The Great Pay Disconnect: 95% of Workers Say Wages Haven't Kept Up with Soaring Costs

A new survey from Monster reveals a stark reality for American workers: 95% say their wages haven’t kept pace with the soaring cost of living, leading to widespread financial stress and career shifts. As inflation inches up and employers pull back on competitive raises, this disconnect is fueling dissatisfaction and increasing the risk of high turnover.

The Financial Squeeze

Financial strain is forcing tough decisions. According to the survey, beyond cutting nonessential spending (75%), a significant number of workers are actively searching for higher-paying jobs (56%), reducing retirement savings (55%), and even acquiring new debt (42%). Career expert at Monster notes this isn't about scaling back on luxuries; it’s about meeting basic needs, with 94% identifying groceries as the fastest-rising expense.

Adding to the pressure, only 9% of workers report receiving a raise to offset higher costs. With the state of pay "out of sync with the soaring cost of living," Monster career expert warns that workers are being "severely shortchanged."

Employers Hitting the Brakes

Despite the employee crisis, employers are planning to be cautious. Average salary budget increases for 2026 are projected to drop to 3.5% (down from 2025), a sign that economic uncertainty is making organizations pull back after a period of competitive pay bumps.

However, experts caution against this conservative approach. Considering that approximately half of all workers are willing to "job-hop" for better pay, companies risk high turnover. Payscale research reinforces this, finding that 88% of workers believe salary should reflect the cost of living.

A Call for Proactive Compensation

A Monster career expert urges employers to calculate the actual cost of turnover—including lost productivity and institutional knowledge—and compare it to the cost of a raise. Often, an increase is easily justified.

If significant raises aren't possible, employers should explore alternatives to mitigate financial pain:

• Incremental Increases: Consider quarterly raises or spot bonuses.

• Flexible Options: Offer remote work or flexible schedules to reduce commuting costs.

• Communication: Acknowledge the financial struggle. As Salemi advises, “At least communicate to workers that they see their pain and if they could do more right now, they would.”

The message is clear: To retain talent and maintain morale, organizations must stay thoughtful and proactive in their compensation approach in this high-cost environment.