Should you’re hoping for an enormous pay increase this 12 months, latest knowledge suggests you may wish to test these expectations. Pay raises in 2026 are holding regular moderately than surging, in keeping with analysis from Payscale.
The findings come from Payscale’s 2026 Compensation Greatest Practices Report, which surveys organizations in regards to the wage will increase they distributed in 2025 and what they plan for this 12 months. The info gives an image of the place employer pay budgets stand amid ongoing financial uncertainty.
The numbers aren’t transferring a lot
The median base pay enhance for 2026 sits at 3.5%, equivalent to what employers gave in 2025. For employees who have been anticipating raises to outpace inflation extra aggressively, that’s probably a little bit of a letdown.
There are some variations between Canadian and American wage will increase, in keeping with the report. Whereas U.S. employers are planning median will increase of three.5%, Canadian organizations are projecting barely decrease raises at 3.2%.
Nevertheless, Canadian will increase are literally larger relative to that nation’s inflation fee, which held regular at 2.2% in November 2025. By comparability, U.S. inflation was operating at roughly 2.7% yearly as of late 2025.
As for what drives raises, benefit and efficiency stay the dominant components, with 76% of organizations citing them as probably the most influential drivers of pay will increase.
Market changes to remain aggressive with the price of labor got here in second at 46%. About 45% of organizations additionally issue value of residing into their choices.
The rise of ‘peanut butter’ raises
One rising development in pay is across-the-board salary will increase. They’re typically known as “peanut butter raises” as a result of they unfold pay will increase evenly moderately than tying them to particular person efficiency rankings.
In keeping with Payscale’s knowledge, 48% of organizations plan to proceed performance-based pay will increase, however a good portion are reconsidering that strategy.
About 18% are contemplating peanut butter will increase, 16% are planning to implement them and 9% already use this methodology. In complete, greater than 40% of organizations are both utilizing or actively contemplating standardized raises.
This might mirror a shift away from performance-based programs, which have confronted criticism for being subjective and doubtlessly liable to bias. Organizations with giant frontline or lower-wage workforces might discover uniform will increase less complicated to manage and clarify to staff.
Employers really feel assured relating to flat budgets
Regardless of the dearth of motion in wage budgets, most employers appear comfy with their compensation methods. About 60% consider their 2026 wage will increase are aggressive sufficient to retain and have interaction expertise.
That confidence seems to stem from having higher knowledge to again up pay choices. Organizations that may clarify their compensation decisions utilizing market data appear safer of their strategy, even when budgets aren’t rising.
For employees, the message is that important pay jumps most likely aren’t coming by annual raises alone. These seeking to enhance their income might have to contemplate different methods, akin to pursuing promotions, growing new abilities or exploring alternatives elsewhere.
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