Workers Say Pay Isn’t Keeping Up with Cost of Living

Nearly all workers say that their wages haven’t kept up with the cost of living — data that furthers the trend of employee dissatisfaction with pay, especially as inflation creeps back up and employers back off on competitive salary increases.

A new survey of more than 1,200 employees from careers site Monster found that an overwhelming 95% of workers said their wages have not kept up with the rising cost of living, prompting widespread financial stress and causing many workers to cut expenses and look for higher-paying jobs. Experts said it’s a finding that employers might want to consider, prompting them to look at compensation and benefits strategies. 

“American workers are financially stretched, and [those] financial strains are influencing workers’ career decisions,” said Vicki Salemi, career expert at Monster.

Meanwhile, 76% of employees said recent economic policies under the new administration have directly affected their financial planning. 

While cutting nonessential spending is the top financial choice employees are making due to rising costs (cited by 75% of workers, up from 69% in 2024), significant amounts are also searching for higher-paying jobs (56%), reducing contributions to retirement or emergency funds (55%), and acquiring new debt through credit cards or loans (42%), according to Monster.

“It's not like they’re identifying luxury, nice-to-have items that they can scale back on,” Salemi said, explaining that 94% of workers identified groceries as the fastest-rising expense. “The need-to-have pricey expenses make daily living much more challenging.” 

How-To Guide: Communicating Limited or No Pay Increases to Employees

The new findings come as inflation starts to rise again. The consumer price index for September, for instance, increased 0.3% on a monthly basis and rose 3% year-over-year. Meanwhile, health care costs are also significantly on the rise for both employers and employees, with premiums for employer-sponsored family health coverage hitting nearly $27,000 a year.  

Pay ‘Out of Sync’ with Cost of Living

The new figures on financial strain are coupled with the fact that just 9% of workers indicated they received a raise or salary adjustment to offset higher costs, according to Monster. 

“The state of pay today is out of sync with the soaring cost of living,” Salemi said. “Workers are being severely shortchanged and feeling the blunt impact as wages aren't keeping pace with significantly higher expenses. While many employers also face higher operating costs and may be genuinely stretched, as well, the reality remains that wages have not kept pace with the cost of living.”

Meanwhile, other reports have found that organizations are planning to pull back on salary increases for employees as they grapple with economic concerns. U.S. employers are planning, on average, a 3.5% salary budget increase for 2026, down 0.1% from 2025, according to Seattle-based compensation firm Payscale. Consulting firm WTW recently gave the same prediction for next year’s average pay increase percentage. 

Although it’s not a big decrease, those figures indicate that the shifting economic landscape is affecting employers and making them cautious about spending. That’s a change from the past few years, when a tight labor market, inflation, and the effects of the pandemic caused organizations to rely on competitive pay bumps to keep workers happy and engaged.

“In such an uncertain environment, it is likely that many employers are in wait-and-see mode and will take a more cautious approach as they devise their pay and compensation strategies going forward,” said Sydney Ross, economic researcher at SHRM. 

Specialty Credential: Total Rewards

Turnover Risk 

Although recent estimates regarding 2026 salary increase budgets indicate that employers are pulling back on pay increases, experts caution that employers should remain flexible. Without increasing pay, they may risk losing employees, especially in the wake of the rising cost of living.

“Considering that approximately half of workers said they're more willing to job-hop in pursuit of better pay, employers may experience turnover,” Salemi said. 

Plus, Payscale research found that the vast majority of workers (88%) believe that salary should reflect the cost of living.

Salemi recommended that employers stay thoughtful and proactive in their pay approach. 

“Calculate the cost of replacing that worker, the time-to-fill, lost productivity, institutional knowledge, and how it impacts their bottom line, along with decreased morale and additional workloads of others who remain employed at their same pay,” she said. “Compare that cost with their current salary and chances are, that salary increase is a no-brainer. It's easily justified and warranted.”

If employers are not able to increase employee pay in one full amount, Salemi said, they can consider incrementally offering quarterly increases or spot award bonuses. 

Looking at Other Options

If increased wages aren’t in the cards at all for organizations due to economic strain, employers could consider reducing workers’ hours slightly, Salemi said, “which, in turn, increases their value.” Offering more flexible schedules and remote options to decrease commuting costs, as well as resources to upskill, can be another strategy to consider. 

Frequent communication is also key, she said, so workers feel seen and heard. 

“When employers are struggling financially and they're trying to prevent layoffs amid their own financial turmoil, they may want to consider at least communicating to workers that they see their pain and if they could do more right now, they would,” Salemi said.