Friday, April 1, 2011

Price Indexing and Cost of Living Adjustments

Below is a link to a brief essay on price indexing to get at the idea that there is no perfect way to compensate people for a price increase but there are standard ways of doing it in practice. It's been a while since we've seen substantial inflation, so it may be a little harder to get students to be interest in COLAs, but I do believe students can understand that when working for a large company they might be assigned to work wherever on the globe that the company has an office. The idea that their compensation should be adjusted to the local cost of living then should resonate, at least a little bit.

No comments: