Expecting a Big Raise in 2026? Don’t Count on It

Employers in the year ahead are likely to remain reluctant to embark on any major hiring sprees, and the lack of demand for workers should serve to keep a lid on pay increases.

Several major forecasts and surveys of employers largely call for the continuation of the job market’s recent trends, in which hiring has slowed to a crawl compared to the last few years. Employers have been reluctant to hire too many workers, but also wary of mass layoffs, as economic uncertainty caused by unpredictable tariff policies has made planning future expansions difficult.

U.S. employers plan to give raises averaging 3.3%, a tenth of a percentage point lower than in 2025, according to a survey by payroll software company Payscale.

Forecasters at jobs website Indeed expect the job market to remain in low gear over the next year, with job openings stabilizing rather than continuing to decline, and unemployment rising, but not too much. None of that would push employers to give out huge pay raises like they did in 2022 when labor was in high demand, and the economy was reopening from the pandemic.

Wage growth, as measured by salaries advertised in job postings, has cooled down over the last year, according to Indeed.

Some economists think the job market might slow down even further in the year ahead, which would put downward pressure on wages. This might be why the Fed has been lowering borrowing costs, which can boost hiring.

However, some forecasters see upside for the job market and wages, as some of the market’s recent slowdown has been attributed to a lack of workers, in addition to a lack of jobs. That could be especially true in industries affected by President Donald Trump’s immigration crackdown, according to economists at Deutsche Bank, led by chief economist Mathew Luzzetti.

“Against a backdrop of continued weak labor supply, it will not take much improvement in demand conditions to stabilize and then re-tighten the labor market, at least modestly. Indeed, some sectors at the epicenter of the immigration crackdown, such as construction, appear to have tightened in recent months, with wages accelerating as payroll gains collapse,” he wrote in a commentary.