US employers plan an average salary increase budget of 3.4% to 3.6% for 2027, about the same as 2026. Merit budgets sit near 3.2%. Budgets are flat, so the real change is in how companies split them: fewer across-the-board raises, and more money set aside for top performers, promotions and market adjustments.
Salary Increase Budget 2027: The Numbers From Each Survey
Every major compensation survey published in 2026 lands in a narrow band:
| Survey | 2027 projection (US) | 2026 actual | Who was surveyed |
| WTW | 3.4% total | 3.5% | 1,650 US companies, March to May 2026 |
| Mercer | 3.2% merit, 3.5% total | In line with 2024 to 2026 | 1,001 US companies, July 2026 |
| Payscale | 3.5% | 3.4% | Released August 2026 |
| WorldatWork | 3.6% total (mean) | 3.6% | 1,799 organizations, March to May 2026 |
| The Conference Board | 3.5% (median) | 3.5% | Annual US survey |
| Salary.com | 3.5% total, 3.2% merit | Merit flat for 2 years | 818 organizations, September 2026 |
| Gallagher | 3.3% to 3.4% by employee group | 3.7% to 3.9% | Nearly 1,200 employers, July 2026 |
The surveys measure slightly different things. Some report merit only, some report total increases, and some use the average where others use the median. That explains most of the gap between 3.2% and 3.6%. If someone in your leadership team quotes a single number, ask which one it is.
Why 2027 Salary Budgets Aren’t Growing
The labor market has cooled, and inflation is no longer pushing budgets up the way it did in 2022 and 2023. In WTW’s survey, cost management was the top reason for caution (32%), followed by a tighter labor market (28%) and inflation concerns (27%).
Gallagher’s data shows the drop most clearly. Employers gave managers a 3.9% average increase in 2026 and plan 3.4% for 2027.
How Employers Are Splitting Their 2027 Salary Increase Budget
Most companies won’t have more money to spend in 2027. What they’re changing is where the money goes.
Fewer across-the-board raises
Payscale found that 32% of companies plan uniform “peanut butter” raises for 2027. That’s down from 36% in 2026 and 44% the year before. More companies want raises to reflect performance.
Merit pools too small to reward top performers
Salary.com puts the median merit pool at 3.0% for the second year running. Its example: on a $75,000 salary, the gap between a high performer getting 5.5% and a solid performer getting 3.0% is about $72 per biweekly paycheck. That’s a hard message to send a top performer, and it’s why many companies now fund promotions and market adjustments from separate pools.
Money set aside for market adjustments
Salary.com’s survey shows an average of 0.8% budgeted for equity and market adjustments on top of merit. The Conference Board found a median 0.5% “other” pool that companies keep for flexibility during the year.
More pay changes outside the annual cycle
Mercer reports that 64% of organizations gave, or plan to give, off-cycle salary adjustments in 2027. WTW found 34% are increasing retention bonuses or spot awards.
Fewer promotions
Mercer expects 8.4% of the workforce to be promoted in 2027, down from 8.6% in 2026 and 9.9% in 2025. With fewer promotions, the merit increase carries more weight for everyone else.
2027 Salary Budgets by Industry
Industry matters more than the national average. Mercer’s 2027 merit budget projections:
| Industry | 2027 merit budget |
| High tech | 3.8% |
| Banking | 3.7% |
| Energy | 3.6% |
| Healthcare | 3.0% |
| Retail | 3.0% |
| Consumer goods | 2.9% |
The Conference Board shows a similar pattern: 3.7% for technology and telecom, and around 3.0% for retail, government, nonprofits and education. It also found that 37.8% of organizations give bigger raises for AI skills, the most common skill-based reason for a higher increase.
What to Do With This Data Before Your Cycle Opens
Use the surveys as a starting point, then test them against your own workforce. Three checks worth running before finance signs off:
- Compare your 2026 actual spend with your 2026 budget. If managers went over, a flat 2027 budget is effectively a cut.
- Find out where your pay sits against the market. If key roles are below their band midpoint, a 3.5% merit pool won’t close the gap. That calls for a separate market adjustment pool.
- Model more than one scenario. Show finance what 3.2%, 3.5% and 3.8% cost, and what each one means for your top performers.
Frequently Asked Questions
What is the average salary increase budget for 2027?
US employers are planning an average total salary increase budget of 3.4% to 3.6% for 2027, according to WTW, Mercer, Payscale, WorldatWork, The Conference Board and Salary.com. Merit-only budgets average about 3.2%.
Is 3% a good raise in 2027?
A 3% raise is slightly below the average 2027 merit budget of about 3.2%. For a solid performer at a company with a typical budget, 3% is close to normal. Top performers at most companies should expect more.
Why are 2027 salary budgets lower than in 2023?
Inflation and labor shortages pushed budgets above 4% in 2022 and 2023. Both have eased, so employers have returned to the 3% to 4% range seen before the pandemic.
Which industries have the highest salary increase budgets for 2027?
High tech (3.8%), banking (3.7%) and energy (3.6%) lead Mercer’s 2027 merit projections. Consumer goods (2.9%), healthcare (3.0%) and retail (3.0%) are the lowest.
What is the difference between a merit budget and a total salary increase budget?
A merit budget pays for performance-based raises. A total salary increase budget also includes general or cost-of-living increases, promotions and market adjustments. That’s why total budgets (around 3.5%) are higher than merit budgets (around 3.2%).
