When you’re running out of peanut butter, you spread what you have thinly across your toast. And apparently, that’s how are companies are spreading raises this year, according to a recent compensation report.
The idea of a meager “peanut butter raise” that is spread evenly across the company, regardless of performance, is not a new idea, but under this tight labor market of higher unemployment rates and fewer job openings, it’s on the rise.
According to Payscale’s 2026 compensation best practices report, approximately 44% of companies are either planning to do across-the-board — aka peanut butter — raises, or already have. About 16% of organizations said they are doing peanut butter raises for the first time, while 9% say they already do this, and 18% are considering doing it this year.
These across-the-board raises are not an enticingly large amount. In the Payscale report, the average base pay increase was 3.5%, which barely keeps up with inflation. Over the last year, consumer prices have risen, on average, by 2.4%, according to the Bureau of Labor Statistics.
“It’s a short-term strategy with long-term risk, because obviously, if you don’t differentiate on performance, then your … key high performing talent that are probably driving the most business outcomes for you are going to feel disregarded,” said Ruth Thomas, chief compensation strategist at Payscale.
Thomas said government, nonprofit and education sectors that tend to have rigid pay bands for staff were the most likely to implement this raise strategy. Industries like health care and construction are also reportedly considering it this year.
So why do companies do this? Quite simply, because they can get away with it. Starbucks only doled out 2% across-the-board raises to its corporate workers last year, citing the need to control costs.
Unfortunately, this pay strategy is likely going to stick around.
“Recession or low wage inflation are the two reasons that you will see people defaulting to peanut butter pay,” Thomas said. “As long as the economy stays like it is, we will probably settle into this pattern.”
Thomas said the last time peanut butter pay took hold in the U.S. labor market was after the 2008 financial crisis. “Pretty much from 2009 up ’til COVID times, you were on 3% increases year over year,” she said.
“We’re in an employer-friendly market right now, companies know employees are ‘job hugging,’” said Cynthia Pong, founder of Embrace Change, a career coaching and consulting firm, citing the practice of employees sheltering in place at their jobs. “Employers can keep raises flat and uniform without expecting much pushback ― especially when some employers aren’t giving raises at all.”
Illustration: HuffPost; Photos: Getty
What To Do When You Get A ‘Peanut Butter’ Raise
It’s not motivating to keep working for a company that gives out the same low pay increase, regardless of whether you do a good or great job.
“If peanut butter raises are the ceiling and top performers and high potentials get the same increase as someone who’s barely meeting expectations, it’s not only unfair, it’s also shortsighted from an organizational standpoint,” Pong said. “High performers need to feel seen and valued. If they don’t, you’ll lose your best people to your competitors.”
Is it possible to get the jelly of a merit increase on top of your peanut butter pay? Potentially, Pong said. An employee who gets a low raise could counter with language like: “I’m curious about the process for pursuing a performance-based salary adjustment. Could you share more about how to do that?” Pong suggested.
If your manager says there is no formal process, you can make the process formal by offering to summarize your impact and contributions to relevant stakeholders and set up time on their calendar to make your case.
“Regardless of how the conversation goes, follow up in writing afterwards summarizing the discussion to create a record that you can reference down the line,” Pong said.
Thomas said employees have the right to know how their pay increases are being allocated and what methodology their boss is using. This way, you can understand, “Am I being recognized as a high performer, or is this some other message that you’re trying to give me?” she said.
Whether you get the raise you deserve or not, the best way to fight peanut butter raises is to keep the door open to new career opportunities that will reward your efforts in the future.
“The most important thing you can do to negotiate or advocate for yourself is to build your leverage,” Pong advised. “Keep your network warm, interview when you don’t need to, increase your visibility inside and outside your organization and industry, and cultivate options and multiple revenue streams that you can activate quickly.”