"Peanut butter" pay raises are out, as employers shift to merit hikes
Summary
More companies are moving away from giving all workers the same pay raises. Instead, they are focusing on giving bigger raises to employees who perform well. In 2027, average pay raises will be around 3.5%, with some industries offering higher increases.Key Facts
- Only 32% of employers plan to give the same raise to all workers in 2027, down from 36% in 2026.
- Companies want to use pay budgets more strategically to reward top performers.
- The average planned pay raise for 2027 is 3.5%, just slightly higher than in 2026.
- Inflation is about 3.5%, so raises may only just keep up with rising prices.
- Some industries expect bigger raises, such as aerospace and defense (4.5%) and pharmaceuticals (4%).
- Industries like telecommunications plan lower raises, around 2.5%.
- The data comes from a Payscale survey of about 1,300 human resources and pay experts.
- The trend shows employers shifting resources to reward strong individual performance rather than equal increases for all.
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