About 44% of employers plan to roll out uniform, across-the-board pay bumps by 2026, according to a new Payscale report. About 16% of organizations have recently implemented this “peanut butter” increase: 9% say they already use a pay strategy, and another 18% of organizations are considering it this year. And top-performing companies are already in the process. About 56% of organizations that report they will exceed their revenue goals by 2025 are using or actively considering peanut butter pay increases.

Companies still plan to increase employees’ wages by 3.5%, the same rate as last year. And while 48% of businesses will continue the tradition of paying workers based on performance—which report describes as a “best practice” – the new compensation trend may be trying to alleviate financial problems for low-wage workers.

“The tying of merit pay increases to performance ratings has come under criticism in recent years for being too subjective and prone to bias,” the Payscale report said. “At the same time, some organizations are making headlines by choosing to standardize salary increases to ease the administrative burden and reward workers equally, especially for low-wage workers where inflation is a big concern.”

Shrinking salary budgets and flat raises amid economic uncertainty

Job seekers and employees alike are suffering from a tough labor market: Hiring has slowed, layoffs are continuing, and wages aren’t looking like they’re holding up. Looking ahead to the coming year, the picture doesn’t look too good.

Wall Street analysts and business executives are floating the idea that we are in a “K-shaped economyHigher-income Americans have seen their incomes and wealth increase, while lower-income people struggle against smaller gains and higher costs of living. The concept has come to explain the confusing US economy, where strong overall growth contrasts with slow hiring and rising unemployment.

While US companies are holding their average salary budget increase steady at 3.5%, according to a 2025 report from Willis Towers Watsonthere is a large group planning to scale back. Almost one third of businesses plan to lower their fees-increase budgets compared to the previous year, citing a potential recession, reduced financial performance, and desire for more control of costs.

Last year, one high-profile employer ditched his merit-based raises in favor of a general, flat salary. Starbucks announces that it will happen will give a standard 2% raise to all salaried North American employees by 2025, deviating from the norm that managers have a say in raises to their direct reports. It’s all part of CEO Brian Niccol’s bid to cut costs in a broader company transformation effort.

But Starbucks is just one notable name on a growing list of employers looking for economic hardship. Lexi Clarke, Payscale’s chief people officer, SPOKE luck last year saw salary increase budgets slashed as tariffs and economic woes created uncertainty, forcing many employers to be cautious.

“Economic concerns now surpass labor competition as the primary driver of compensation decisions,” Clarke SAYSas “66% of employers cite this as the reason for resignation, up 17% from last year.”

While many companies are cutting wage budgets and giving peanut butter raises, many are reinvesting in their star talent. America’s largest private employer, a $968 billion retail titan Walmartopens a strategy to 2024 in pay top store managers up to $620,000 per year.

US CEO John Furner said it was a way to “make managers feel like owners,” recognizing their success with a piece of the revenue pie. Their average base salary was increased from $130,000 to $160,000, raising their total compensation to between $420,000 and $620,000 per year.

And with more than 4,000 store managers across the US (and about 1.5 million workers) when the policy went into effect, the payout wasn’t just generous—it was a calculated cultural bet.