The Rise of ‘Peanut Butter’ Raises—and Why Homeowners Need To Be Prepared

The "peanut butter" raise is a rising strategy many companies are currently considering in earnest in 2026 as a way to offset rising costs and handle employee salaries, according to experts. 

The recent Payscale’s 2026 Compensation Best Practices Report noted that “some organizations, particularly those with large frontline or lower-wage populations, are rethinking their compensation differentiation as inflation continues to affect workers unevenly.”

In turn, these companies will likely opt for across-the-board smaller pay increases rather than larger, performance-based ones in the coming year.

"The concept of 'peanut butter' raises involves giving even pay increases to all employees of an organization rather than awarding raises based on individual performance metrics,” says Toni Frana, career expert manager at FlexJobs. “This generally means a more modest increase for employees as the budget for salary increase is spread evenly across the organization, regardless of individual employee contributions.”

For homeowners facing rising costs, these smaller pay bumps might have adverse consequences.

Why 'peanut butter' raises should concern homeowners

The Payscale report found that most companies (48%) still plan to continue performance-based pay increases.

However, the report also found that 18% of organizations are considering these peanut butter pay increases; 16% of organizations “are newly planning to implement peanut butter increases”; and 9% are already implementing this approach.

Mark Hamrick, senior economic analyst with Bankrate, admits merit-based pay remains important. However, he notes a significant difference in both the amount and makeup of compensation among full-time, part-time, and gig workers who are all operating within the current K-shaped economy.

“This is where the well-to-do are doing fine, and those in middle- and lower-income realms are struggling amid affordability challenges,” Hamrick says.

While these raises may seem more fair than the performance-based ones, experts say that they are not meaningful enough to make a difference in employees’ finances.

David Torosyan, a human resources manager at J&Y Law, explains these raises end up getting lost in the noise like another email in your inbox, “because your day-to-day doesn't really change.”

“From an HR perspective, I've always felt like these kinds of raises make it harder for high performers to grow their income over time, so they wind up leaving,” he says.

Susan S. Mahaffee, president and founder of People Rise, a strategic HR consultancy and executive coaching practice, countered that it’s easier to give everyone the same thing so people don’t complain, and you can point to market trends or inflation to justify it.

“The danger in this approach is that your high performers will usually leave because of the lack of differentiation. When there’s no distinction between average and exceptional performance, your top people feel it,” she says.

“Over time, raises and real-life costs—like housing—can quickly become misaligned, and that gap creates frustration,” she adds.

How these raises affect disposable income, saving power, and the ability to keep up with housing costs

It’s no secret that housing costs have been skyrocketing in the past few years.

While inflation is decreasing, it remains elevated, standing at 2.4% in January, according to the latest consumer price index.

Of course, mortgage rates have finally come down below 6% for the first time in 3.5 years, with the 30-year average rate dropping to 5.98% on Feb. 26, according to Freddie Mac. However, they are still almost double what they were in the corresponding week in 2021: 3.02%, according to Freddie Mac data.

 It’s also important to note that additional high costs include health insurance premiums, which have jumped for many Americans since Jan. 1, putting additional strain on Americans’ savings.

Against that backdrop, several experts say that these peanut butter raises end up becoming insignificant.

“While a pay increase in general is positive, with peanut butter raises, the end result may be less of a raise than an employee is used to, or expecting, which could impact the amount families can save (and ultimately spend) as housing costs and other expenses increase,” said FlexJobs’ Frana. “A more modest raise means a more modest spending and saving footprint, which of course impacts families, but also can have a broader economic impact.”

How can homeowners proactively budget or negotiate to offset stagnating earnings?

Payscale found that the median base-pay increase overall in 2025 was 3.5%, and the planned base-pay increases for 2026 will remain at that level.

Bankrate’s Hamrick says that the concern for homeowners is that a flat 3.5% raise might help manage some specific expense spikes, including those related to homeownership costs. However, he adds that property taxes and insurance premiums frequently rise faster than a standard paycheck bump.

“For low- and middle-income workers, volatile expenses can undermine both emergency and retirement savings, resort to more reliance on credit card debt, shrink disposable income, and make it harder to build a financial cushion against outlier expenses,” he says.

To address stagnating earnings, he says homeowners should review their fixed expenses and adjust accordingly.

“Falling mortgage rates are leading to increasing opportunities for refinancing among those who purchased homes in the post-COVID era,” he adds.

In addition, he suggests shopping for less expensive home insurance or appealing a property tax assessment.

He also says that this year's rising federal income tax refunds can help pay down debt, bolster savings, and cover essential maintenance.  

“Staying proactive with budgeting ensures a standardized peanut butter raise does not cause financial indigestion,” he adds.

Finally, regarding negotiating for higher increases, experts say the more specific the employee is, the better.

Mahaffee says that when she coaches people who want to negotiate their salary, she encourages them to propose specific measures and deliverables that can be tied to additional or separate, time-bound bonuses or benefits.

“If you’re able to clearly outline what you will deliver—and do the heavy lifting of defining it—it becomes much harder for an employer to decline the conversation,” she says. “Doing something specific, time-bound, or project-based increases the likelihood that they will accept or at least seriously consider your proposal and co-create something with you.”