What raise should you expect in 2027? The real numbers

Somewhere in your company right now, a spreadsheet is deciding what your raise will be. Not you. Not your manager’s opinion of you. A spreadsheet, built around a percentage that someone in finance picked in the fall.

If you know that percentage before the meeting, you’re negotiating. If you don’t, you’re being informed. This is the part of the year when it’s still possible to change the number. If you are staying put for the money, read about job hugging first.

What raise should you expect in 2027?

About 3 to 3.5%, on average. In Marsh’s July 2026 survey of 1,001 U.S. organizations across 15 industries, employers planned an average 3.2% merit increase and a 3.5% total salary increase budget for 2027, which includes promotions and cost-of-living adjustments. The survey says that is about where actual increases landed in 2024, 2025 and 2026. Your raise may be partly absorbed by rising health plan costs.

Payscale’s survey lands in the same place. It finds salary budgets averaging 3.5% for 2027, up slightly from 3.4% in 2026, and describes that as roughly in line with inflation. So if your company gives you 3%, you’re not getting ahead. You’re keeping your place. Know your employment law protections.

Compare that with what the labor market is paying. Average hourly earnings rose 3.0% over the year ending in September, according to the Bureau of Labor Statistics. Employers are budgeting to match, not to exceed.

What is a peanut butter raise?

A peanut butter raise is spreading the same percentage across everyone, thin and even, regardless of how people performed. Everyone gets 3%. The person who carried the team gets 3%. The person who coasted gets 3%.

It’s falling out of favor, slowly. In Payscale’s 2027 survey, 32% of companies plan across-the-board raises, down from 36% in 2026. The survey also notes that an equal raise for everyone can demotivate people because it ignores performance, and that a quarter of employers reported losing talent over insufficient pay increases.

Here’s what that means for you. More companies are moving toward differentiated pay: bigger raises for top performers, smaller ones for everyone else. That’s good news if you can show what you’ve done. It’s bad news if nobody has been keeping track.

Why raises feel smaller for some people than others

The budget is a pool, and your manager divides it. If the pool is 3.5% and your manager wants to reward two stars, the rest of the team gets less. The person who talks about their results gets considered. The person who assumes the work speaks for itself often doesn’t.

That second habit is common among people who were raised to keep their head down and be grateful for the seat. It’s also where a lot of pay gaps start. If you’re the first in your family at a job like this, nobody told you the raise conversation is a negotiation with a budget deadline. I’ve sat on the company side of it, and I can tell you the people who asked, with numbers, usually moved the figure.

It’s also worth knowing your rights on the subject. In California you’re allowed to talk about pay with your coworkers, which is one way to find out whether the pool is being divided fairly.

How to ask for more than the average

Timing matters more than most people think. Budgets for next year get set in the fall. A request made in January is asking for money that’s already allocated. A request made now is asking to be counted when the pool is divided.

Write down your results. Revenue, hours saved, errors reduced, projects delivered, people trained. One page, dated, specific. Not “I work hard.”

Get a market number. Know what your role pays outside your company. For California roles, my guide to salary expectations in California shows where to find it.

Name the ask. Say a number or a percentage. “I’d like to discuss a 6% adjustment based on these results and the market for this role” gives your manager something to carry to finance. “I’d like a raise” doesn’t.

Ask for the next best thing if the raise is capped. A title change, a one-time bonus, extra paid time off, a training budget, or a date when pay gets reviewed again. These are easier to approve than a base increase and they compound.

My full playbook is in how to negotiate a raise, including what to say when the answer is no.

A word to the companies reading this

If you’re building a 2027 budget, the data is on your side to differentiate. Spreading 3.5% evenly keeps the bottom happy and loses the top. Use the pool to reward the people you can’t afford to lose, and be able to explain how you decided. Pay decisions you can’t explain are the ones that turn into complaints. Managers also need to practice the conversation itself, and difficult conversations training shows what works.

And if you want help preparing your case or your pay structure, book a free 20-minute conversation. Bring the numbers.

McKinley holds a J.D. but is not a licensed attorney. Articles here are general information, not legal advice. For your specific situation, talk with an employment attorney.

Data current as of September 2026. Sources are linked where each figure appears.