President Donald Trump's freeze on federal hiring could affect Americans in lots of ways. Your Social Security cost-of-living adjustment (COLA) might seem to be an unlikely item on the list.
However, Trump's hiring freeze at the U.S. Bureau of Labor Statistics (BLS) could make inflation data collected by the agency less accurate, and result in a COLA increase that doesn't keep pace with the higher prices seniors pay. One senior advocacy group isn't happy about it.
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How could a hiring freeze affect your Social Security COLA?
To understand how a hiring freeze at the BLS could affect your Social Security COLA, we first have to understand how the COLA is calculated. That calculation hinges on inflation.
Each month, the BLS releases inflation data for the previous month. The agency's staff contacts thousands of physicians' offices, retail stores, service establishments, and more all over the U.S., either in person, on the phone, or online. They collect information on the prices of thousands of items used in the inflation metrics tracked by BLS.
One of those inflation metrics is the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). As its name indicates, this inflation number focuses on prices paid by primarily blue-collar workers who live in urban areas.
The Social Security Administration (SSA) calculates the annual COLA by comparing the average CPI-W for the third quarter of the current year against the average for the previous year. If there's an increase, the SSA rounds it to the nearest one-tenth of 1% to set the COLA for the next year.
Trump's hiring freeze at the BLS has forced the agency to cut back on the number of businesses it surveys each month to gather inflation data, according to a recent article published by The Wall Street Journal. The BLS is now using a method for estimating prices that isn't as accurate as the approach previously used because it doesn't have enough workers. The agency has also halted collecting inflation data in three U.S. cities.
The bottom line is that the Social Security COLA is only as good as the inflation data used to calculate it. That data could be less reliable going forward.
"Problems for American seniors"
The Senior Citizens League (TSCL) is a nonprofit organization that has advocated for seniors since 1992. It highlighted the potential problems for retirees that could result from President Trump's hiring freeze in its latest COLA projection update.
TSCL Executive Director Shannon Benton said: "While streamlining the federal government is a good thing, that shouldn't involve cutting back on our ability to measure how our economy is changing." She added: "Inaccurate or unreliable data in the CPI dramatically increases the likelihood that seniors receive a COLA that's lower than actual inflation, which can cost seniors thousands of dollars over the course of their retirement."
Could less accurate inflation data from the BLS help seniors? Maybe. TSCL acknowledged that there's a possibility that the BLS's inflation numbers could be higher than actual inflation and lead to a higher COLA. However, the risk is just as great that the opposite could be true. TSCL put it bluntly: "Problems with CPI data could spell problems for American seniors."
A recent survey of seniors conducted by TSCL underscores a perceived issue with Social Security COLAs. This survey found that 80% of seniors thought the inflation rate for 2024 was more than 3%, which is well above the 2025 COLA of 2.5%.
Is this issue a mountain or a molehill?
Perhaps the BLS hiring freeze ultimately won't have a significant effect on the benefits increase received. But anyone who has worked with data is probably familiar with the saying, "Garbage in, garbage out." The more unreliable the inflation data from the BLS is, the more unreliable the Social Security COLA will be.
Retirees won't find out what the Social Security COLA for 2026 will be until mid-October. They could learn then whether or not the COLA issue resulting from President Trump's hiring freeze is a mountain or a molehill.
