WTW: Employers Convey More Focus, Intent in 2027 Salary Budget Plans

U.S. employers’ average pay increase budgets are projected to be 3.4% in 2027, a slight deviation from 2026’s forecast and actual increase of 3.5%, according to WTW’s Salary Budget Planning Report, released on Wednesday, July 15.

The consulting firm’s new report was based on a survey conducted from March through May. A total of 1,650 U.S. organizations participated, and more than 34,000 total responses were received from HR and Rewards leaders representing employers in 156 countries.

The theme from this year’s results is that employers are shifting away from broad-based pay raises toward precise, performance-driven compensation strategies to attract and retain top talent. Cost management pressures (cited by 32% of survey respondents), a tighter labor market (28%) and inflationary concerns (27%) continue to drive employers’ stable-yet-cautionary approach to salary planning.

“While top-line budgets are generally holding steady, the real shift is happening beneath the surface,” said Brittany Innes, WTW’s director of rewards data intelligence. “Organizations are being more deliberate about how they allocate pay, where they focus investment and what outcomes they expect to drive. Employers are no longer simply reacting to economic signals; they’re reimagining how to best support broader business goals despite uncertainty.”

The new figures for the U.S. market resemble those found in WorldatWork’s salary budget survey report, also released on July 15. The professional association projected 3.6% mean salary increase budgets for 2027 and put 2026 actual mean increase budgets at 3.6%.

Employers Adjusting Strategies to Land and Keep Talent

More than one-third of WTW’s survey respondents said they are actively adjusting their compensation programs to address business needs and labor market realities within the currently uneven economic environment. An additional 15% said they are planning upcoming program changes.

Specific compensation changes include:

• Hiring at higher salary ranges (cited by 36% of participants);
• Increasing the use of retention bonuses or spot awards to help secure key employees (34%); and,
• Raising starting salary ranges (32%).

Employers also are looking to strengthen their employee value proposition by:

• Improving the employee experience (47%);
• Expanding training opportunities (40%); and,
• Enhancing health and wellness benefits (38%).

“Salary increase budgets reflect the current balance between the supply and demand of labor. While the focus is often on the low demand for labor, most leaders forget that we are still in the throes of low supply,” said Lori Wisper, WTW’s senior managing directors for work and rewards. “Employers will continue to experience salary increases in the ‘land of 3%’ for the foreseeable future given these dynamics. Those who focus on using that money wisely will be the ones that win the inevitable war for talent once demand picks up.”

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