Final answer:
COLA, or Cost of Living Adjustment, is a wage increase aimed at helping workers keep up with inflation. It is a form of indexing applied to wages.
Step-by-step explanation:
COLA stands for Cost of Living Adjustment, which is a wage increase designed to help workers keep up with rising prices caused by inflation. In the 1970s and 1980s, labor unions commonly negotiated wage contracts that included COLAs, which guaranteed that wages would automatically increase based on the rate of inflation. For example, if inflation was 5%, a wage increase of 8% would be given. COLAs are a form of indexing applied to wages.