Nearly half of companies are turning to poor ‘peanut butter’ raises—following the same pattern of the 2008 recession, an expert says. And it could take years to recover

Fortune

by Emma Burleigh

February 24, 2026

AI-Generated Deep Dive Summary

Nearly half of U.S. companies are shifting to flat, uniform pay raises—a trend reminiscent of the 2008 financial crisis—referred to as "peanut butter" raises due to their widespread but thin impact. These raises, which apply equally across all employees regardless of performance, signal a move toward cost-cutting strategies amid economic uncertainty and low wage inflation. Ruth Thomas, chief compensation strategist at Payscale, notes that this approach gained traction during the Great Recession and is resurfacing now as employers prioritize budget stability over merit-based rewards. The resurgence of peanut butter raises aligns with current economic conditions: labor market instability, constrained pay budgets, and minimal wage growth. With hiring slowing and layoffs increasing, employees face a challenging job market where finding stable, well-paying positions is difficult. Job seekers' confidence in landing new roles has dropped to its lowest since 2013, mirroring the "jobless recovery" following the last recession. Employers are also grappling with financial constraints. While average salary increase budgets remain steady at 3.5%, nearly a third of businesses plan to reduce their compensation budgets this year, citing economic uncertainty and cost control. This shift reflects a broader trend where companies prioritize retaining talent over rewarding individual performance, potentially leading to demotivation among employees. For workers, the implications are significant.Merit-based raises have declined, leaving top performers without meaningful rewards. This could hinder recruitment and retention efforts, as high-performing employees may seek opportunities elsewhere for recognition and growth. The long-term impact of this trend remains uncertain, but it underscores the challenges of navigating an employer-dominated labor market with limited wage growth. The resurgence of peanut butter raises highlights a broader shift in corporate compensation strategies, driven by economic instability and the need for cost management. While employers

Verticals

businessfinance

Originally published on Fortune on 2/24/2026