By Dave Gahary —
This Veterans Day, those who served their country will have a lot less to be thankful for. In a slap to the face of veterans and seniors, the Obama administration announced on October 15 that there will be no cost of living adjustment, or COLA, applied to the paychecks of the more than 70 million Americans who are retired or disabled, only the third time in 40 years that there has been no increase, all occurring since 2010.
The Bureau of Labor Statistics (BLS), which calculates what the COLA will or will not be, uses the so-called Consumer Price Index (CPI), which “measures changes in the price level of a market basket of consumer goods and services purchased by households.” Unfortunately for seniors and retirees, who drive much less than those still in the workforce, the price of gasoline weighs heavily into the CPI basket calculation, and that was the main culprit in BLS’s decision. Seniors and retirees are affected much more by medical costs, which are expected to increase by 6.5% in 2016. Also unfortunate for those depending on the CPI to help give them a boost for the following year, “inflation is now permanently muted” from the index, massaged away by successive political administrations since 1921, in order to ensure reelection.
Besides the bad news for those on a fixed income where every dollar counts who will be forced to apply for food stamps and other government subsidies for the poor, an alarming trend has been established that many may not be aware of. If all the COLA increases are added up from the last eight years since 2008, it equals just 14.3%, compared to an increase of 69.6% from 1975 to 1982, the first eight years COLAs were offered.
Pennsylvania senior Margaret McGraw is one of the many million who will be affected by the BLS’s decision.
“I don’t think it’s right,” the 71-year-old McGraw told The Times-Tribune of Scranton. “People are struggling from month to month.”
Ms. McGraw, who barely survives from a $790 a month Social Security check, pays $238 in rent and other expenses, “often runs out of money before the end of the month.”
If one looks to the financial nerve center of the United States, however, Wall Street, incomes on the street of dreams couldn’t be better.
Although Wall Street bonuses aren’t paid until 2016, those who monitor the pay packages are predicting a huge windfall for investment bankers, in fact the biggest in years.
“Overall compensation for mergers and acquisitions bankers could be up by as much as 50% this year,” says Wall Street compensation consultant Alan Johnson. That means a bonus of over $1 million, up from $600,000 last year.
Average salaries on Wall Street, including bonuses, were $404,800 in 2014, and the average bonus has been up by more than 50% over the past three years, to $172,900.
Dave Gahary, a former submariner in the U.S. Navy, is the host of AFP’s ‘Underground Interview’ series.