Escalator Clause

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Escalator Clause

A stipulation contained in a union contract stating that wages will be raised or lowered, based upon an external standard such as the cost of living index. A term, ordinarily in a contract or lease, that provides for an increase in the money to be paid under certain conditions.

Escalator clauses frequently appear in business contracts to raise prices if the individual providing a particular service or type of merchandise is forced to pay more for labor or materials.

Such clauses are also often part of contracts or leases executed subject to price-control regulations. When this type of provision is in a lease, a landlord has the power to collect the maximum amount of rent allowed under rent regulations that are in effect at the time of the lease. The escalator clause provides that if the rent regulations are altered during the time of the lease, the tenant must pay the new rental fee computed pursuant to the revised regulations.

escalator clause

n. a provision in a lease or other agreement in which rent, installment payments or alimony, for example, will increase from time to time when the cost of living index (or a similar gauge) goes up. Often there is a maximum amount of increase ("cap") and seldom is there a provision for reduction if the cost of living goes down or for deflation instead of inflation. (See: cap)

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Stated differently, even if the pattern of union employment across industries had remained constant, the number of union workers covered by escalator clauses would have declined.
Because contracts containing escalator clauses cover a period of more than one year, the percentage of workers covered by COLA clauses depends not only on contracts negotiated that year, but also on contracts negotiated in previous years.
25 percent package that contained escalator clauses that could boost the pay of workers by up to 28 percent depending on the national level of inflation.
Boeing, they said, had benefited from price escalator clauses in its sales agreements that boosted 2000 operating revenues in a way that was not likely to be repeated in 2001
2 percent over five years, with escalator clauses for inflation.
2 percent increase over five years, with escalator clauses to deal with inflation - the same deal given to Department of Water and Power workers last year.
There are escalator clauses based on playing time and performance that could eventually push the deal beyond $10 million.
A second major concern for the union is the possibility of unanticipated inflation, which would erode real wages under a long-term labor contract in the absence of a cost of living escalator clause and, again, cast an unfavorable light on the union leadership.