25% of bosses say bad pay is costing them top talent: Fortune

A quarter of employers now admit their pay packages are pushing top performers out the door, according to a new Payscale report highlighted by Fortune. The culprit: so-called ‘peanut butter raises’ that spread wage bumps evenly across the workforce regardless of performance.

What the report shows

Around 25% of companies admitted they were losing talent in 2026 due to insufficient wage increases, according to the Payscale report.

Around 36% of U.S. companies say they gave out standard, across-the-board pay increases this year. These ‘peanut butter raises’ are spread out evenly to all staffers, regardless of their performance, and have been dolled out as companies grapple with economic uncertainty.

Why merit pay is fading

Some companies are ditching merit-based wage bumps in favor of ‘peanut butter raises’—and it’s hurting employee morale. The trend maps to sectors where budgets are tight and headcounts are large.

The report notes peanut butter raises are more common among sectors with huge workforces, hourly staffers, and step-structures, including government and education.

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The high-performer problem

‘Peanut butter pay is often framed as the fairest approach because everyone receives the same increase,’ Ruth Thomas, chief compensation strategist at Payscale, tells Fortune. ‘But employees don’t typically judge fairness by whether everyone got the same—they judge it by whether they were rewarded appropriately for their individual contribution.’

‘When pay increases fail to reflect differences in impact, organizations risk sending the message that performance doesn’t make a difference, and that’s where motivation starts to erode,’ Thomas added.

Why it matters for markets

Turnover is not cheap. Analysis from The Dream Collective shows that replacing high-potential talent can cost a business two to three times the outgoing worker’s annual salary, and high performers deliver approximately 400% more productivity than the average employee.

That is a productivity and margin story hiding inside HR line items, especially for labor-heavy businesses heading into 2026 guidance season. Watch for management commentary on retention costs and wage inflation on upcoming calls.

Options market and stocks to watch

Wage-sensitive names worth keeping an eye on:

• WMT: massive hourly workforce, a natural test case for how peanut butter raises land at scale.
• AMZN: watch for retention costs across fulfillment and AWS engineering talent.
• META: aggressive comp for AI talent runs opposite to the peanut butter trend, watch commentary on stock-based comp.
• PYPL: Payscale competitor space, watch HR software demand as merit pay frameworks get rebuilt.
• WDAY: HR platform exposure, watch for pickup in comp-planning module usage.

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