Payscale: Merit Increases Gain Ground as Across-the-Board 'Peanut Butter' Raises Decline

HR Dive · United States · Aug 6, 2026

Payscale's 11th Annual Salary Budget Survey finds U.S. employers plan average pay increases of 3.5% for 2027, marginally up from 2026, while the share of companies giving uniform across-the-board raises is falling — from 36% in 2026 to a planned 32% in 2027. Merit-based increases are now the most popular raise type, with flat raises flagged as demotivating; 25% of firms reported losing employees in 2026 due to insufficient pay increases. More broadly, 30% of employers expect salary budgets to grow year over year in 2027, up sharply from 16% last year, even as overall pay increase trends have been declining since the post-COVID peak. With wage growth now roughly matching inflation, workers may become more mobile — a signal staffing agencies should monitor for potential upticks in candidate availability.