Congressional Corner: Government Needs A New Approach For Determining COLAs

Congressional Corner: Government Needs A New Approach For Determining COLAs

By Representative Eliot Engel (NY-16)

For the third time in the last seven years, almost 65 million Social Security recipients did not receive a benefit increase in 2016.

Social Security has provided invaluable support to America’s seniors for generations. An important element of this support is the annual cost-of-living adjustment, or COLA, which helps many seniors make purchasing decisions and manage their budgets. Currently, these adjustments are tied to a measure of inflation called the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers (CPI-W). This measure, however, fails to adequately capture the types of costs regularly incurred by older Americans.

The Bureau of Labor Statistics (BLS) tracks an index called the Consumer Price Index for the Elderly (CPI-E), which is geared towards capturing inflation among the 62-and-over population. The CPI-E more heavily weighs things seniors buy than the CPI-W. For example, a BLS analysis found that the share of expenditures on medical care by the CPI-E population is roughly double that of the CPI-W population. In addition, the CPI-E assigns a lower weight to luxury items, like entertainment and travel, which many seniors purchase less frequently when compared with younger individuals.

Using a measure like the CPI-E would allow the government to more accurately base COLAs on the true living costs the typical senior must pay – a concept that just makes sense.  Furthermore, from 1982 through 2011, the CPI-E ran at an average annual rate of 3.1 percent, compared with a 2.9 percent rate for the CPI-W.

The government needs a new approach – one that recognizes the reality of rising costs in many areas, especially health care, that are putting pressure on seniors. It is absolutely outrageous that our seniors are suffering because we continue to use an antiquated formula to determine sorely needed cost of living increases.

To fix this serious issue facing America’s seniors, I have authored and continue to introduce the Guaranteed 3% COLA for Seniors Act.  This legislation requires the use of the more appropriate CPI-E to determine the Social Security COLA. In addition, the bill would ensure that seniors receive a minimum 3 percent COLA every year, even if the CPI-E COLA falls below this amount.

I have introduced the Guaranteed 3% COLA for Seniors Act each Congress since 2009, and will continue to sound the horn every year until it becomes law. Our seniors helped build this great country.  Social Security is a sacred pact and our seniors deserve far better than to languish on the edges of poverty due to an outdated formula and Congressional inaction.


The opinions expressed in “Congressional Corner” reflect the views of the writer and are not necessarily those of The Senior Citizens League.