When do you consider someone "wealthy" or "rich"?

[Write4U]

A person making $20k a year makes much less than a person making $100k a year. Neat huh?

People on government assistance programs are usually the only ones receiving automatic COLA adjustments as well. They also generally have competitive jobs.

People in government also receive COLA. Persons employed in non-profit corp that receive federal moneys also receive COLA.
Working as bookkeeper for a non-profit (receiving federal moneys), I was a recipient as well as responsible for the distribution of the COLA as a percentage of salary to 40 employees. That's when the inherent unequal distribution of that "basic living cost adjustment" struck me.

 

[Seattle]

People in government also receive COLA. Persons employed in non-profit corp that receive federal moneys also receive COLA.
Working for a non-profit as bookkeeper, I was a recipient as well as responsible for the distribution of the COLA as a percentage of salary to 40 employees. That's when the inherent unequal distribution of that "basic living cost adjustment" struck me.

It's not "unfair" any more than different salaries are unfair. You should learn to live on what you make. The same percent COLA applied to everyone is as fair as you can get. It's supposed to offset the inflation rate which also applies to everyone unequally.

 

[Write4U]

You should learn to live on what you make

If you do not make a living wage, you are punished when costs of basic goods rise . I call that "adding insult to injury".

 

[Seattle]

If you do not make a living wage, you are punished when costs of goods rise . I call that "adding insult upon injury".

Cost of goods rise (inflation) when you pay people more without any increase in efficiency.

 

[Write4U]

Cost of goods rise (inflation) when you pay people more without any increase in efficiency.

Yeah, I've heard that story many times. That was the argument for maintaining slavery. Just can't afford to pay lazy people.

Trickle down economics has been tried and failed, over and over again. All that money keeps floating at the top and there is none left by the time it reaches the bottom.

Fact; when you pay people more, you increase demand for goods and increase productivity.

 

[Write4U]

A little History.

Economic policy of the Bill Clinton administration

The economic policies of Bill Clinton, referred to by some as Clintonomics (a portmanteau of "Clinton" and "economics"), encapsulates the economic policies of United States President Bill Clinton that were implemented during his presidency, which lasted from January 1993 to January 2001.

President Clinton oversaw a very robust economy during his tenure. The U.S. had strong economic growth (around 4% annually) and record job creation (22.7 million).

He raised taxes on higher income taxpayers early in his first term and cut defense spending and welfare, which contributed to a rise in revenue and decline in spending relative to the size of the economy. These factors helped bring the United States federal budget into surplus from the fiscal year 1998 to 2001, the only surplus years after 1969. Debt held by the public, a primary measure of the national debt, fell relative to GDP throughout his two terms, from 47.8% in 1993 to 31.4% in 2001.[1]

https://en.wikipedia.org/wiki/Economic_policy_of_the_Bill_Clinton_administration#

 

[Seattle]

Yeah, I've heard that story many times. That was the argument for maintaining slavery. Just can't afford to pay lazy people.

Trickle down economics has been tried and failed, over and over again. All that money keeps floating at the top and there is none left by the time it reaches the bottom.

Fact; when you pay people more, you increase demand for goods and increase productivity.

I'm not describing trickle down economics. I'm just saying that if you pay anyone or buy anything for more than you need to it's inflationary. I'm not saying the world is going to end if you increase the minimum wage.

If you exaggerate the effect you will probably agree with me. What happens if you pay the McDonald's worker $100k to sell you a hamburger? It's inflationary by necessity. Sure, they will have more money to spend and that's good for the economy.

It still doesn't mean it's a smart thing to do.

 

[Write4U]

f you exaggerate the effect you will probably agree with me. What happens if you pay the McDonald's worker $100k to sell you a hamburger? It's inflationary by necessity. Sure, they will have more money to spend and that's good for the economy.

But you are grossly misrepresenting reality.
McDonald workers do not make a living wage to begin with, let alone 100k.
And that's ok with you?

No one is suggesting that they make 1ook, but Henry Ford had it right when he said I pay my workers enough so that they can buy my cars. Seems to me that's a win win situation.

The Middle Class Took Off 100 Years Ago ... Thanks To Henry Ford?

Kreipke says there was chronic absenteeism and lots of worker turnover. So Ford gambled that higher wages would attract better, more reliable workers.
"It was an absolute, total success," Kreipke says. "In fact, it was better than anybody had even thought."

The benefits were almost immediate. Productivity surged, and the Ford Motor Co. doubled its profits in less than two years. Ford ended up calling it the best cost-cutting move he ever made.

It's widely believed that Henry Ford also upped wages to expand his market — paying employees enough to buy the cars they made. While that wasn't Ford's main motivation, it was a welcome byproduct, and a game changer, says University of California, Berkeley, labor economist Harley Shaiken.

https://www.npr.org/2014/01/27/2671...-took-off-100-years-ago-thanks-to-henry-ford#

 

[Write4U]

This is so true and topical.

(warning crude language)

 

[Seattle]

But you are grossly misrepresenting reality.
McDonald workers do not make a living wage (let alone 100k) to begin with. And that's ok with you?

No one is suggesting that they make 1ook, but Henry Ford had it right when he said I pay my workers enough so that they can buy my cars. Seems to me that's a win win situation.

The Middle Class Took Off 100 Years Ago ... Thanks To Henry Ford? https://www.npr.org/2014/01/27/2671...-took-off-100-years-ago-thanks-to-henry-ford#

That's just politics.

No one was suggesting they made $100k. As I said, you would probably agree with me if we made the example more extreme.

 

[billvon]

let's assume there is a general living cost increase of 600.00 p/yrand that represents 2.5 % of the averaged cost of basic living expenses.[/QUOTE]
So basic living expenses are not living expenses?

It's not a BCOLA. It's a COLA. If your cost of living goes up 2.5% and you get an increase of 2.5% - it's covered. If you are saving (which is wise) it is MORE than covered, since you can save the same amount and have more to pay your living expenses. Your increase is covered and you get an incentive to save.

Math is cool, huh?

 

[Write4U]

billvon said ;
It's not a BCOLA. It's a COLA. If your cost of living goes up 2.5% and you get an increase of 2.5% - it's covered. If you are saving (which is wise) it is MORE than covered, since you can save the same amount and have more to pay your living expenses. Your increase is covered and you get an incentive to save.

no COLA is based on basic living cost, as shown in the link I provided in post #477
I'll repost:

How Salary Cost-Of-Living Adjustments Are Calculated

Cost of living refers to the amount of money required to maintain a standard of living, accounting for basics like housing, food, clothing, utilities, taxes, and health care.
Increases (or decreases) in the price of these necessities affect the cost of maintaining your
lifestyle, and this, in turn, shapes how well your income will support you and your dependents.

IOW , basic living expenses, not maintaining luxury yachts and private planes.

 

[billvon]

IOW , basic living expenses, not maintaining luxury yachts and private planes.

No one considers yachts and planes as part of COLA. What's wrong with you?

 

[Write4U]

No one considers yachts and planes as part of COLA. What's wrong with you?

RIGHT! A lot of Senators own yachts or private planes, or both!

Do Members of Congress get Automatic Pay Hikes (COLAs)?

Under the terms of Public Law 101-194, the Government Ethics Reform Act of 1989, lawmakers receive an annual adjustment in pay [a cost of living adjustment or COLA] equal to the change in the government's Employment Cost Index for the fourth quarter of the prior calendar year versus the year before that (this constitutes a one-year time lag between when the pay raise is measured and when it actually takes effect).

An automatic provision is made for this pay hike each year, and is self-implementing without any specific vote by Congress (i.e., passage of the overall Treasury appropriations bill enables the raise to occur). However, Members of Congress can, by majority vote, block the pay increase from taking place. This occurred for salary hikes slated for 1994-1997 and for 1999.

Surprise, surprise....

Members of Congress have linked their own pay increase to that of thousands of other high-ranking personnel in the federal government, including cabinet agency heads and judges.

IOW, very wealthy people not in need of an increase in Basic living costs.

p.s. do they get this raise for being more productive than McDonald employees?

 

[billvon]

RIGHT! A lot of Senators own yachts or private planes, or both!

Right. Their COLA is not to enable them to afford yachts or private planes, nor is it intended to allow them the basics of life. It is to adjust their salaries to match inflation. Period.

You also somehow left out the fact that since 2009 they have voted to not take the COLA that applies to all government workers. How odd that you would leave that out!

And your math STILL doesn't work. Sorry. I know math is hard.

 

[Write4U]

Right. Their COLA is not to enable them to afford yachts or private planes, nor is it intended to allow them the basics of life. It is to adjust their salaries to match inflation. Period.

Why should they receive a COLA which far exceeds the actual cost of living increase?

You also somehow left out the fact that since 2009 they have voted to not take the COLA that applies to all government workers. How odd that you would leave that out!

Why do you keep lying? I may not have seen the 2009 vote, but in post #494 I did quote

However, Members of Congress can, by majority vote, block the pay increase from taking place. This occurred for salary hikes slated for 1994-1997 and for 1999.

And guess who was President in 2009? Obama and a Democratic congress, a little more socially oriented crowd.

And your math STILL doesn't work. Sorry. I know math is hard.

The math works fine, you just keep refusing to see the inherent inequality in the distribution of wealth and any adjustment for Cost of Living Increases as a real mathematical number, instead of some vague percentage which results in a adjustment that for the wealthy far exceeds the actual average cost of living increase in real dollars. That's making a profit on inflation, you know "unearned income".

As you said yourself, inflation of maintenance of your 5 million dollar yacht is not part of an increase in cost of basic living expenses, especially if it is the tax payer who has to foot the bill. That's just plain robbery.

Get real man.

 

[billvon]

Why should they receive a COLA which far exceeds the actual cost of living increase?

Because for them the COLA is misnamed. It's an automatic raise that keeps their salary the same in real dollars. (A raise that they have declined over the past 11 years.) That's its purpose. Not to allow people to live on "only" $170,000 a year.

The math works fine

Your math doesn't work AT ALL.

You have claimed that "COLA is distributed as an increase of 2.5 % of your income. So a person making 20,000 p/yr receives a COLA of 500.00 p/yr, actually losing 100.00 p/yr on the actual cost of increase." You've also said "his COLA, calculated as percentage of income, is less than the actual cost of living increase." Both are incorrect.

You correctly state that a cost of living adjustment applies to your salary, not your expenses. That means if the cost of living goes up 2.5%, and your salary goes up 2.5%, you actually get MORE money to spend, rather than losing money as you have claimed.

Let's take a simple example. Guy makes $10,000 a year. He spends $8000 on basic living expenses, and $2000 for everything else (entertainment, savings, optional purchases etc.)

Now cost of living goes up 2.5%. He gets a 2.5% COLA. His expenses are now $8200 a year. His pay is now $10250 a year. He now has (10250-8200) = 2050 for everything else. $50 more than he had before. So he is GAINING money on the COLA.

Simple math.

 

[Write4U]

Simple math.

You are completely missing the point.
That is why you had to modify your concept of COLA as a fixed amount of money into a percentage raise of salary instead of an amount of increase in living costs.

Because for them the COLA is misnamed. It's an automatic raise that keeps their salary the same in real dollars. (A raise that they have declined over the past 11 years.) That's its purpose. Not to allow people to live on "only" $170,000 a year.

By your own word, your examples have nothing to do with COLA, the subject under discussion.

A raise in pay for tenure or merit is not the application of COLA, which is a raise in cost of basic living expenses, which is based on actual COST, not a percentage of income.

As bookkeeper for a large non-profit corporation, I used to distribute COLA payments and I know what I'm talking about.

If the cost of basic living expense goes up by $600.00 p/yr, everyone should get a single payment (or tax credit) of $600.00 regardless of your income. Not as a calculation of a percent of income which translates into a different amount for everyone and favors the people with high incomes.
That's simple math.

 

[billvon]

By your own word, your examples have nothing to do with COLA, the subject under discussion.

YOU brought up Congressional salaries. If you wish to retract your statement, I am good with that.

If the cost of basic living expense goes up by $600.00 p/yr, everyone should get a single payment (or tax credit) of $600.00 regardless of your income.

So someone making $1 million a year should get $600? Sounds like a waste of money to me.

A father in a family of 8 should get $600, because you figure his increase in cost of living will be the same as a single guy's? Might want to rethink that.

Everyone who is doing a reasonable job SHOULD get regular raises. This is mainly to keep up with inflation. That's how it's supposed to work. If he's doing a great job, then increase it faster than inflation. COLAs should be reserved for unusual conditions - a radical increase in housing prices or food due to a drought, for example.

 

[Write4U]

YOU brought up Congressional salaries. If you wish to retract your statement, I am good with that.

No, because COLA does not address Income. It addresses Expense of basic goods.

So someone making $1 million a year should get $600? Sounds like a waste of money to me.

Exactly, technically a person with a high income is not affected by a increase on the cost of meat. He imports his caviar from Norway, by plane.

A father in a family of 8 should get $600, because you figure his increase in cost of living will be the same as a single guy's? Might want to rethink that.

Yes, you're getting it. Actually it's even worse. The COLA as percentage of salary of a low income earner may not even pay for that 600 dollar increase and he loses on the deal, while COLA based as percentage of salary on a high income person results in his making a profit on the deal. That's the inherent inequality build into the distribution of COLA as a percentage of income.

Everyone who is doing a reasonable job SHOULD get regular raises. This is mainly to keep up with inflation. That's how it's supposed to work. If he's doing a great job, then increase it faster than inflation.

I totally agree, but when your boss tells you you are getting a raise in salary because you are doing a good job, he is not talking about COLA

COLAs should be reserved for unusual conditions - a radical increase in housing prices or food due to a drought, for example.

Right! But to a low income earner, any increase in the costs of basics of life, food, shelter is disastrous, whereas it does not affect the living standard of high income earner living in his mansion and having a chef prepare his dinner. COLA has nothing to do with Income. It is based on an increase in cost of certain basic living Expenses, such as rents, utilities, staple foods, gas, as calculated from statistics on the Consumer Price Index, not a general inflation of the whole Nation's Economy.

And adding "insult to injury", if you calculate the increase in basic costs as a percent of income (as they do now) then 1 person, making a million a year, makes a huge profit on that slight increase of cost, whereas the guy with 8 kids, making 20 thousand a year, ends up with less than the actual increase in cost of his real expenses.

To a poor person an increase of 600 dollars may represent a weeks salary, to a rich person it may represent an hour's income. That is why I brought it up . The current system favors high income earners, exactly opposite to the intent of COLA which is designed to assist low income earners as they are the most affected by any increase in the cost of basic living expenses.

Hence my observation that current COLA as a percentage of income does not represent a cost of living adjustment, but a cost of lifestyle adjustment. The poor get poorer, the rich get richer.