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Workers eagerly awaiting big pay hikes after their stellar performance reviews are in for a rude awakening; Instead of rewarding employees based on merit, many bosses will be dishing out flat and low \u201cpeanut butter\u201d raises spread to all staffers in 2026. And worryingly, it\u2019s a trend that last emerged during a perilous economic time in history.\u00a0<\/p>\n
\u201cIt\u2019s a term that\u2019s gone quite viral at the moment, but it\u2019s not a new phenomenon,\u201d Ruth Thomas, chief compensation strategist at Payscale, tells Fortune<\/em>. \u201cPeanut butter pay increases tend to come into play when you are in an environment of economic volatility and low wage inflation. The last time we really saw this was post the Great Recession, after the financial crisis in 2008 [and] 2009.\u201d<\/p>\n During that dark period for the housing and job markets, Thomas says that pay budget increases were stuck at about 3% for a long time: close to the 3.5% bump also expected this year, according to a recent Payscale report.\u00a0<\/p>\n And just like during the Great Recession, many employers\u2014around 44%\u2014plan to roll out one uniform, across-the-board wage bump in 2026 in lieu of merit-based raises. About 16% of organizations are newly implementing these \u201cpeanut butter\u201d raises: 9% say they already employ the pay strategy, and another 18% of organizations are considering it this year.\u00a0<\/p>\n The compensation strategist explains that there are a few overlapping market conditions that allowed peanut butter raises to rise in popularity today and back in 2008. During both eras, there was labor instability among workers, pay budgets were restricted, and wage inflation was low. Peanut butter raises thrive when the pendulum swings to an employer\u2019s market\u2014but Thomas cautions bosses against playing a heavy hand.\u00a0<\/p>\n \u201cObviously, smaller pay budgets are going to make pay increases individually smaller and lack of differentiation amongst colleagues. That will probably be de-motivating,\u201d Thomas continues. \u201cAlthough we\u2019re in an employer\u2019s labor market, organizations still want to retain their top talent. Top talent are going to seek some type of reward for their input to the organization, and that may be a difficulty for many organizations.\u201d<\/p>\n Job-seekers and staffers are suffering through a difficult labor market: Hiring has slowed, layoffs are steadily streaming in, and wages don\u2019t feel like they\u2019re holding up.\u00a0<\/p>\n Looking at the year ahead, the picture doesn\u2019t look too pretty\u2014and looking back, there\u2019s some disheartening d\u00e9j\u00e0 vu.<\/p>\n Between January and the start of December last year, 1.1 million layoffs were announced\u2014the sixth time since 1993 that the number had been surpassed, according to 2025 data from Challenger, Gray & Christmas. And notably, several other recessionary years had toppled the layoff high of 2025\u2014including 2020, 2009, and 2001\u2014as years of economic woes crushed the career of millions across industries.\u00a0<\/p>\n Americans have also hit record-low confidence in landing a new job since at least 2013, a time that was in the thick of the \u201cjobless recovery\u201d following the Great Recession, according to a 2025 study from the New York Federal Reserve. The perceived probability of getting another gig in the case of a job loss had dropped to 44.9%, the weakest percentage since they started tracking the data over a decade ago.<\/p>\n Even if job-seekers manage to find a job after months to years of applying, they\u2019re now up against the reality of battered pay budgets.\u00a0<\/p>\n While U.S. companies are holding their average salary increase budget steady at 3.5%, according to a 2025 report from Willis Towers Watson, there\u2019s a large cohort that is planning to scale back. Nearly a third of businesses plan to lower their compensation-increase budgets compared to last year, citing a potential recession, dwindling financial performance, and desire for more control over costs.\u00a0<\/p>\n Changes in the economy and labor market contribute to the ebb and flow of peanut butter raises currently taking hold at many American companies. And just like during the Great Recession, employers are wary of what\u2019s ahead.\u00a0<\/p>\n Lexi Clarke, Payscale\u2019s chief people officer, told Fortune<\/em> in 2025 that pay-increase budgets are being slimmed as tariffs and economic issues create uncertainty, forcing bosses to be on their guard.<\/p>\n \u201cEconomic concerns have now overtaken labor competition as the primary driver of compensation decisions,\u201d Clarke said, as \u201c66% of employers cite this as the reason for pulling back, up 17% from last year.\u201d\u00a0<\/p>\n<\/div>\n #companies #ditching #meritbased #bumps #peanut #butter #raisesand #tactic #bosses #recession<\/p>\n","protected":false},"excerpt":{"rendered":" Workers eagerly awaiting big p… <\/p>\n","protected":false},"author":1,"featured_media":24761,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[938,14304,266,2724,542,648,345,2998,2006,14301,2294,2295,522,14303,13732,14302,10801,1277,1175,14305,2190,929,14306,3166,3167,81,342],"_links":{"self":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/24760"}],"collection":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=24760"}],"version-history":[{"count":0,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/24760\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/media\/24761"}],"wp:attachment":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=24760"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=24760"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=24760"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}The disheartening job market similarities between 2008 and 2026\u00a0<\/h2>\n
Two-thirds of employers are cutting their pay bump budgets as uncertainty looms<\/h2>\n