“Peanut butter raises” — or across-the-board pay increases spread thinly among employees — have come into question in 2026, The New York Times reported May 10.
The term began popping up most recently after a compensation data company’s report found that some companies would be giving across-the-board raises in 2026 rather than larger merit-based pay increases to a select few, the Times wrote. But compensation experts told the newspaper it is not necessarily best practice.
Nick Bloom, PhD, an economist at Stanford (Calif.) University, said organizations turn to peanut butter raises when they cannot distinguish strong performers from weak ones and when leaders want to take “the course of least resistance.” A well-managed company, he said, compensates its top performers well while keeping an eye on the market.
“Good management involves setting tough targets, evaluating employees against this and rewarding those that make their targets,” Dr. Bloom said. “This means some folks will get paid and others won’t.”
Kevin Murphy, an executive compensation expert and professor of finance and business economics at USC Marshall School of Business in Los Angeles, told the Times the approach sends “exactly the wrong signals” — telling high performers their employers “just don’t care that much.”
Even so, the practice appears common. A July survey from Korn Ferry found that 43% of respondents across industries said their organization plans to give salary increases to at least 95% of its workforce in 2025, and nearly 80% of companies said they will give raises to at least 80% of employees. At the same time, 1 in 3 companies across industries reduced their planned salary budgets in 2025 in response to economic uncertainty.
In healthcare, at least 25 hospitals and health systems have raised workers’ pay since December, including systemwide minimum wage increases and raises for unionized staff members as part of new contracts. Across health systems, leaders are also making investments in workforce spending in internal talent pipelines, leadership development and employee well-being and benefits.
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