Many U.S. companies are abandoning performance-based pay raises in favor of a uniform, across-the-board increase - often referred to as a "peanut-butter" style raise - according to new research from compensation expert Payscale.
The trend is expected to continue in 2026, with over 44% of companies opting for the identical hikes. This approach may seem appealing from an administrative perspective, as it's easier to implement and can save money on complex calculations. However, critics argue that this method can lead to a lack of motivation among employees who don't feel they're being recognized or rewarded for their individual achievements.
Some experts caution that spreading pay hikes evenly across the workforce can have unintended consequences. Top performers may feel undervalued or overlooked, leading them to seek opportunities elsewhere. Payscale's chief compensation strategist, Ruth Thomas, notes that while base pay budgets may be limited, companies can still offer bonuses and promotions to reward top talent.
The "peanut-butter" approach gained popularity during the Great Recession as budget-constrained companies looked for ways to cut costs. However, with a slow decline in pay increase budgets expected in 2026, more companies are adopting this strategy to maintain flexibility.
Interestingly, smaller establishments with fewer than 100 employees are offering higher pay increases - up to 4% - compared to their larger counterparts. In contrast, businesses with between 10,000 to 50,000 workers plan to hand out 3% raises in 2026.
Industry-specific averages for pay hikes also vary. Companies in sectors struggling to find workers, such as construction and technology, are offering above-average pay increases of up to 5%. Meanwhile, blue-collar fields like construction are gaining popularity among younger job-seekers due to the prospect of jobs less susceptible to automation.
As AI continues to reshape the job market, some employers may need to rethink their compensation strategies. With 77% of Generation Z saying they want a job that's hard to automate, companies may need to offer more than just a paycheck to attract top talent in the future.
The trend is expected to continue in 2026, with over 44% of companies opting for the identical hikes. This approach may seem appealing from an administrative perspective, as it's easier to implement and can save money on complex calculations. However, critics argue that this method can lead to a lack of motivation among employees who don't feel they're being recognized or rewarded for their individual achievements.
Some experts caution that spreading pay hikes evenly across the workforce can have unintended consequences. Top performers may feel undervalued or overlooked, leading them to seek opportunities elsewhere. Payscale's chief compensation strategist, Ruth Thomas, notes that while base pay budgets may be limited, companies can still offer bonuses and promotions to reward top talent.
The "peanut-butter" approach gained popularity during the Great Recession as budget-constrained companies looked for ways to cut costs. However, with a slow decline in pay increase budgets expected in 2026, more companies are adopting this strategy to maintain flexibility.
Interestingly, smaller establishments with fewer than 100 employees are offering higher pay increases - up to 4% - compared to their larger counterparts. In contrast, businesses with between 10,000 to 50,000 workers plan to hand out 3% raises in 2026.
Industry-specific averages for pay hikes also vary. Companies in sectors struggling to find workers, such as construction and technology, are offering above-average pay increases of up to 5%. Meanwhile, blue-collar fields like construction are gaining popularity among younger job-seekers due to the prospect of jobs less susceptible to automation.
As AI continues to reshape the job market, some employers may need to rethink their compensation strategies. With 77% of Generation Z saying they want a job that's hard to automate, companies may need to offer more than just a paycheck to attract top talent in the future.
Those "peanut-butter" style raises might be easier to implement, but do they really address the root issue of motivating employees?
But then there's the thing about industry-specific averages and stuff. It's all so complicated, you know? 
. Companies need to think outside the box (or in this case, the pay raise structure) and offer something more than just a paycheck to attract the best talent. Maybe it's time for a fresh approach to compensation that actually recognizes individual achievements? 
. I mean, let's be real, who doesn't love getting a raise no matter what they've done? It's about time more employers focus on happy employees, rather than just doling out raises based on individual performance 
. Plus, it's great that smaller businesses are offering higher pay increases – they're showing that you don't have to be massive to care about your workers 
. The only thing I'd worry about is top performers getting the hint and looking for better gigs 
, but overall, this trend feels like a step in the right direction 
.
. But for other industries where automation is already taking hold, I don't think a few extra bucks is going to make up for it.
and someone's been crushing it all year 
️, but their raise is just as small as everyone else's 
It's like they're not even trying to do better 
.
) are doing things differently - offering more raises 
! And it looks like some industries are willing to pay more to keep workers 
. I'm not sure what the future holds, but one thing's for sure: with AI coming for our jobs 
, but what about the rest of us? I think employers need to get creative and find ways to reward their top performers without breaking the bank 
#PayRaiseDilemma #CompensationStrategy #FutureOfWork
It's like when in The Office, Jim Halpert gets all frustrated because he feels like his boss isn't taking him seriously 
. Anyway, I think companies need to find a balance between making sure everyone's happy (or at least doesn't feel left behind) and still attracting the best talent. Maybe they can try some hybrid approach? 
. I mean, what's wrong with recognizing individual achievements and rewarding people for their hard work? If companies want to save money, maybe they should look at other areas of the budget instead of just cutting corners on raises. And don't even get me started on smaller businesses offering more generous pay increases... that's like, totally not fair to larger companies that have to absorb more costs 
. On the other hand, it's probably easier for HR departments to manage, and it can save money on complex calculations 
. One thing is for sure - with AI taking over some jobs, we'll need more than just a decent salary to keep our employees happy 
.