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Not a big issue with the current workforce since inflation is and has been under control for several years. It was a big issue in the 1970s when inflation was out of control. Thanks for the memories!

Jim, if you find a way to get us pay for COL, let me know. My husband and I can move back to California, buy that house by the beach, and go on evening strolls viewing the sunset. Until then, we will continue living in Dallas, Texas - no beach in sight - too hot for the evening strolls, but we can afford a house here, and by the way, business is pretty good here too. In Dallas' COL is pretty much in balance with the price of salaries, so if you choose you can live within your means. Jim, if you do find a way to get us a COL increase each year, based on where we live and what it costs to live there - we would be high-tailing it (Texas expression?) back to Cali for that wonderful climate and seascape!

Jim, congratulations on joining the Compensation Cafe team as a featured blogger!

While I agree that cost-of-living should have little application in corporate compensation policies, unfortunately it's a fact of life that working folks mentally compare the media headlines on CPI changes with their own annual salary adjustments to see if their "standard of living" is being maintained.

It's the continuing challenge of compensation professionals to keep abreast of the points that you have made in your post and in other articles like "Why CPI-Based Pay Policies Are Not the Answer" (http://www.worldatwork.org/waw/adimLink?id=29395&nonav=yes).

Great article, Paul, and so appropriate - thanks!

Congratulation, Jim, will stay tuned for more excellent, original thinking for which you are known.

You've made it sound horribly burdensome to pay COL differntials ("making a separate pay rate for each worker based on their personal expenses") which does not agree with my experience. Where I have worked the COL was accounted for and paid by using a factor (usually a percent of base pay) that applied to all employees. The factors are readily available from companies like Runzheimer and Mercer. Individual employees did not have their own factor. We operated for many years with such a plan and had no problems. I have never heard of any company operating as you describe.

Paul & Vita: Thanks for adding your welcomes to those of the blue-ribbon contributors ... it's an honor to be in their number .. and a challenge to meet the exalted standards they set.

Richard: You are completely correct. I can't find anyone willing to pay me according to the standard of living I would like to achieve... like Donald Trump's. Seems terribly unfair to ascribe some arbitrary theoretical norm to me that has no relationship to my actual living costs!

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