Forbes:
• About 44% of employers plan to give uniform, across-the-board pay raises in 2026 instead of merit-based increases, a practice often called peanut butter raises, according to a Payscale report.
• Average pay increase budgets are holding steady at about 3.5%, but nearly a third of companies plan to reduce raise budgets due to economic uncertainty and cost control concerns.
• Employers cite criticism of merit-based pay as too subjective and biased, and say flat raises are simpler to administer and can better support low-wage workers facing inflation.
• Economic conditions are a key driver: slower hiring, ongoing layoffs, and fears of recession have overtaken labor competition as the main factor shaping compensation decisions.
• While many companies spread limited raises evenly, some still heavily reward top performers, such as Walmart boosting pay for top store managers to strengthen performance and culture.