Many workers could see a “peanut-butter” style pay raise this year — a term compensation specialists use to describe across-the-board increases, CBS News reports. According to new research from Payscale, over 40% of employers plan to distribute identical pay hikes to everyone rather than tie raises to individual performance.
Payscale’s 2026 Salary Increases Preview report found that 44% of companies will use this even-spread method, nicknamed after the way one might smoothly spread peanut butter across a slice of bread. The approach is gaining traction because it eliminates the subjective nature of performance-based raises, which some companies view as potentially biased and harder to manage. It also simplifies payroll administration and can reduce costs, according to the outlet.
Payscale notes that “pay hikes will hold steady at 3.5% in 2026, unchanged from 2025, the group found. Still, merit-based pay hikes remain the predominant method used by companies, with 48% of organizations saying they plan to rely on performance-based raises.”
However, there are drawbacks to the model. Experts warn that paying everyone equally can dampen motivation among high performers who expect to be rewarded for extra effort. “When pay isn’t differentiated by performance, it’s simpler for employers, but top performers may start to feel overlooked,” explained Ruth Thomas, Payscale’s chief compensation strategist, in an interview with CBS News. Thomas added that companies not relying on merit-based raises can still recognize standout employees through bonuses, promotions, or other incentives.
Pay boosts also differ noticeably by company size. Businesses with fewer than 100 employees expect to offer an average raise of 4% in 2026. In contrast, larger corporations — those employing between 10,000 and 50,000 workers — plan to offer increases closer to 3%, according to the report.
Payscale’s researchers noted that smaller organizations tend to use higher pay hikes as a way to attract and retain talent, while large companies often face structural and budget constraints that limit their flexibility.