COLA, Raises Two Different Things

The retiree COLA, which is set through an automatic inflation-linked process, has no direct effect on pay raises for active employees, which are determined through the annual budget process involving the White House and Capitol Hill. However, there is some confusion of the two in the federal realm since some employees and even members of Congress refer to raises as COLAs and some retirees refer to their COLAs as raises. The raise figure is linked to a measure of wage growth, the employment cost index, not to the cost of living.