Declining yen likely means zero COLA for US troops in Japan

YOKOTA AIR BASE, Japan — The declining Japanese yen means many American troops stationed here are likely to lose the allowance they receive to offset the cost of overseas goods and services, according to U.S. Forces Japan.

This month the yen hit a 40-year low against the strengthening U.S. dollar. On Tuesday the dollar was worth more than 162 yen, roughly the same exchange rate seen in December 1986.

“Because the U.S. currency now buys significantly more goods and services on the local economy than it did previously, the supplemental allowance required to equalize purchasing power, commonly known as COLA, is shrinking,” according to a USFJ news release Monday.

Overseas COLA — or Cost of Living Allowance — fluctuates with exchange rates and is supposed to ensure troops’ buying power is equal to that of service members in the continental United States.

“The COLA index for many installations in Japan is projected to drop to 100 and below, meaning the allowance will be zero,” the release states.

Service members ability to purchase goods in Japan will stay the same, even without the allowance, because of the favorable exchange rate, according to USFJ.

“With the dollar this strong compared to the yen, service members can find a lot of value buying food and household goods on the local economy,” USFJ spokesman Air Force Col. John Severns said in the release.

COLA, a fluctuating, untaxed benefit, is designed to preserve overseas service members’ purchasing power.

An online COLA calculator provided by the military shows that a sergeant stationed at Yokota with six years’ service and two dependents received over $100 in COLA for the first pay period in July. A captain with the same family size and length of service would get more than $133.

The Pentagon calculates the allowance by making a list of 150 non-housing goods and services that military households spend the most money on. Next, a voluntary living pattern survey is used to gauge service members’ shopping habits, which are then compared to local retail prices.

That information is used to compute a rate that is supposed to represent how expensive those items are when compared to the average stateside.

In 2024, the most recent year for which a full set of data is available, 225,000 service members living outside the continental U.S., including in Alaska and Hawaii, received about $1.2 billion in cost-of-living allowance payments, according to the Government Accountability Office.