What Is Considered the Standard Cost of Living Raise?

The Bureau of Labor Statistics (BLS) determines the Consumer Price Index or CPI. The CPI reflects increases or decreases in cost of living based on items like food, housing, transportation, gas, and insurance costs to the average consumer.

One problem with the calculations researched by the BLS is that often, apples are not compared to apples. For example, an in depth analysis of expenses from household to household is not considered. One family may be paying for two children in college where another family has two children relying on student loans to pay for college. There analysis will only show a household with two children in college, regardless of the expense of tuition.

The size of a household is considered but the because expenses vary from lifestyle to lifestyle, it’s almost impossible for the BLS to come up with an accurate cost of living raise or adjustment each year.

The BLS carefully chooses approximately 14,000 households and analyzes income and expenses or the cost to live. While you may not be on that list of households analyzed, the BLS argues that it is a good representation of both urban and rural households.

Of those 14,000 households, data experts determine annually how the cost of living should be adjusted. Currently, for those asking what is the standard cost of living raise, the range is from 3% to 4%. Where you live in the United States is also a factor that is not necessarily determined by the BLS.

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Most employers use the Occupational Outlook Handbook issued annually by the BLS. If you search this free service you can get an idea of what wages are current for a particular industry. In searching for “auto technicians” we found auto technicians who worked for dealerships earned $19.61 per hour in 2009. If you apply a 3.5% increase for 2010, you could expect a cost of living raise to $20.03 or sixty-nine cents.

Using this handbook is a great tool for employees as well. It can help you argue what your cost of living raise should be based on your work industry, however, if the cost of living is down based on the Consumer Price Index, if you do receive a cost of living raise of any kind, be happy with that increase.

According to the BLS, during the period from January 2008 to January 2010, wages in all non-farm occupations were down due to economy issues. In any event, most employers, but not all, do hand out at the very least a cost of living raise of around 3%. Large metropolitan areas in California and New York may receive a cost of living raise on the higher end, or 4% to 5%.

If the industry where you make your living has suffered significantly due to the economy, some employers are relying on a one-time bonus and skipping cost of living raises.

Good employers will take the time to answer the question what is the standard cost of living raise and if they will partake in any BLS recommendation, consider increases or explain their business goals for the new year. In the long run, with today’s economy still in recovery, most should only expect a cost of living raise of approximately 3% to 3.5% for year 2010 and most certainly for the years beyond.