had read somewhere (brain cells refuse to remember where)that a COLA is to keep wages equal too inflation but does not raise real income, where a pay raise must be greater then the inflation rate to effect a real increase to income. Is this making sense? I've got a bet going on this one so economic based, tracable definitions are really important.>>

I don't think that "pay raise" is any kind of official term. It probably would include any kind of increase in one's salary.

COLA, on the other hand, stands for "cost of living adjustment." It's meant to be an adjustment that increases one's pay so that it keeps step with inflation.

Here's a bit more on the COLA from the social Security Administration:
http://www.ssa.gov/OACT/COLA/COLA.sum.html

Cheers!

Selena
Copyright 1996-2022 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us