My question is, is that something something be happy about?
Happiness is personal.
You can choose to look on the bright side "Hey, I'm making 3% more today!" or the dark side "Only 3%. That's how much my personal cost of living has increased, so it's like getting nothing."
My personal cost of living increase is almost certainly not the same as yours. Some people are paying a lot of rapidly-increasing health care costs, for example. Some people are saving for college educations that are rising more rapidly than inflation. Others are living a life that isn't getting much more expensive the past year or so.
Happiness is very context sensitive.
In my company, 3% has been the norm for the past few years. But I also remember a time when single-digit raises were devastating, and a clear sign that you needed to move on to keep up with inflation.
It is my understanding that a cost of living raise is designed to keep
your salary consistent with inflation and that it is something that is
pretty much expected even for an average employee.
It always depends on how one measures inflation, and the cost of living. Here's a calculator which seems to indicate that inflation in the US has been under 3% for a while - http://www.usinflationcalculator.com/ . That may or may not be an accurate measure of your personal cost of living.
For those collecting Social Security in the US, their Cost of Living Increase in 2014 is only 1.5%
Perhaps it is true that in your part of the world, in your field, that 3% is an "average, keep up with the cost of living" raise these days.
You still get to feel happy, if you choose, that your company values you enough to want to keep you around.
Or you can feel sad that your company considers you only average.