Healthcare Pay Stagnates as AI’s Impact on Jobs Remains on the Horizon

NEW YORK, NY – December 09, 2025

As healthcare organizations continue to navigate economic crosscurrents, a new report from Mercer signals a period of financial stabilization that may feel more like stagnation for many employees. According to the firm’s October 2025 US Compensation Planning Survey, employers across the nation plan to hold total salary increases to an average of 3.5% in 2026, with merit-based raises at 3.2%—figures identical to 2025’s actuals. This trend, mirrored by reports from Willis Towers Watson and Payscale, suggests that real wage growth will be minimal, with inflation forecasts for 2026 hovering between 2.6% and 3.5%.

For the healthcare sector, which is already grappling with significant operational and labor challenges, these numbers tell a more complex story. The data reveals a critical disconnect between stated talent priorities and actual budget allocation, a phenomenon Mercer calls the “compensation strategy gap.” Furthermore, the much-hyped impact of artificial intelligence on hiring and pay has yet to materialize, indicating that organizations are still in the early, cautious stages of integrating AI into their core workforce strategies. This creates a challenging environment where the need for innovation is high, but the mechanisms to reward it are lagging.

The Widening Gap Between Pay Strategy and Talent Needs

One of the most striking findings from the Mercer survey is the strategic paradox facing employers. While leaders identify skill and talent development (34%) and market competitiveness (31%) as top priorities, a staggering 83% of organizations plan to distribute their salary increase budgets equally across the workforce. This broad-brush approach fails to differentiate and reward the high-demand skills essential for navigating the future of healthcare, from clinical informatics to AI implementation.

“Employers have a significant opportunity to strategically shape their spending to better align with critical talent goals,” said Lauren Mason, Mercer’s US Workforce Solutions Leader, in the press release. “By focusing compensation budgets on high-demand skills rather than spreading resources too thin, leaders can more effectively drive their workforce strategy and secure the talent essential for success.”

The reluctance to adopt a more targeted approach often stems from a combination of factors, including a desire to maintain internal equity, the administrative complexity of managing skill-based pay systems, and general economic uncertainty. However, in a sector like healthcare, where the competition for data scientists, cybersecurity experts, and specialized clinical technicians is fierce, this uniform approach poses a significant risk. Failing to offer competitive compensation for these critical roles can lead to higher turnover, difficulty in attracting new talent, and a widening of the very skill gaps that organizations are trying to close. This creates a cycle where innovation is stifled not by a lack of vision, but by a compensation model that fails to support it.

Healthcare's Compensation Headwinds

The Mercer data confirms that the healthcare industry is facing significant economic headwinds that directly impact its ability to reward employees. The sector, along with retail, reported some of the lowest planned merit increases for 2026 at just 2.9%. This is a continuation of a trend, as healthcare has consistently lagged behind other industries like financial services and energy, which anticipate higher total increases of 3.7%.

These constrained budgets reflect the immense pressure on healthcare systems. Persistent labor shortages, particularly in nursing and allied health professions, continue to drive up operational costs. Simultaneously, providers face tightening reimbursement rates from both government payers and commercial insurers, squeezing profit margins. In this environment, cost control becomes a dominant priority, often leading to conservative compensation strategies that can feel disconnected from the intense demands placed on the workforce.

The result is a difficult balancing act for healthcare leaders. They must find ways to attract and retain talent in a highly competitive market while operating under severe financial constraints. This challenge is compounded by a projected decrease in promotions, with employers planning to promote around 9% of their workforce in 2026, down from 10% in 2025. For healthcare professionals looking for career and financial advancement, the landscape appears increasingly challenging, potentially impacting morale and long-term retention.

AI's Quiet Arrival in Workforce Planning

While discussions about AI often center on job displacement and radical transformation, the Mercer survey provides a grounding dose of reality. Currently, AI and automation have a surprisingly limited impact on hiring and compensation decisions. Only 2% of surveyed organizations cited AI as a reason for reduced hiring, and 57% reported stable hiring volumes despite its adoption. This suggests the revolution is not yet here, but is rather in a slow, deliberate phase of implementation.

Stephanie Penner, Mercer’s US & Canada Career Practice Leader, offered a crucial insight in the company's release: “AI hasn’t yet reshaped hiring or compensation decisions – not because the technology isn’t ready, but because organizations are still evolving their operating models to apply AI responsibly and with the right governance and oversight.” This is particularly true in healthcare, a sector defined by its high stakes and regulatory complexity. Before AI can be used to optimize staffing models or create more equitable pay structures, organizations must first build robust frameworks for governance, data privacy, and ethical oversight.

As these foundational elements are put in place, AI’s role is expected to grow. The technology holds immense potential to help solve the very challenges organizations currently face. For instance, AI could analyze market data, internal performance metrics, and skill inventories to help close the “compensation strategy gap,” enabling a more dynamic and data-driven approach to pay. It could also optimize scheduling and administrative tasks, freeing up clinical staff to focus on patient care. The current data does not signal a lack of potential for AI, but rather highlights that the journey from innovation to implementation is a marathon, not a sprint, especially in the cautious and highly regulated world of healthcare.