How to Calculate Cost of Living Wage Increase

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The consumer price index (CPI) is a figure published monthly by the U.S. Bureau of Labor Statistics that measures the price change of consumer goods and services purchased by U.S. households. The annual percentage change in the CPI is typically used to determine the rate of inflation. Because cost-of-living wage increases are directly tied to inflation, you can use the CPI index to calculate the expected cost-of-living wage increase.

Instructions

  1. Go to the main website of the U.S. Bureau of Labor Statistics.

  2. Locate the previous year's CPI table and determine the CPI for the previous year. For example, in 2009, the CPI was 2.7 percent.

  3. Multiply last year's CPI figure by your annual salary to determine the cost-of-living wage increase for the next year. Using 2009's figure and assuming a salary of $50,000, the formula would be: $50,000 x .027 = $1,350. This figure represents the expected cost-of-living wage increase. You can also calculate the expected increase for an hourly employee by multiplying the CPI figure by the hourly wage. For example, assuming an hourly wage of $10, $10 x .027 = $0.27.

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