STUTTGART, Germany — For most U.S. troops and civilians stationed in Europe, the New Year has ushered in a solid bump in cost-of-living allowances, the first such jump in months.
The boost, which stretched across Germany, Italy and the United Kingdom, is linked to the dollar’s steady decline against the euro throughout December.
For servicemembers, the allowance, known as COLA, increased by 39 percent in Germany and by 26 percent in Italy, which equals about $120 more per paycheck for an E-5 with three dependents. In the United Kingdom, COLA increased by 23 percent, or $46 per paycheck for a similarly ranked troop. The change took effect Jan. 1.
For civilian workers, post allowance jumped by 40 percent in Germany and 43 percent in Italy. That means a family of four earning $45,000 per year will receive roughly $100 more per paycheck. That change takes effect on Sunday.
The rate remained flat in the United Kingdom for civilians.
Meanwhile, military members and civilians stationed in both Belgium and the Netherlands also saw increases in their COLA and post allowance.
For overseas troops and civilians, more COLA means more money in the paycheck. But it’s also a double-edged sword that represents diminished purchasing power on the local economy.
Still, for people like Mike Alfaro, a military spouse in Stuttgart, the increase is welcome news.
"It’s better for us when the dollar is weak because we always stay on base," said Alfaro, whose wife is an Air Force sergeant.
Chief Warrant Officer III Adam Bouskuet, who serves with the 66th Military Intelligence Group, says he’s usually oblivious to the fluctuations.
"Honestly, I don’t even notice it," Bouskuet said of COLA increases and decreases. "With respect to the younger soldiers though, I know it is has big benefit to them."
In the topsy-turvy world of currency exchange rates, it’s hard to predict whether the recent allowance increase will hold. Most of 2008 saw the dollar gain against the euro, which lost 4.3 percent against the U.S currency over the course of the year.
Indeed, COLA and post allowance rates had been in freefall since August, when the dollar began making strong gains against both the euro and British pound.
During early trading Friday, the dollar ended its December slip after posting its biggest gain in two weeks against the euro, which bought $1.3910, down from $1.3954 in late New Year’s Eve trading.
