Skip to main content

Cost of Living Adjustment: Are you leaving money on the table?

By August 29, 2023May 31st, 2024L & I, News, Worker’s Compensation
Female doctor helping patient at hospital on a blog about cost of living adjustment

2023 Cost of Living Adjustment 

To keep up with annual inflation and rising costs, the Washington State Department of Labor and Industries (L&I) looks to the Employment Security Department (ESD) to determine if a Cost of Living Adjustment (COLA) is necessary. And if so, how much? 

Before we get into ‘how much’, let’s understand how COLA is calculated. Stick with me here, I’m going to throw a lot of numbers at you. 

COLA is based on 3rd quarter increases (Jul-Sept) year-over-year, as listed in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). In Washington State, the ESD produces a report of the average annual wage, and whether there was an increase from the previous year.

In 2023, the ESD reported that the average annual wage in Washington State increased approximately 2% over the previous year. So, what does that look like in real terms? The table below shows the annual US COLA, Washington average salary, and annual inflation increases since 2020.

Washington State COLA: Salary and inflation rate increases 2020-2024

Year 2020 2021 2022 2023 2024 Prediction
COLA  6.7% 10.1% 7.51% 2.1% 3%
Ave. WA Salary $69,641 $75,550  $82,508 $84,167 $86,692
Annual Inflation Rate 1.71% 4.49% 8.89% 8.5% 2.6%


COLA: A refreshing treat or empty salaries?

When the costs of food, rent, gas, and general living expenses are going through the roof, why is the COLA so low? 

The COLA formula seems logical at first glance—determine the average annual wage growth and set the COLA accordingly. But, our question is whether the average annual salary is the best gauge of increases in the cost of living. Let’s dig into this more. 

According to the Washington State Office of Financial Management, the average wage in Washington in 2020 was $75,550. We now know that in 2023, the average has risen to $84,167. That’s an increase of about 11.4%. At the same time, Washington’s minimum wage has gone from $13.50 to $15.74 per hour. That’s a 16.5% jump. Yeah, so?  Why does that matter?

Think of some of the more strenuous jobs that may require a worker to file an L&I claim and miss work: roofers, laborers, warehouse workers, welders, nursing practitioners, etc. Generally speaking, the harder, more physical, and more dangerous jobs are usually on the lower side of the pay scale, yet they make up the vast majority of injury claims. 

Most people receiving time-loss benefits aren’t “top-tier” wage earners making over $84k/year, and while I’m no economist, it seems to me that the COLA should be tied more closely to the incomes of people who are actually receiving—and attempting to live on—those benefits. Remember, time loss is generally only 60% of a person’s wage at the time of injury.

The numbers don’t add up 

Still with me? Good, ‘cause here’s the problem. Let’s go back and look at those 2020 numbers, the most recent finalized data available from the Office of Financial Management. It says the average wage in Washington was $75,550, yet the US Census has Spokane’s per capita income at $34,340. 

Well, we know that certain areas of our state have higher average salaries, generally due to the higher number of industrial jobs in the rest of the state compared to the higher number of tech and white-collar-type jobs in King County. But that difference is astounding when it comes to determining whether injured workers can survive on time-loss benefits.

If an injured worker was making $34,340 and was on time loss at 60% of their wage, they would receive $396.23 per week. Well, 2.1% of $396.23 is $7.92. 

The COLA in 2023 has increased this injured worker’s time loss rate by less than $8 per week. I don’t know where you shop, but I know my grocery bill has increased by more than $8/week since last year. Then there’s gas, rising interest rates, rising rents, and everything else that goes into the cost of living mix. Oh my! 

Are you leaving money on the table?

We have to imagine there’s a better way to determine these adjustments, but for now, what we have is what we have. Deep sigh. If you’re on time-loss for an injury and didn’t receive the COLA that you expected, or you want to make sure your wage order is accurate, don’t leave your money on the table. If you’d like to schedule a free consultation with Carlisle + Byers, contact us today. We’ll help you sort through the jargon so you’re taking advantage of all that COLA offers.