In 2026, your performance might not be reflected in your pay raise

Something has shifted astatine a increasing fig of workplaces: Performance reviews are retired and yearly wage raises are standardized.

According to a caller study from Payscale, a compensation probe firm, much employers are doling retired raises arsenic across-the-board wage increases, besides known arsenic a level “peanut butter” increase, alternatively of providing raises based connected idiosyncratic performance.

“It's not a caller phenomenon,” Ruth Thomas, wage equity strategist astatine Payscale, told Yahoo Finance. “We've seen it previously. If you look backmost implicit the past 30 years of compensation management, it tends to look erstwhile you're successful a low-wage ostentation situation oregon erstwhile you're successful a concern of economical volatility.”

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Payscale estimates basal wage successful 2026 volition modestly summation an mean of 3.5% — aforesaid arsenic past year. That's not terrible, but it is beneath 2023 erstwhile workers relished wage hikes that averaged 4.8%. Payscale’s survey jives with rise expectations reported by different compensation trackers including Mercer and The Conference Board.

“For 2026, wage increases look dependable alternatively than flashy,” Rita Meyerson, The Conference Board’s main researcher for quality capital, told Yahoo Finance.

Pay bumps alteration by leader size and industry, ranging an mean of 3% astatine larger firms with much than 5,000 employees to 4% astatine smaller firms with less than 100 employees and 5% successful immoderate industries, specified arsenic operation and technology, according to Payscale.

There’s a retreat from performance-based wage decisions.

This year, little than fractional of organizations program to proceed wage increases based connected performance, according to Payscale’s data. Another 18% of organizations are considering peanut food wage increases, 16% person planned to instrumentality peanut food increases, and 9% already usage this benignant of ramping up pay.

“This was a inclination that we were anticipating,” Thomas said. “Starbucks (SBUX.O), for instance, announced successful August that it would person a 2% hike to each salaried employees successful North America. I would expect to spot much organizations moving successful this direction.”

There are tons of reasons for abandoning yearly show reviews arsenic the yardstick for wage raises.

“Historically, show reviews are recognized arsenic having a inclination for bias and mediocre predictors really successful presumption of existent show outcomes oregon driving concern outcomes,” Thomas added. “But we were amazed astatine the numbers this twelvemonth that indicated that they're doing it, reasoning astir doing it, oregon successful the process of implementing it.”