COLA keeping pace with dollar’s decline
November 18, 2007
Americans in Europe know all about the falling dollar.
There’s evidence of it everywhere — on the radio, in the newspaper and even at the counter of the on-post Burger King where the exchange rate for local currency is posted.
Americans in England also know that, looking at costs alone, they’ve got it worse than their counterparts in Germany and Italy.
And those in Italy generally have it worse than those in Germany.
But there’s more to the story.
While it’s true that the dollar has slumped significantly against all major European currencies in the past year, it’s also true that the cost-of-living allowances Americans get to offset the effects of the weak exchange rates have kept pace with the dollar’s fall in all three countries.
Still, it’s hard to find anyone who feels his or her paycheck is going as far as it used to — especially if it is necessary to make an emergency run to buy toilet paper in Naples, Italy, with euros converted from U.S. dollars.
Just four rolls of the stuff — or at least of Scottex brand — cost the equivalent of $7.72 on Wednesday at the Carrefour, a shopping area popular with Americans in Naples.
That same day, Stars and Stripes surveyed 10 of the more common items the Defense and State departments use to set their cost-of-living allowances in Naples; Darmstadt, Germany; and Brandon, England, in an effort to figure out if Americans stationed overseas are getting equitable compensation in the three countries.
The evidence seems to say they are.
The euro, used in Germany and Italy, is 17 cents more expensive than it was a year ago, according to U.S. Federal Reserve Bank of New York price data. That means the euro, which has cost $1.46 on average in November, is 13.3 percent more expensive than it was a year ago.
Troops’ COLA, however, has increased at an even greater rate.
For example, an E-5 with four years’ service living off base with two dependents and stationed in the Kaiserslautern area collected $599 in COLA in November 2006. That same troop gets $716 in COLA this month — an increase of 19.5 percent over last year.
If that same E-5 were stationed in Naples, he would have collected $813 in COLA in November 2006. This November, he’ll get $948 — a 16.57 percent rise over last year.
The percentage increases aren’t the same for all troops — COLA is determined by a member’s rank, time in service, number of dependents and other factors. But even those at the bottom are doing better than in the past.
Take, for example, Pfc. Robert Edwards, a member of the 72nd Signal Battalion in Mannheim, Germany.
“It’s crazy,” he said of shopping off base. “I used to buy a whole rack of shoes.” But the falling dollar sent his shoe addiction into rehab, and now almost all his shopping is done on base.
“I have no other choice,” he said.
The numbers tell a different story.
Last November, Edwards would have gotten about $215 in COLA as a single private first class living in the barracks. This year, he’ll get about $247 in COLA in November — an increase of 15.2 percent.
In the United Kingdom, the pound also has become 17 cents more expensive over the past year, on average. But because the pound was already more expensive than the euro, the increase is only 8.9 percent over a year ago.
Meanwhile, the COLA given to troops at RAF Lakenheath and surrounding bases has shot up.
The same E-5 mentioned earlier would have seen his COLA go from $685 in November 2006 to $843 this month at Lakenheath — an increase of 23 percent.
Civilians, likewise, are compensated for the dollar’s woes.
In Germany, a civilian making between $39,000 and $41,000 a year with two dependents living in Kaiserslautern will get about $970 in post allowance, the civilian equivalent of COLA, for November. That same employee wouldn’t be as flush in Lakenheath, where he’d get about $680 in post allowance for the month, but in Naples he’d get about $1,100 for November.
Despite the compensation, Americans say the dollar’s distress is stressing their wallets when they venture off post.
“To me, it’s really expensive,” Staff Sgt. Cynetha Payne, a supply journeyman with the 100th Logistics Readiness Center at RAF Mildenhall, England, said of shopping at off-base stores. “I’m spending $20 for a meal.”
As a result, she tries to do most of her shopping on base.
It’s probably not a surprise, but Europeans who have access to U.S. shopping facilities on post see the advantage in avoiding the European economy.
Juan Cid, a Spaniard assigned to the NATO Allied Land Component Command Headquarters in Heidelberg, Germany, buys his food at the U.S. commissary and his clothes, shoes, candles and other items at the Army and Air Force Exchange Service.
“The prices,” he said. “The rate between the dollar and the euro is better for Europeans.”
The corollary to that is that it’s worse for Americans — especially when they shop off base.
The 10 items Stripes surveyed bear that out in vivid detail.
The shopping list: a liter of milk, a six-pack of name-brand beer, a pound of coffee, a pound of apples, two liters of name-brand cola, 32 ounces of liquid dish detergent, a loaf of bread, a dozen eggs, a pound of chicken breast and four rolls of toilet paper.
The total for those items came out to $41.77 in England, $38.08 in Italy and $32.70 in Germany. At the commissary, those same items came out to $23.55.