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A recent survey has found that budgets for employee compensation in 2026 are projected to be about on par with where they were this year—and ongoing economic uncertainty could be keeping compensation investments flat.
Mercer’s U.S. Compensation Planning survey found that employers plan to boost their compensation budgets by 3.1% for merit increases and 3.5% for total salary increases for non-unionized employees. That’s consistent with 2025, as employers have delivered actual merit and total salary increases of 3.2% and 3.5%, respectively.
Interestingly, Mercer’s report found that 20% of U.S. companies expect ongoing economic uncertainty to have a significant impact on compensation decisions in 2026. Also, the report found that 88% of respondents noted that the budgets are still in the preliminary phase, and that there is further potential for salary increases to soften as budgets are solidified closer to the end of the year.
Compensation in 2026: a ‘cautious’ approach
The flat projections for compensation budgets in 2026 come after a multi-year period of budget increases—particularly during the pandemic-driven Great Resignation.
“The compensation fever has cooled,” says Lauren Mason, Mercer’s U.S. workforce solutions leader. “After years of rapid growth, companies are now approaching 2026 with a more cautious mindset.”
That hesitancy
