Companies Shift to Targeted Pay Strategies as Salary Budgets Hold Steady at 3.4% for 2027: WTW

HR Dive · United States · Jul 24, 2026

WTW's survey of more than 34,000 companies finds U.S. salary budgets are projected to grow 3.4% in 2027, roughly flat with the 3.5% actual increase in 2026, as employers prioritize cost management over broad-based raises. More than a third of companies are adjusting compensation programs, increasingly favoring spot awards, retention bonuses, and higher starting salary ranges for critical roles rather than across-the-board merit increases. Employee retention remains elevated at 69% staying put, while only 22% of companies report adding headcount — a signal of continued labor market caution. For staffing firms, the shift to performance-driven, targeted pay strategies may affect placement negotiations and client compensation benchmarks heading into 2027.