If you’re anticipating a big raise next year, you may want to temper your expectations. Signs are pointing to a mediocre 2027 in terms of salary increases.
Budgets for worker raises next year are nudging up 3.5%, flat from 2026, according to two recent surveys of employers. The Conference Board and Mercer — both business consulting organizations — landed on the same figure after polling over 1,300 firms in total.
The research shows two key factors are shaping how businesses are planning their raises: artificial intelligence and inflation.
“I wasn’t totally surprised by our results,” Jo Anne Rioli Moeller, a program director at The Conference Board, said in a webcast Tuesday. “Inflation is a large indicator of what’s going to happen with salary-increase budgets.”
Moeller explained that large salary increases that followed the pandemic were a result of inflation, which peaked above 9% in 2022. Since 2023, wage growth has remained above inflation for all but three months on record.
Now that inflation has moderated around 3%, so too have budgets for salaries.
And while inflation is driving the overall size of the pot of money earmarked for raises next year, AI is an increasingly important factor this year in determining who is actually getting a pay increase.
Who’s getting a raise in 2027
In January, the salary research firm Payscale said 2026 was characterized by so-called “peanut butter” raises, in which employers spread raises fairly evenly across the board.
But the trend appears to be short-lived. Companies are planning to do a 180 in 2027 by being extra picky with who they are choosing to get a raise. According to Mercer’s findings, just 8.4% of a company’s workforce on average will get a raise next year.
The workers who are getting tapped for raises typically include ones who are developing in-demand skills. And right now, AI is the name of the game.
Roughly 38% of employers surveyed by The Conference Board skills related to AI and machine learning are driving pay raises, topping a list of 17 skills by a notable margin.
The second most-cited skill was people management, at 30.7%, followed by data analytics, at 30.4%. (That means if you want a raise next year, growing these skills — and flexing them to your employer — could be a savvy way to land a bigger paycheck.)
These findings underscore that even though the broader job market is sluggish, employers are putting a premium on workers who know how to use and implement AI.
A separate report from the tax firm PwC suggests the AI premium can be substantial. It found that jobs requiring AI skills offer an average 62% higher pay than similar roles that don’t require such skills. These jobs are growing eight times faster than the overall job market.
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