COLA

Do prices rise? The answer is yes. However do wages rise to the parallel rising of prices? No. So what is this (COLA)? It is a cost of living allowance - it is a clause in a contract that is bargained by a union.

COLA clause provides for automatic increases in the level of wages usually on a quarterly basis based on the percentage increase in the Consumer Price Index (CPI). Only 25 percent of workers covered under the union contract in the past had some kind of COLA protection. The figure had risen in the late 1970’s through the 1980’s to 60 percent. 

As inflation has receded in the 1980s, many unions have elected to trade away COLA protection for other benefits just like in our case with the Local 100. However, Mr. Steve Downs, chair T/O division does not believe that. With the result being that in the late 1990’s through 2000 only about 20 percent of workers were still covered.

The COLA clause have a contradictory effect on strike activity because they reduce the frequency of strikes for two reasons. First, by linking wages to prices, they help to eliminate large catch up wage demands that result from unanticipated inflation. Second, union contracts with COLA clauses are on average of longer duration, reducing the frequency of negotiations and the opportunities for strikes to occur. In certain situations, however a COLA clause increases the probability of a strike. 

For the 2012 contract Samuelsen and his skilled seasoned bargainer Mr. Steve Downs, chair T/O division will reinstate the COLA clause. Downs always points at our previous presidents how they let go of the COLA clause and tries to paint them in a negative light as a result. However he is devoid of moral courage to indicate that COLA was traded for what? His memory seems to fade but now it his turn to rise and shine and the proof will be in the pudding. We believe and suggest that in many cases the employer will not resist wage indexation.

The probability of a strike is also higher when the COLA clause contains a cap on the maximum allowable wage increase either because removing the cap became a haggling issue or because the cap generates catch up demands as wages fall behind inflation.