The cost-of-living adjustment (COLA) for federal employees in 2025 is a crucial measure that aims to maintain the purchasing power of federal workers’ salaries amidst rising living costs. It is calculated based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures the change in prices of goods and services purchased by this specific group of consumers.
COLAs are of paramount importance for federal employees as they ensure that their salaries keep pace with inflation, thereby preserving their standard of living. Historically, COLAs have played a significant role in supporting the financial well-being of federal workers, particularly during periods of high inflation. They help maintain the morale and productivity of the federal workforce, which is essential for the efficient functioning of the government.