Companies Plan Modest Salary Increases for 2026 Amid Economic Uncertainty

What's Happening?

A recent survey conducted by Endeavor Business Intelligence reveals that more than a third of companies are planning salary increases of less than 3% for 2026. The survey, which included nearly 330 respondents, indicates that one in seven organizations are considering salary budget increases of 2% or less. Conversely, 12% of businesses plan to increase total salaries by at least 5%. The majority, over 40%, anticipate salary growth between 2% and 4%. The survey highlights widespread uncertainty regarding compensation, with nearly 20% of respondents undecided about their pay strategies for 2026. This cautious approach reflects ongoing economic pressures and talent needs. The findings align with The Conference Board's forecast, which predicts an average salary increase of 3.4% for large companies in 2026, consistent with the current year's growth rate.

Why It's Important?

The survey's findings underscore a cautious economic outlook among U.S. businesses as they navigate salary planning for 2026. The modest salary increases reflect concerns over economic pressures, including rising healthcare benefit costs, which are projected to increase by 6.5% next year. This anticipated rise in healthcare costs could significantly impact company budgets, influencing salary decisions. The cautious stance on salary growth may affect employee retention and recruitment, as competitive compensation remains a critical factor in attracting and retaining talent. Companies must balance economic constraints with the need to offer attractive compensation packages to maintain a skilled workforce.

What's Next?

As companies finalize their salary plans for 2026, they will need to consider the broader economic environment, including potential changes in healthcare costs and other operational expenses. Businesses may also need to explore alternative compensation strategies, such as bonuses or non-monetary benefits, to remain competitive in the job market. The ongoing evaluation of salary budgets suggests that companies will continue to monitor economic indicators and adjust their strategies accordingly. Stakeholders, including employees and industry analysts, will be closely watching these developments to gauge the economic health and competitiveness of U.S. businesses.