When the prices of everyday goods and services go up, the buying power of your paycheck goes down. A Cost-of-Living-Adjustment (COLA) is the contractual provision in your Collective Bargaining Agreement that keeps your wages in step with those rising prices.

More precisely, COLA automatically ties wage changes to changes in the Consumer Price Index (CPI). The Bureau of Labor Statistics has long recognized COLAs as a means to help protect the purchasing power of wages from the eroding effects of price increases over time. When prices rise, COLA adjusts your pay so you aren’t falling behind.

A General Wage Increase (GWI) moves you forward. It’s new money, a negotiated pay raise that the APWU wins at the bargaining table. COLA is different. COLA keeps you from sliding backward when prices rise.

A GWI is an across-the-board increase, or a uniform percentage increase, for all eligible employees. Note, however, that the actual percentage for a specific grade and step may differ slightly if a uniform step increment is applied.

COLA, by contrast, is automatic. It isn’t negotiated each time. It’s a formula built into the contract that responds to real-world price changes. Your union negotiated the right to COLA; the economy determines the amount.

Now that you understand how COLA and a GWI differ, the third piece is the step increase.

COLA is a backstop against inflation. It keeps your purchasing power the same when prices rise.

General Wage Increases (GWI) are negotiated pay raises, new compensation the APWU wins for you at the bargaining table.

Step increases (sometimes called “within-grade increases” at other federal agencies) reward your experience and longevity. They are granted automatically after a set waiting period and were developed to create a consistent, structured pay system for federal employees.

These three work together as a system. COLA protects your current earnings. GWI grows them. Step increases reward the time you’ve put in.

This is one of the most common frustrations members have, and it’s a fair question.

COLA is tied to specific, limited inflation metrics, not to your personal spending. If housing, health care, energy, or food costs spike faster than the overall CPI, you’ll feel that gap. On top of that, COLA adjustments are calculated based on past data, so they often lag behind immediate price spikes.

For retirees: COLAs tied to Social Security often rely on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). That index was designed to reflect working-age spending patterns, not retirement spending patterns, so it may not accurately track the expenses retirees actually face.

The bottom line is that COLA is designed to keep you close to whole. But in periods of rapid or uneven inflation, it won’t always cover every cost increase you experience.

CPI has come up several times already, so let’s break it down.

The Consumer Price Index measures the average change over time in the prices consumers pay for a representative “basket” of goods and services. It’s the government’s primary tool for measuring inflation as you experience it in your day-to-day living expenses.

The Bureau of Labor Statistics classifies expenditure items into more than 200 categories across eight major groups: food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services. Government-charged user fees like water and sewerage charges, auto registration fees, and vehicle tolls are also included.

CPI tells us what has happened to the value of the money in our pockets. Because your COLA is calculated from CPI data, understanding CPI helps you understand why your COLA adjustment comes out the way it does.

This is one of the most important benefits the APWU has won for its members, and it’s worth understanding what sets it apart.

If you’re a career APWU-represented employee, you receive every cent of your calculated COLA, from entry step to top step. That is not the case at other postal unions.

When other postal unions negotiated separately with the Postal Service, they agreed to pay newer employees only a percentage of the COLA calculated for all steps below their respective top steps. The numbers tell the story:

Only career employees receive COLA directly. However, PSEs in non-POStPlan Level 4 Remotely Managed Post Offices (RMPOs) who reach 24 months of relative standing convert to career status and become eligible for COLA adjustments.

Many PSEs don’t realize this: COLA adjustments made during your first 24 months as a PSE are built into the existing pay schedules. You start receiving those benefits with your career appointment date. So while you aren’t receiving COLA checks as a PSE, the value of those adjustments isn’t disappearing. It’s waiting for you.

Yes, COLA can be zero, and that’s usually good news.

A zero COLA means BLS views inflation as flat during the measurement period. Your purchasing power held steady without needing an adjustment. Prices didn’t rise, so your paycheck didn’t need to catch up.

Your pay cannot decrease because of COLA under the APWU agreement.

In rare situations, prices can actually fall, a phenomenon called deflation. Technically, a COLA calculation can come in below the Base Month Index. But Article 9, Section 3.C of the APWU/USPS Collective Bargaining Agreement is clear: in no event will a decline in the Index below the Base Index result in a decrease in the pay scales.

That’s a protection your union negotiated. COLA can go up or stay flat, but it will never pull your pay down.

COLA adjustments are made twice a year, in accordance with Article 9, Section 3.B of the APWU/USPS Collective Bargaining Agreement.

The Bureau of Labor Statistics releases updated CPI data in January and July. If there is any upward rise in the Index level during the applicable six-month measuring period, eligible employees receive the COLA payment effective with the second full pay period after the release of that Index.

So when you see a COLA announcement from the APWU, expect the adjustment in your paycheck roughly two full pay periods after the relevant CPI data drops.

Find the latest information on COLA here.

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