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How to Calculate a Cost-of-Living Adjustment (COLA)

Practical resources, data, and knowledge to help ChurchSalary members calculate a cost-of-living adjustment (COLA).
How to Calculate a Cost-of-Living Adjustment (COLA)
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At ChurchSalary, we frequently get questions about how to calculate a cost-of-living adjustment for staff. Admittedly, it can be a daunting task.

ChurchSalary has cultivated resources, maps, and links below to help you. Gather the appropriate data. Contextualize it using personal knowledge of your community. Then filter it through your church’s compensation philosophy in order to calculate a cost-of-living adjustment.

Table of Contents

  1. Summary
  2. Orientation
  3. Basic Expenses
  4. Purchasing Power
  5. Income and Cost of Labor
  6. Conclusion
  7. Worksheet
  8. Glossary

Summary

The basic goal of a cost-of-living adjustment (COLA) is to either (1) adjust nationwide salary figures to suit your location and/or (2) to adjust salaries on an annual basis to offset inflation.

  1. To account for the local cost of living, every ChurchSalary report includes a county-level cost-of-living index (COLI) figure based on your ZIP code.
  2. To account for inflation, the Social Security Administration (SSA) publishes a COLA every year. Beginning in December 2021 (through 2022), the SSA will increase benefits by 5.9 percent to account for inflation.

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ChurchSalary is made possible through funding from the Lilly Endowment Inc. As part of Lilly's "National Initiative to Address Economic Challenges Facing Pastoral Leaders," ChurchSalary—and our parent, Church Law & Tax—is committed to helping church leaders and pastors develop an atmosphere of healthy financial stewardship, especially in the area of church staff compensation.

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