Welcome to the age of "peanut butter" raises. As CBS News explains, the term refers to the idea of companies spreading raises evenly among the workforce rather than doling them out based on performance reviews. The compensation firm Payscale sees the idea rising in popularity, with 44% of employers either already using the concept (18%) or considering it (16%). Merit-based increases remain in the lead for now, with 48% of organizations using them. However they are doled out, pay raises are expected to remain at 3.5% in 2026.
Companies are gravitating to across-the-board boosts for a few reasons, according to Payscale. Performance ratings can be subjective and vulnerable to bias, and flat increases are simpler and cheaper to administer. But there's a trade-off—"a risk that top performers will feel disadvantaged in that environment," Ruth Thomas, chief compensation strategist at Payscale, tells CBS. Employers can still target high performers through bonuses and promotions as well as less common perks such as specialized mentorships, a compensation expert tells HR Brew.
The peanut-butter approach gained traction after the Great Recession, when managers were under pressure to contain costs, and Thomas says similar budget tightening is returning. That squeeze is sharper at large employers: Organizations with 10,000 to 50,000 workers expect to offer 3% raises in 2026, compared with 4% at firms with fewer than 100 employees. "Smaller employers appear to be using pay more aggressively to compete for talent, while larger organizations face structural and budgetary challenges that limit flexibility," the report says.
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