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I was fooled into thinking that if you worked hard and outperformed your peers, the money would inevitably follow. But if the financial pressure and uncertainty that’s been omnipresent the past few years has taught me anything, it’s that the rules for success are being rewritten. Case in point: Nearly half of employers are doing away with performance-based salary increases in 2026. Instead, they’re opting for uniform pay bumps across the board—a new workplace trend called “peanut butter” raises.
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Normally, I love adding peanut butter to everything—but I’m not sure how I feel about coupling it with my paycheck. So, I decided to investigate and tapped five career experts for their insight. Ahead, everything you need to know about peanut butter raises, including what they really are and what’s driving this trend, the pros and cons of this strategy, and whether equal compensation across the board is actually a good thing.
In this article 1 What are “peanut butter” raises? 2 What’s driving the “peanut butter” raise trend? 3 Are there benefits to “peanut butter” raises? 4 What are the downsides of “peanut butter” raises? 5 So, do “peanut butter” raises help or hurt employees?
What are “peanut butter” raises?
Like spreading peanut butter evenly across a piece of bread, companies are distributing “peanut butter” raises evenly to all employees across their organization. Instead of rewarding performance metrics, contributions, or merit, LinkedIn Career Expert Catherine Fisher says this strategy typically applies a flat percentage (think: 3.5%) or standard bump to everyone’s compensation within an organization. Keith Spencer, CPRW, a career expert at Resume Now, says: “Because the available raise budget is distributed broadly, most employees end up receiving a relatively modest increase, regardless of their contributions.”
What’s driving the “peanut butter” raise trend?
According to Founder and Chief Empowerment Officer of career advancement platform Equipt Women, Kelly Mooney, peanut butter raises are popular “when times are tough.” Right now, the entire labor market is in a precarious position. On top of economic uncertainty and inflation, the future of work is less clear than ever before for employees and employers alike. Job insecurity is rampant in all industries, and Mooney says companies are struggling to meet financial expectations and forecast projections amid unpredictable market dynamics. Unsurprisingly, this has only added to cost-control pressures. “With tighter budgets and higher operating costs, many organizations are prioritizing stability and predictability over aggressive growth,” Spencer said.
Additionally, the shift to equal pay increases has been a long time coming. Over the years, performance-based raises have faced criticism for being subjective and prone to bias or unfairness. And at a time when employee morale is low due to ongoing layoffs and rising living costs, Spencer says peanut butter raises help employers save face. Evenly distributing raises across the board prevents employers from being accused of playing favorites or being unfair. It’s a smart way to boost morale and employee retention.
Are there benefits to “peanut butter” raises?
Psychological safety in the workplace matters more than ever before. Nicole Johnston, the founder and CEO of executive leadership and coaching platform innatePOWER LLC, says peanut butter raises reduce workplace stress and anxiety, aiding in psychological safety. Employees stop worrying whether they’ll get a pay bump. This, in turn, makes it easier to focus on work. “When employees aren’t worrying about compensation and unpredictability, they can channel energy into performance and collaboration,” Johnston said. Oftentimes, the better you perform at work, the better you feel about yourself. This can be rewarding in and of itself.
What’s more, a collective raise for all can encourage deeper teamwork and bonding. “The peanut butter approach is appealing because it’s fair and it’s simple,” Chris Martin, the lead researcher at Glassdoor, said. Unlike other approaches, this doesn’t create “winners” or “losers” throughout the workplace or make anyone feel undervalued. This, in turn, leads to less fracturing and resentment amongst co-workers.
What are the downsides of “peanut butter” raises?
On the other hand, peanut butter raises come with caveats. First, Martin says they can make workers feel defeated and, over time, stunt their motivation. After all, why make the effort when the employee who consistently shows up late and unprepared earns the same reward as you? “When outcomes aren’t differentiated, motivation can erode,” Spencer said. “Over time, this can lead employees, particularly high performers, to feel undervalued, causing frustration, disengagement, and a greater likelihood of seeking opportunities elsewhere.”
Second—and most importantly—Johnston says that equal distribution doesn’t necessarily mean equitable distribution. “If everyone receives the same increase year after year, high performers may quietly disengage.” Obviously, this doesn’t bode well for employers, but it’s particularly damaging because it inadvertently leads employees to sabotage their career trajectories. When you disengage from your job, you’re not just disengaging from your employer but your career as a whole. You stop looking for opportunities to grow and upskill, and stop paying attention to what’s happening in your industry and the market.
So, do “peanut butter” raises help or hurt employees?
When it comes down to it, there is no clear-cut answer on whether peanut butter raises are a positive workplace trend, namely because every compensation strategy comes with risks. “Peanut butter raises can be a positive in the right circumstances, but they aren’t a one-size-fits-all solution,” Spencer said. He explained they typically work best when stability is the top priority or the alternative is giving out no raises at all. In these circumstances, peanut butter raises can maintain morale and engagement, providing consistency for employers and organizations alike.
Alternatively, Johnston says, “differentiated recognition sustains ambition,” so recognizing and rewarding employees for their hard work is crucial. It makes them feel seen and valued. It’s what ultimately drives them to work at peak performance. Furthermore, Mooney believes the peanut butter strategy points to “lazy leadership,” saying that leaders often use this method to avoid having difficult conversations with staff. Leaders should reward high performers for their impact and achievements, and ensure low performers understand the factors that led to their lack of compensation increase. The latter isn’t an easy conversation, but it’s an important one for both the employees’ and the company’s growth. With that said, Mooney believes that employees should know upfront what they need to do to earn a raise—they shouldn’t just assume they’ll get one.
At the end of the day, Fisher says that “People who understand their value, communicate their impact, and advocate for themselves are more likely to earn promotions, take on bigger responsibilities, and increase their pay over time.” So, always know what’s happening in your field, expand your network, record your wins, and never stop growing. When it comes down to it, taking control of your career is the best thing you can do for yourself and your salary growth.