New York, NY--Congressman Eliot Engel led a rally on the steps of City Hall Sunday where he announced his legislation to guarantee seniors a 3% minimum increase annually in their Social Security COLA (Cost of Living Adjustment).

“For the first time in 30 years, there will be no Cost of Living Adjustment for Social Security recipients.” Rep. Engel said, “And because of the way the Social Security COLA is currently calculated, there is no projected increase for the next two years.

“Given that the average Social Security retirement benefit is small - only $13,800 per year, below the minimum wage salary of $15,080 - this has caused considerable and warranted angst among seniors.”

Rep. Engel’s legislation, the Guaranteed 3% Cost Of Living for Seniors Act (HR 4193) would guarantee a minimum increase annually in COLA for Social Security recipients.

He said, “Our challenging economic times mean that people across our country are struggling to pay their bills. And for seniors living in high cost of living areas, like New York, it can be an even greater burden.”

According to the Bureau of Labor Statistics, seniors spend 12.7 percent of their income on health care costs, almost three times the 4.7 percent among those between the ages of 25 and 64. This is compounded by health care costs increasing faster than those for other goods and services.

The 11-term congressman called Social Security and Medicare “two of the greatest anti-poverty programs our country has ever enacted.” He said that most seniors rely on Social Security benefits as their only income. “And, just as seniors have come to expect expenses like the price of their rent, fuel and prescription drugs to rise each year, they have come to depend on a small increase in their Social Security Cost of Living to help make ends meet,” he said.

The Social Security COLA formula is currently based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, (CPI-W) which reflects the purchasing patterns of people who earn at least half of their income from earned wages. However, seniors have a different income structure and spend almost three times more on medical care than those between the ages of 25 to 64. It is under the CPI-W formula that there will be no COLA increases.

Rep. Engel’s legislation would mandate using an experimental index of the Bureau of Labor Statistics called the Consumer Price Index for the Elderly (CPI-E) and geared to capturing inflation among those 62 and over. From 1982 to 2007, under CPI-E inflation ran at an average annual rate of 3.3 percent. That compares with a 3 percent rate with the CPI-W, which is the figure used to determine Social Security benefits. Using a measure like the CPI-E will allow the Federal government to more accurately base COLAs on the actual living costs the typical senior must pay.

Rep. Engel’s legislation would provide a stop-gap measure to ensure that seniors get a minimum 3% COLA every year if the alternative formula falls below this amount.

“There is no question seniors would be better off if my legislation was enacted and I am proud to say the legislation was applauded by the National Committee to Preserve and Protect Social Security, and they were pleased I am addressing this important issue,” Rep. Engel said.