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A new Payscale report shows that 44% of companies are considering “peanut butter” raises in 2026—spreading salary increases evenly across employees rather than tying them to performance. Merit-based raises still lead at 48%, but shrinking compensation budgets are pushing employers toward simpler, across‑the‑board approaches.
Flat raises became popular after the Great Recession and are resurfacing as organizations face financial pressure. Ruth Thomas, Payscale’s chief compensation strategist, notes that uniform increases are easier to administer when budgets are tight. Still, while this method avoids concerns about bias and complex evaluations, it risks demotivating high performers. Companies hoping to retain top talent may need to rely more on bonuses, promotions, or other recognition tools to fill the gap.