"Peanut butter" pay raises are out, as employers shift to merit-based hikes

TL;DR

Companies are moving from broad, across-the-board pay raises to merit-based and other forms of compensation for top employees.
Only 32% of employers plan standard, across-the-board increases in 2027, down from 36% in 2026.
The average base pay increase planned for 2027 is 3.5%, a slight increase from the previous year.
The size of compensation budgets is not growing, but employers are changing how they distribute raises.
Some industries, such as aerospace and defense, plan higher average pay increases (4.5%), while others, like telecommunications, plan lower increases (2.5%).

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