02-10-2026
Employer Insight: Payscale, a compensation software and data provider, published a report predicting that more employers will be giving “peanut butter raises” to employees. “Peanut butter raises” are increases given “across the board” rather than calculated individually based on performance or merit (The Guardian); spread evenly, like peanut butter on a piece of bread.
According to Payscale, more than 40% of organizations are considering or planning to use “peanut butter” compensation increases in 2026. These organizations plan to give an average raise of 3.5% to all employees, which is similar to last year. Historically, pay increases have typically been tied to performance ratings, and forty-eight percent of organizations plan to continue that practice. However, performance-based increases have “faced criticism in recent years for being subjective, bias-prone, and administratively complex.” In a volatile labor market, some organizations with large frontline or lower-wage workforces are rethinking their compensation strategies. These lower-income workers bear more pressure from inflation and cost-of-living increases.
Another reason for these limited across-the-board raises: Money is tight. When the total financial pool is small, spreading it evenly may feel more acceptable. Starbucks is one of the more prominent employers using the “peanut butter raise.” It announced a flat 2% raise for all salaried North American employees in 2025, including corporate employees, manufacturing workers, and retail leadership.