Dive Brief:
- The merit increases employers awarded this year were only slightly below previous projections, with a mean 3.1% merit increase, versus a 3.2% projection in October 2025, according to the latest Mercer QuickPulse Compensation Planning Survey.
- Average total increases were 3.4%, versus a predicted 3.5%, per the report.
- Meanwhile, just 4% of employers gave workers equal, across-the-board salary increases, also called “peanut butter” raises, rather than merit increases, Mercer found. Most still use a combination of individual performance and position relative to market value or relative to peers.
Dive Insight:
The popularity of peanut butter raises is growing, according to Payscale’s 2026 Compensation Best Practices Report. Payscale found that 16% of companies are ready to implement these across-the-board raises, and another 18% are considering it.
However, Mercer’s study reveals that spreading a set salary budget evenly across employees, regardless of performance or merit, has not yet become mainstream.
Most of the 756 employers surveyed said they used a formal salary structure “where each job is assigned to a pay grade based on market data.” More than half said they also considered geographic differences.
By sector, the Mercer survey revealed very little variation when it came to merit increase percentages. No industries reported average merit increases more than 3.2%, despite some optimism from certain sectors, such as high tech, which projected an average merit increase of 3.4% in October.
Total pay increases for 2026 were more diverse, with high tech offering the highest average total increase percentage at 3.6%. By comparison, both transportation equipment and retail and wholesale averaged 3.1%, while chemicals and other manufacturing both averaged 2.9%, making up the lower end of total increases.
Healthcare services companies were not at the bottom of the scale in 2026, unlike previous years, Mercer said. That sector gave out an average 3% increase in merit pay and 3.3% increase in total pay.
