Shoppers peruse offerings at a weekly farmers market Aug. 8, 2023, in Kaiserslautern, Germany. Despite price increases across Germany, U.S. service members in the Kaiserslautern Military Community will see their overseas cost of living allowances drop starting with next month’s paychecks. (Alexander Riedel/Stars and Stripes)
KAISERSLAUTERN, Germany — The season’s greetings American troops and their families in the largest overseas U.S. military community can expect from Uncle Sam this year will mean less holiday green to spend.
Starting Nov. 16, the overseas cost-of-living allowance for service members stationed in the Kaiserslautern Military Community and other areas in Europe is going to drop, with the first slice coming in December’s paycheck.
The next cut is already penciled in for May 16, 2024.
In the Kaiserslautern area, an E-6 with 10 years of service who lives off base with a spouse and two children is currently pocketing $270 in COLA every pay cycle.
This buffer is slated to shrink to $232 by December and down to $193 by May, according to an 86th Airlift Wing statement.
The area is home to tens of thousands of service members and their families.
The upcoming reduction is the first in a two-phased cut announced in May.
For trims greater than two index points, the military uses a two-step approach to give families time to tweak their budgets and adapt, defense officials said in the summer.
The reductions are based in part on survey data last collected from service members in 2021. Living in Germany, however, became noticeably more expensive in 2022, when inflation peaked at 8.8% in October in the aftermath of Russia’s invasion of Ukraine in February of that year.
From food to energy, clothing and gasoline, service members in the area, which includes Ramstein Air Base and several Army installations, have been paying higher prices.
While inflation has slowed in 2023, the cost of living remains high in Germany and price averages for goods and services have further increased by more than 3% from a year ago, according to Germany’s federal statistics office.
The overseas cost of living allowance is tax-free. Payouts vary by location, pay grade, years of service and number of dependents.
Its aim is to ensure that the more than 230,000 service members overseas don’t get a raw deal compared with their stateside counterparts when goods and services are pricier there than they are stateside. When prices rise back home, COLA may drop.
“(Service members) shouldn’t see OCOLA as a stable source of finance toward car payments or rent,” Maj. Malachi Thompson III, a branch chief for personnel policy and programs at U.S. Air Forces in Europe and Africa, said in a statement Friday. “It exists to absorb some of the dollar’s impact as it fluctuates in a larger global economy.”
Adjustments to the National Defense Authorization Act last year stipulate that the Defense Department can tighten its purse strings on families only every six months or for significant shifts in currency exchange rates.
Two surveys gauge the cost of living abroad versus in the U.S. The annual retail price schedule compares prices for a basket of about 120 items based on recent shopping trends year to year.
The living pattern survey asks service members every three years about their household costs and where they buy goods locally or on base. The next living pattern survey is not slated until September 2024.
A web calculator on the Defense Travel Management Office website allows service members to see the current overseas COLA rate.
