WorldatWork: 2026 Salary Increase Budgets Project U.S., Global Caution

U.S. organizations are projecting mean salary increase budgets of 3.6% in 2026 to stay competitive in the labor market — a slight contraction compared to last year and a continuation of the gradual but ongoing pullback that began in 2024. That’s according to WorldatWork’s 2025-2026 Salary Budget Survey of 4,250 total rewards and HR leaders from 1,774 participating organizations.

The new research also revealed 2025 actual mean salary increase budgets in the U.S. averaged 3.7%, a bit under the 3.8% increases employers projected for 2025 in the previous year’s survey.

On a global scale, respondents from most countries reported general budget stability, if not some slippage. As a result, 2026 projections ranged between slight increases to slight decreases compared to 2025 actuals.

The WorldatWork data closely matches that from WTW’s recent report, which predicted 3.5% U.S. salary increase budgets for 2026, compared to 3.7% for its 2025 projection and 3.5% for its 2025 actual.

(Top-level results from the 2025-2026 report will soon be available to the general public. The full report — covering base salary increases and merit budgets for 22 countries and in-depth salary budget insights for the U.S., Canada, India and the United Kingdom — will be available for purchase in late July. Report purchase also provides access to the U.S./Canada Online Reporting Tool to build customized reports based on industry, organization size and/or geographic area).

Absent major disruptions, predicted and actual mean percentages in the U.S. tend to track closely over time, as seen in the table below. While the 2026 projection trails those from the previous three years, it remains more robust than the general 3% projections that were prominent for most of the past decade-plus.

Comp Pros Slightly Hedge Their Bets

In summarizing the new survey results, WorldatWork research and compensation leaders gravitated to the word “caution.”

“I really do think the general theme here is caution,” said Liz Supinski, the association’s director of research and insights. “Slowing growth, persistent uncertainty, and rising geopolitical and trade tensions are leaving organizations uncertain about what’s coming next. Because of that, increase budgets are almost universally a bit lower than last year and predicted budgets for 2026 are the same or lower than 2025 levels.”

Sue Holloway, the association’s compensation content director, stated, “What stands out most is the continued, though modest, contraction of salary increase budgets in the U.S. and globally. While not dramatic, the trend is consistent, signaling a cautious approach by employers in the face of ongoing economic and labor market uncertainty.”

Supinski said broad-brushed impacts are an outcome of the interconnected nature of modern business.

“The average change across all countries is a decrease of 0.5% from last year’s budget level,” she said. “It’s important to remember that the majority of the companies that provide us with data for countries outside the U.S. and Canada are multinationals, with most based in the U.S. and Canada. So, part of their decision-making is based on the expected health of their North American business, not just the country for which they’re reporting the data.”

Out of all the represented countries, none projected a budget that was 0.2 percentage points less than or greater than their 2025 actual.

Holloway said the data suggests that, in this collective caution, “Organizations are recalibrating their pay strategies to align with evolving business conditions and workforce dynamics.”

For historical context, here are links to articles on recent years’ WorldatWork Salary Budget Survey results:

• 2024 survey report: Global Salary Increase Budgets Contracting; U.S. Projection at 3.8%
• 2023 survey report: Employers Budgeting 4.1% Pay Raises in 2024
• 2022 survey report: Salary Increase Budgets Reach 20-Year High
• 2021 survey report (member only): Salary Increase Budgets Poised to Rebound in 2022

A Glimpse at Worker Type

Breaking down the data by employee classification, the WorldatWork survey showed generally the same trend lines for hourly and salaried workers. In the U.S., increases for workers classified as “non-exempt hourly non-union” are projected to be 3.6% in 2026, versus a 3.7% actual for 2025. The projected and actual figures mirrored those for workers classified as “non-exempt salaried” and “exempt salaried.” Increases for “officers/executives” came in at 3.6% for 2026, the same figure as the 2025 actual. Similar trends occurred in most other countries represented by survey respondents.

Spanning the Globe

Additional global snapshots and storylines from the survey include:

• Canadian projection is slightly lower and higher. Canadian HR and total rewards professionals predicted 2026 salary increase budgets would average 3.5%, versus the 3.7% projection and 3.4% actual for 2025.
• India raises remain robust. Indian organizations projected the largest 2026 average salary increase budget in the survey — 8.8%. This figure, though, is a downshift from last year’s 9.5% prediction for 2025 and the 9.0% actual for the year.
• United Kingdom stays steady. Survey participants from the U.K. projected 3.8% average salary increase budgets for 2026, in line with the 3.8% actual for 2025 but under that year’s 4.2% projection.

Internalizing the Data

Given all the numbers, what is the new report’s biggest takeaway for organizational leaders who are responsible for compensation?

“I would say it’s that total rewards professionals must remain vigilant,” said Holloway. “Economic and labor market uncertainty continues to put downward pressure on compensation budgets, requiring organizations to do more with less. Stretching smaller salary increase budgets to drive impact — through differentiation, targeting adjustments and other non-monetary reward elements — will be essential.”

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Employee Compensation
• Finance and Budgeting
• Total Rewards