Instead of only rewarding standout employees with raises, employers are turning to “peanut butter raises” that benefit all employees.

Peanut butter raises are uniform, across-the-board pay increases that employers spread evenly, rather than tailoring raises to individual performance. They are called peanut butter raises because, like spreading peanut butter on bread, employers distribute the money in a smooth, even layer over the workforce. 

Under a peanut butter raise strategy, everyone gets roughly the same percentage or flat-dollar increase, say 2% for all salaried employees, regardless of their performance rating, role or impact. According to a recent Payscale report, about 44% of employers plan to use some form of a peanut butter raise this year. Of that group, nearly one in ten say they already use the pay strategy, while close to two in ten are considering it this year. 

High-performing businesses are especially enthusiastic about peanut butter raises, per the Payscale report. More than half of organizations that said they exceeded their revenue goals last year (56%) are using or considering peanut butter pay increases this year. 

The approach contrasts with traditional merit-based pay, where managers differentiate raises so that star employees get significantly larger increases than average or low performers. In the merit model, performance ratings and manager input heavily influence the pay raise percentage. By contrast, in the peanut butter model, those factors don’t matter at all for the annual increase. 

Performance-based pay raises have come under fire recently for being vulnerable to bias because they rely on managers and performance ratings, according to the report. 

“Tying merit pay increases to performance ratings has come under criticism in recent years for being too subjective and prone to bias,” the Payscale report stated. “At the same time, some organizations have made headlines by electing to standardize pay increases to alleviate administrative burden and reward workers equally, especially for low-wage workers, where inflation is a big concern.”

Another force is pushing employers toward peanut butter raises — money is tight. Many U.S. companies are keeping average salary increase budgets at around 3.5% this year, according to a 2025 report from leading insurance broker Willis Towers Watson. Payscale notes that when the total pool is small, spreading it evenly can feel more palatable than telling some employees that they will get little or nothing, so a few high performers can get more. 

Starbucks is a prominent example of this shift to peanut butter raises. The company announced a flat 2% raise for all salaried North American employees in 2025, moving away from the traditional model in which managers differentiated raises for their direct reports. This decision was part of a broader turnaround strategy led by CEO Brian Niccol to control costs while still providing some pay growth. The 2% raise applied to Starbucks corporate employees, manufacturing workers and retail leadership such as store managers. 

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