Cost of Living Still Exceeding Wage Growth

Along with the above, reports indicate that wages are not keeping up with the cost of living, even though costs are coming down for some important items, such as fuel. Employees are delaying contributions to retirement plans, looking for higher-paying jobs, etc. Employers are advised to review their programs for compensation, benefits and other support systems to be able to retain their employees.

Along that same line, health insurance costs are expected to help fuel that increase; they have risen by 6% in 2025 over 2024 levels, and are expected to rise even more in 2026. A significant contributor to these costs is that of prescription drugs, particularly the GLP-1 weight-loss drugs, which have increased 9.4% in 2025. Nearly half of employers now cover GLP-1 drugs, up from 44% in 2024. Consequently, employers and employees are about to face an “affordability crunch,” according to Mercer research.