US employers are holding salary budgets roughly flat for a third straight year, but WTW’s newly released 2027 Salary Budget Planning Report shows the money is being aimed very differently than it was even twelve months ago. The consultancy’s survey of 34,024 organizations in 156 countries, including 1,650 US respondents, found average US salary increase budgets projected at 3.4% for 2027, barely below 2026’s actual 3.5%. Cost management pressure (32%), a tighter labor market (28%), and inflation concerns (27%) are the top reasons employers gave for staying conservative on the topline number.
What matters more than the flat headline figure is where the dollars are going. Thirty-three percent of employers are already adjusting their compensation programs, shifting from broad raises toward targeted moves: 36% are hiring at higher salary ranges for hard-to-fill roles, 34% are expanding retention bonuses and spot awards, and 32% are raising starting salary ranges. “Salary budgets may be holding steady, but how organizations use those dollars is changing significantly,” said Brittany Innes, WTW’s senior director of rewards data intelligence. Lori Wisper, the firm’s senior managing director for work and rewards, put it plainly: “Those who focus on using that money wisely will be the ones that win the inevitable war for talent.”
The original insight is what this signals for HR technology, not just budgeting. A flat topline number with this much internal reallocation is hard to run through static merit matrices. It needs compensation platforms that can model targeted increases by role and document the reasoning, precisely the kind of consistency gap that showed up this week in a separate HiBob survey on AI skills and pay premiums: employers already pay more for scarce capability but few can explain the decision with a shared standard. WTW’s data shows the same instinct in the wider rewards package, with 47% of employers investing in employee experience and 40% in expanded training, treating retention as engineered infrastructure rather than an annual bonus check.
Source: WTW
