The 'Peanut Butter' Pay Revolution: Why Companies Are Spreading Raises Evenly in 2026
For decades, the corporate playbook promised that exceptional performance would be rewarded with exceptional pay. But a seismic shift is underway in compensation strategy, as employers increasingly abandon individualized merit raises in favor of what’s being called the “peanut butter raise”—a uniform pay increase spread evenly across the workforce.
According to a new report from compensation data firm Payscale, approximately 44% of companies plan to implement these across-the-board wage bumps in 2026. The trend is gaining particular momentum among top-performing firms: 56% of organizations expecting to exceed their 2025 revenue goals are either using or actively considering the approach.
“The traditional merit increase model has faced growing criticism for being subjective and vulnerable to unconscious bias,” the report states. “In response, some organizations are standardizing increases to reduce administrative complexity and ensure equitable compensation, especially for lower-income employees who are disproportionately impacted by inflation.”
This shift comes against a backdrop of a tightening labor market and a so-called “K-shaped” economic recovery, where higher-income professionals continue to see gains while lower-wage workers struggle with stagnant pay and rising living costs. While the average salary increase budget remains steady at 3.5%, nearly one-third of companies plan to reduce their compensation budgets compared to last year, citing recession fears and financial pressures.
The move toward standardized raises represents a fundamental rethinking of performance incentives. Last year, Starbucks made headlines by announcing a flat 2% raise for all salaried North American employees, moving away from manager-discretionary increases. The decision was part of a broader cost-control strategy, illustrating how economic concerns are now driving compensation decisions more than competition for talent.
Yet not all companies are following the same path. Retail giant Walmart made waves in 2024 by dramatically increasing compensation for its top store managers, with total packages reaching up to $620,000 annually. “We want our managers to feel like owners,” explained U.S. CEO John Furner, highlighting an alternative strategy of heavily investing in top talent while maintaining broader cost discipline.
The debate over compensation strategy reflects deeper questions about fairness, motivation, and economic stability in uncertain times. As Payscale’s Chief People Officer Lexi Clarke noted, “Economic concerns have now overtaken labor competition as the primary driver of compensation decisions.”
Voices from the Workforce
Michael Torres, HR Director at a Mid-Sized Tech Firm: “We adopted flat raises last year. It’s reduced internal pay equity complaints by 40% and cut administration time in half. For retention, we now focus more on spot bonuses and career development paths.”
David Chen, Senior Software Engineer: “As a high performer, it’s demoralizing. My 3% ‘peanut butter’ raise feels like a pay cut after inflation. It signals that going above and beyond doesn’t matter anymore.”
Rebecca Miller, Retail Associate & Union Organizer: “Finally! For years, ‘merit’ raises were just excuses to pay some of us less. This is a bare-minimum step toward fairness when executives still get million-dollar bonuses.”
Dr. Amanda Pierce, Labor Economist at Cornell University: “This trend reflects both pragmatic cost control and a growing awareness of pay equity issues. The challenge will be balancing fairness with the need to recognize and retain critical talent in key roles.”