Why ‘Peanut Butter’ Raises Are Backfiring on Companies in 2026

In a tight labor market, employers are discovering that spreading pay raises evenly may feel fair—but could hurt performance and push top talent out the door.

BY BRUCE CRUMLEY @BRUCEC_INC

Illustration: Inc; Photo: Getty Images

Deciding how to accord staff raises is never easy for business owners, who typically want to be fair to everyone but particularly reward top performers to encourage continued productivity boosts. But today’s low rates of both recruitment and turnover will likely make pay decisions even trickier for leaders in 2026, and raises the risk they’ll end up making different groups of workers unhappy no matter what they do.

Many employees took heart in recent months at hearing reports that a large swath of companies were set to hand out so-called “peanut butter” raises this year. According to various surveys, nearly 35 percent of businesses said they were either considering, or had........

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