"Peanut butter" pay raises are out, as employers shift to merit hikes
Here's what employees can expect for a raise in 2027 as companies move away from broad-based pay increases.
Recent data from Payscale reveals a shift in corporate compensation strategies, with employers moving away from uniform "peanut butter"-style pay raises toward merit-based increases for top performers. This change, noted by Ruth Thomas, Payscale's chief compensation strategist, reflects a broader trend of businesses allocating pay budgets more strategically to drive business transformation.
In 2027, employers plan to grant a base pay increase of 3.5%, a slight increase from the 3.4% expected this year. However, this modest rise may not significantly outpace inflation, which is projected to remain around 3.5% annually through 2027. Despite the overall flatness in compensation hikes, certain industries are slated for larger or smaller pay increases.
Aerospace and defense companies anticipate a 4.5% boost, while pharmaceutical firms are preparing for a 4% raise. Conversely, sectors like retail, healthcare, and government are expected to see smaller increases, all in the 3% range.
Written by urgent.news from CBS News's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
