Somewhere in HR, a spreadsheet died, and nobody sent flowers. For years the pitch was: work harder, get more. Sandbag the quarter, get less. Simple, almost democratic in its brutality. Except a growing share of employers have quietly decided that math is too much trouble, and they're spreading 2026's raises like peanut butter — evenly, thinly, across everyone, whether you closed the big account or spent the year perfecting your out-of-office reply.
The numbers back up the vibe shift. Yahoo Finance reports that average base pay increases for 2026 are landing around 3.5%, flat from last year and well below the 4.8% employers were handing out back in 2023. Small employers and hot sectors like construction and tech are stretching to 5%; big firms are closer to 3%. Payscale's own pay-equity strategist Ruth Thomas put the trend plainly: standardized raises tend to surface "in a low-wage inflation environment or economic volatility" — corporate-speak for "we're nervous and averages are easier to defend in a meeting than judgment calls."
Less than half of organizations now plan to base 2026 raises primarily on individual performance, according to that same reporting, while a real and growing minority — somewhere between a quarter and half, depending on how you slice the surveys — are implementing or seriously weighing across-the-board increases instead. Payscale's own 2026 preview confirms the split almost down the middle: 48% still leaning on performance ratings, 43% flirting with or already running the flat-raise model, and interest in "peanut butter" spreading fastest among the very companies that consider themselves top performers — which is either an irony or an admission, take your pick.
The quiet part, said slightly out loud
The stated reason is refreshingly honest, for corporate America: performance ratings are, in the words cited by Payscale, "subjective, bias-prone, and administratively complex." All true! Performance reviews have always been half theater, half CYA documentation exercise, conducted by a manager who half-remembers what you did in March. But the fix on offer isn't "make evaluation fairer." It's "stop pretending to evaluate."
- If raises are flat regardless of output, the incentive to be the person who fixes the outage at 2 a.m. quietly evaporates.
- If the incentive evaporates, the people most likely to leave for a place that still rewards effort are, unhelpfully, your best people.
- And the people most likely to stay and enjoy the identical 3.5% are the ones for whom "identical" was already a pretty good deal.
Author and management critic Ken Lloyd, quoted in the same Yahoo piece, calls the old review structure a generator of "stress, frustration, pushback, and wasted time" — and he's not wrong that the old system was miserable. But miserable-and-honest beats pleasant-and-fictional. A 3.5% raise handed out like a participation trophy doesn't reduce stress; it just relocates it, from the annual review to the moment your best engineer realizes nobody up the chain can tell the difference between her and the guy two desks over who's been quietly quitting since March. Sound money people talk about currency debasement diluting value that used to mean something. Turns out you can debase a raise the same way — just print the same number for everyone, and let the meaning leak out the back.