How Much is a Cost of Living Raise?

A cost of living adjustment is typically related to the rate of inflation. Using a formula where inflation is the main component, companies may offer a cost of living adjustment in an effort to offset inflation, which results in an employee’s pay to maintain its ‘worth.’ For example, if you made $10/hour 3 years ago and have gotten no cost of living adjustments or raises, that same $10 you’ll make today won’t buy the same thing it did 3 years ago— meaning it has less value— because the cost of buying things has continued to increase.