Post allowances given to American civilians on mainland Europe dropped as much as 30 percent Sunday, falling to their lowest point since March 2007 in response to the dollar’s recent meteoric rise against the euro.
Allowance rates in Germany were hardest hit. There, even the lowest-paid employee with no family will see a drop of more than $125 a month in most locations where U.S. troops are based.
Rates also fell in Italy, Spain, Portugal, Belgium and Luxembourg, but not as sharply, according to an update of allowances posted on the State Department Web site. Rates in the United Kingdom and the Netherlands didn’t change.
Post allowances typically fall as the dollar rises, but rarely so dramatically and in such a short period of time as they have in Germany. The dollar’s record rise against the 15-nation euro contributed most to the allowance drop in the country. New retail price survey data indicating that the gap in prices between Washington, D.C., and Germany has narrowed also contributed to the drop.
The allowance cuts aren’t necessarily bad news, and many overseas employees don’t see them as a bad thing.
Asked what they’d prefer — a stronger dollar or higher post allowances — personnel across Europe on Monday said they’d rather see the dollar gain strength.
"I would rather have the dollar higher than the cost-of-living allowance," because if the dollar gains enough, you could end up better off than if you were in the U.S., said Tom Sheppard, who works for the 266th Financial Management Center in Kaiserslautern.
Sheppard, an Army civilian who has moved back and forth between Germany and the U.S. in the past 25 years, said that before the euro took over as the local currency, the Deutsche mark traded at about three-to-one in Americans’ favor. Even without a cost-of-living allowance, Americans stationed in the country generally made out better than their stateside counterparts.
Sylvia Dorch, who works for the Navy Exchange in Naples, Italy, agreed with the strong dollar premise. "It gives you more choices for shopping on the economy," she said.
Others were also in favor of a stronger dollar, but for different reasons.
"In the short term, I like having more post allowance, but in the long term a stronger dollar is good for the U.S. economy," said Angela Stradtner, another NEX employee in Naples. "Eventually we have to go back to the U.S., where we won’t get this allowance. I’d rather have a strong economy."
Steve Miller, who has been overseas for 26 years and just started receiving post allowance in May for his Army and Air Force Exchange Service job at RAF Mildenhall, England, was of a similar mind.
"We want that pound rate down," he said Monday.
An overall stronger exchange rate is preferable because it’s what post allowance is there for in the first place, to offset an unfavorable exchange rate, Miller said.
To see current post allowance rates, go to http://aoprals.state.gov/content.asp?content_id=216&menu_id=95
