Employees have long been sold the idea that working hard and outperforming their peers would lead to sizable pay hikes and title upgrades. But now, some companies are ditching merit-based wage bumps in favor of “peanut butter raises”—and it’s hurting employee morale.
Around 36% of U.S. companies say they gave out standard, across-the-board pay increases this year, according to a recent Payscale report. These “peanut butter raises”—which are spread out evenly to all staffers, regardless of their performance—have been dolled out as companies grapple with economic uncertainty. And those who work in industries like government and education are often on the receiving end; the report notes peanut butter raises are more common among sectors with huge workforces, hourly staffers, and step-structures.
But dishing out weak raises is doing more than bruising the ego of hard-working employees.
Now, some staffers are jumping ship when they realize their pay bumps don’t align with their efforts. Around 25% of companies admitted they were losing talent in 2026 due to insufficient wage increases, according to the Payscale report.
“Peanut butter pay is often framed as the fairest approach because everyone receives the same increase,” Ruth Thomas, chief compensation strategist at Payscale, tells Fortune. “But employees don’t typically judge fairness by whether everyone got the same—they judge it by whether they were rewarded appropriately for their individual contribution. High performers want to know their extra effort mattered.”
