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For many workers who are holding out hope that 2026 may be the year of finally getting a well-deserved raise at work, it seems it might be happening, just not in the way people had hoped. As a money-saving measure, companies are using peanut butter raises to avoid actual cost of living pay increases or even merit-based pay bumps.

According to the 2026 “Pay Increase Preview Report” from PayScale, researchers sought to provide one of the clearest views into how organizations are approaching salary increases, merit pay, and across-the-board raises for the year ahead. What they found is that while employees are getting raises at their jobs, the way they’re being compensated isn’t exactly making much difference in their take-home amount.

More workers are getting peanut butter raises in 2026.

Andrii Iemelianenko | Shutterstock

The report found that many companies are shifting to “peanut butter raises” for their employees. Otherwise known as across-the-board pay, it means all employees are given a similar, usually modest, raise regardless of their individual performance.

Career coach Colleen Paulson explained the term to CNBC as company-wide raises “that are even and spread thinly, like peanut butter would be on a sandwich.” She went on to explain that these across-the-board tiny salary increases are only done in employer-driven markets because retention isn’t really a concern. She explained, “In a competitive job market, companies don’t really feel the need to increase compensation in the same ways that they would in another market.” 

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Usually, salary raises are tied to performance metrics.

While merit pay is still a best practice among many companies, performance ratings-based raises have faced a bit of criticism in recent years for being subjective, bias-prone, and administratively complex, especially in the midst of economic uncertainty, Payscale found. To combat this, some organizations, particularly those with large lower-wage employees, are rethinking their compensation increases as inflation continues to affect workers.

They found that 48% of organizations plan to continue performance-based pay increases, while 18% are considering peanut butter pay increases. Sixteen percent of organizations are planning to implement peanut butter increases, and 9% of organizations already use peanut butter increases as their approach. In total, more than 40% of organizations are either using or actively considering standardized across-the-board or peanut butter pay increases in 2026.

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Experts hypothesize that ‘peanut butter raises’ could cost companies their top performers.

The concept of “peanut butter raises” isn’t anything new. Starbucks made headlines last year when it announced that it was giving 2% raises to all corporate employees in an effort to reduce costs. 

But when pay increases are suddenly given to every employee, regardless of their output, the top performers soon start to question why they should even put their all into the work if everyone is being compensated the same. Eventually, they may even leave the company altogether.

Paulson explained that top performers will be “out the door as soon as they can” when they find employers that better compensate them for their skills. Companies may not see the impact of “peanut butter raises” now, but when the job market gets better for job seekers, things will change rapidly.

Because the job market is abysmal right now, employees are hesitant to leave their jobs, but once hiring rates eventually turn around, that’s when they’ll notice the effects of this. And of course, low pay is the number one reason employees leave a job.

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Nia Tipton is a staff writer with a bachelor’s degree in creative writing and journalism who covers news and lifestyle topics that focus on psychology, relationships, and the human experience.