Despite 93% of U.S. employers implementing pay increases this year, many workers still struggle to meet their basic needs. Though the majority of employers delivered on pay raises this year, Mercer’s recent QuickPulse U.S. Compensation Planning Survey found that the average merit increase was just 3.2%, which fell slightly below projections.

Because of this, some HR leaders, researchers and payroll experts argue that compensation strategies must evolve. From living wage thresholds to same-day pay to financial coaching, CHROs are exploring how to treat pay as a system of resilience, not just a budget line.

Living wage is a threshold, not a goal

At Dayforce Discover, a panel addressed the “power of pay.” Guest Matt Bahl, vice president and head of workplace financial health at the Financial Health Network, defined the living wage as “the threshold where people can meet basic needs without public assistance.”

According to Paycom’s July 2025 report, 11 states and Washington, D.C. have minimum wages at or above $15 per hour.

Kavya Vaghul, co-founder and chief product officer at the Living Wage Institute, pointed out that even $15 an hour is insufficient in many counties across the country. She said only 56% of U.S. employees earn a living wage, and as the cost of living rises, living wage data becomes a “new way of looking at the market.”

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Earned wage access

Vaghul also highlighted the hardship caused by two-week pay cycles, which delay access to earnings. Jason Rahlan, global head of sustainability and impact at Dayforce, pointed out that 70% of the American workforce is financially unhealthy, according to Financial Health Network.

Rahlan’s own report, The Freedom of Pay, touched on paycheck liquidity. Dayforce found that more than three-fourths of full-time workers in the U.S. are still paid only once or twice a month.

Vaghul added that same-day pay is easier now, referencing innovations that allow for on-demand pay or earned wage access. Dayforce has its own Wallet product, and Paychex Flex Perks, Chime Workplace and Salt Labs—all of which offer some earned wage access—were designated Top HR Products of the Year by HR Executive recently.

Additionally, payroll systems are increasingly pressed to support same-day pay and predictive scheduling, while meeting IRS compliance standards that shape how employees understand and manage their earnings.

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Employers offer financial coaching

While financial literacy has long been a staple of workplace benefits, the speakers emphasized that financial coaching offers something more. While literacy often stops at general education, coaching is hands-on, personalized and built around real-life decisions.

Vaghul described it as one-to-one and available at no cost to employees—a resource that meets people where they are. She said coaching helps employees navigate everything from budgeting and debt to healthcare and retirement. It’s a shift from passive learning to active support, and a growing part of how HR leaders are building financial resilience into the employee experience.

Healthcare costs compound money stress

There’s another aspect of employee financial wellness that touches the HR department. Vaghul pointed out that healthcare costs are persistent and often consume up to a third of a worker’s income. “Healthcare is a lever for improving financial health,” said Vaghul.

Though many employers provide health coverage, Vaghul broke down the challenges across insurance models. PPOs offer the best coverage but are difficult to access, HMOs limit both access and choice, and high-deductible plans shift financial burden onto wages.

She also noted that many low-wage workers are pushed toward ACA plans, which are in flux as the U.S. government debates the handling of subsidies that make these plans more affordable.

Jodi Parsons, senior director of payroll at the Kansas City Royals, shared that her organization formed a concierge-style service two years ago to help employees make healthcare arrangements.

She said this allows people to “focus on work and family obligations.” It also keeps most employees out of high-expense care situations. Parsons cited that 60% of program participants “do not go to the ER at all,” suggesting that fear of cost deters care.

Rahlan pointed out that money stress impacts employees at every level. Workers across the spectrum, from hourly staff to executives, have financial obligations, he said. “[Employees] aren’t asking for a handout. They want access to the money they already earned.”