COLA offers no reprieve from weak dollar
There’s the whammy, and then there’s the double whammy.
The whammy: The euro hit record highs against the dollar in each of the last five business days, making shopping off base even more expensive for U.S. servicemembers in countries that use the common currency.
The double whammy: The cost-of-living allowances paid to troops and civilians to offset the high cost of shopping off base won’t go up at least until the middle of November — and that’s a best-case scenario.
Money news in the United Kingdom is just as bad. There, the British pound hit a 26-year high against the dollar Tuesday and again Wednesday when it opened trading in New York at a fraction more than $2.07 a pound.
And, like in mainland Europe, neither troops’ COLA nor civilians’ post allowance will change in the majority of locations in the U.K.
There’s a good chance that troops’ COLA, which hasn’t moved up or down in Germany since Aug. 1, could go up in mid-November if the dollar stays close to its all-time lows against the euro.
“If the trend continues, there will almost certainly be a change on the 16th of November,” said Steve Bridges, director of finance operations for the Germany-based 266th Finance Command.
Of course, that improvement in COLA is predicated on the continued weakness of the dollar.
In the last three months, the dollar has slipped more than 7.4 cents against the euro, according to data from the Federal Reserve Bank of New York. The dollar is down more than 15 cents for the year.
Despite the beating that the dollar — and troops’ wallets — have taken at the hands of the euro in the past few months, the COLA rate is keeping pace with economic conditions, according to Bridges.
Troops were overpaid COLA from about the second week of August until the beginning of October, according to data provided by the Per Diem Committee.
Since the beginning of October, troops have been underpaid COLA. But the underpayment hasn’t yet compensated for the previous overpayment.
“In the end, it all equals out,” Bridges said.
For now, in most locations in Germany, an E-7 living off base with two dependents will receive about $28 in COLA per day for the first 15 days of November. A civilian employee making the same base salary — $39,000 to $41,999 a year — under similar circumstances will get about $32.26 per day for the first part of November.
In Italy the tables are turned in favor of troops. In Naples, Aviano and Vicenza, for example, an E-7 living off base with two dependents and 14 years of service will receive about $36.75 in COLA per day for the first 15 days of November.
A civilian employee under similar circumstances with the same base salary will get about $32.33 per day in the same time period — similar to those in Germany.
In the U.K., the disparity between troops and civilians is worse. There, an E-7 with 14 years in and two dependents takes in a similar base salary, but collects about $35 per day in COLA. A civilian in similar circumstances will get about $22.63 per day in post allowance.