Spendable income is derived from the BLS Consumer Expenditure
Survey and represents the aggregate spending pattern of CONUS
families varying by income level and family size.
Spending for food consumed at home, food consumed
away from home, clothing, personal care, tobacco and alcohol,
car purchase, personal care, household operations, transportation,
recreation, medical care, and telephone are included in COLA.
Spending for Federal income taxes, shelter expenses, gifts and contributions,
life insurance, and savings are not part of COLA.
Data derived from the BLS data
provides the aggregate amount families spend on COLA goods
and services varying by income level and family size.
COLA is paid as percentage of spendable income. An index of 110 would result in an annual
COLA of 10 percent of the spendable income corresponding to
the member's grade, years of service, and family size.
Current spendable income table updated October 2002, effective
1 January 2003 using BLS and CES data released in 2002.
Factors
that impact on COLA:
- The COLA index is highly dependent
on the proportion of shopping done in on-base facilities. In
general, the higher the proportion of on-base shopping, the
lower the index.
- COLA is not intended to measure all
of the differences in living overseas and living in CONUS. Cultural
differences, climate differences, and inconvenience factors
are more properly addressed through Hardship Duty Pay, Location.