Section 9.3 Cost of Living Adjustment R2022

Section 9.3 Cost of Living Adjustment

1. Definitions
1. "Consumer Price Index" refers to the "National Consumer Price Index for Urban Wage Earners and Clerical Workers," published by the Bureau of Labor Statistics, United States Department of Labor (1967=100) and referred to herein as the "Index."
2. "Consumer Price Index Base" refers to the Consumer Price Index for the month of July 2022 [2019] and is referred to herein as the "Base Index."
2. Effective Dates of Adjustment Each eligible employee covered by this Agreement shall receive cost-of-living adjustments, upward, in accordance with the formula in 4.C, below, effective on the following dates:
   - the second full pay period after the release of the January 2023 [2020] Index
   - the second full pay period after the release of the July 2023 [2020] Index
   - the second full pay period after the release of the January 2024 [2021] Index
   - the second full pay period after the release of the July 2024 [2021] Index
   - the second full pay period after the release of the January 2022 [2019] Index
   - the second full pay period after the release of the July 2022 [2019] Index
3. The basic salary schedule provided for in Table One and Step P of Table Two of this Agreement shall be increased 1 cent per hour for each full 0.4 of a point increase in the applicable Index above the Base Index. For example, if the increase in the Index from January 2023 [January 2022] to July 2023 [January 2020] is 1.2 points, pay scales for employees in Table One and Step P of Table Two of this Agreement will be increased by 3 cents per hour. In no event will a decline in the Index below the Base Index result in a decrease in the pay scales provided for in this Agreement. Steps BB through O in the basic salary schedules provided for in Table Two of this Agreement shall receive COLAs calculated using the formula in this paragraph, adjusted proportionally as reflected in Table Two.

Explanation:

These changes ensure that all career employees covered by the tentative
agreement will receive six cost-of-living adjustments during calendar years
2023 through 2025, with the first COLA effective in March 2023. The exact
amount of the COLAs will be based on future increases in the Consumer
Price Index. As Mail Handlers know from previous years, because of largely
unpredictable fluctuations in the rate of inflation, economists have great
difficulty in accurately projecting the amount of these COLAs. For example,
the seven COLAs paid during the 40-month term of the 2016 National
Agreement averaged $345 per COLA, and the six COLAs paid during the
2019 National Agreement averaged $1,081 per COLA. If these averages
were to repeat themselves during the term of the 2022 National Agreement,
the COLA provision, by itself, could provide between $1,800 and $6,000 in
additional base wage increases over the next three years. Of course, should
inflation moderate, these guaranteed COLA payments will be lower, and
should inflation remain high, these guaranteed COLA payments could result
in large wage increases. That is why continuation of the COLA provision is
so important.