Employers in the U.S. appear to have delivered on their compensation promises in 2026, according to new data from Mercer. However, a deeper look shows that a narrative about a wave of across-the-board pay increases doesn’t hold up under scrutiny.
The mean merit increase paid out this spring was 3.1%, just below the 3.2% employers projected back in October 2025, according to Mercer’s new QuickPulse US Compensation Planning Survey, which drew responses from 756 organizations. Average total increases, which include all pay adjustments beyond merit, came in at 3.4%, also one-tenth of a point below the fall forecast.
What about the ‘peanut butter’ pay approach?
Recent headlines suggest that many employers plan to distribute salary‑increase budgets equally across the organization. This is sometimes called the peanut butter approach, in which a budget gets spread evenly regardless of performance or contribution.
Flashy headlines aside, Mercer’s survey found that only 4% of survey participants said they gave equal raises to everyone. The majority of employers still use some combination of individual performance, market positioning and peer comparisons to determine increases.
That finding aligns with what WTW’s Rewards Data Intelligence practice saw last summer, when it surveyed more than 29,000 organizations across 157 countries, as reported on by HR Executive. “Instead of across-the-board increases, companies are raising starting salaries, bringing in talent higher in the respective pay range and enhancing retention incentives,” said Brittany Innes, director of Rewards Data Intelligence at WTW.
For HR leaders who have fielded questions from managers or employees about whether the company is going flat on pay, that 4% figure from Mercer suggests that this remains the exception, not a real trend.
Industry data on pay increases
Across industries, merit increases were remarkably consistent, according to Mercer. No sector reported an average above 3.2%. The tech industry had projected 3.4% and delivered 3.2%, which reads as a recalibration for a sector that has been shedding roles while AI investment climbs.
Total pay increases tell a more varied story, with tech leading at 3.6%. At the other end, chemicals and other manufacturing came in at 2.9%, as did retail and wholesale at 3.1%. Healthcare services, which have historically lagged, is no longer at the bottom as orgs in that sector, delivering 3.0% in merit and 3.3% in total increases. This hints at a meaningful uptick for an industry that has struggled to compete on pay.
The Mercer data suggests that salary structure adjustments are also worth watching. Just under 60% of respondents plan to adjust their salary structure in 2026, by an average of 2.6%. That is lower than the average merit increase, which means employees are moving through their pay grades faster than structures are expanding. Over time, that dynamic may create compression, and HR leaders who are not tracking it now will be managing the fallout later.
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