Hoping for a Big Raise in 2026? Time to Reset Your Expectations

The job market's gone from hot to chilly, and it's squeezing salaries harder than expected. Federal data shows wage growth slowing since late 2022, with over a quarter of job-switchers taking pay cuts and 16% landing lateral moves (per ZipRecruiter). If you're dreaming of a fat raise, brace for reality: more applicants, fewer openings, and companies dialing back the generosity.

Take Ann Schliemann, a former six-figure project manager. After a layoff in December, she's interviewing for $80K roles—down from $90K at her last gig. "Companies don't have to offer as much as they used to," she says. "I'm to the point where I'll take whatever I can get." At 64, with a paid-off Florida home but slim retirement savings, she's feeling the slide from corporate ladder to slip-n-slide.

This isn't just hype around AI efficiencies (which execs love citing to justify post-pandemic cuts). The U.S. shed 92,000 jobs in February alone. Short-lived pay bumps from the talent wars fueled inflation—but cooling wages won't fix it overnight.

Even If You're Employed, Don't Bank on That Annual Bump

Staying put? No guarantees either. "There's no automatic increase," says Ron Seifert of Korn Ferry. Raises are now targeted at top performers, high-potential stars, or must-have skills—averaging 3.2% to 3.6%, but ranging wildly. Elite talent might snag 1.5-2x that; others get zilch. Bonuses are shrinking too (ADP data).

Managers prioritize retention of key players; the rest? Replaceable. But here's the twist: it's not about past wins. "It depends on where the organization sees future value," notes Mercer partner Tauseef Rahman. Assess if your role aligns with growth areas—being the star of a fading division won't pay.

Job-Hopping: Less Cash, More Strategy

Switching jobs? The "job-switchers' premium" has dwindled to 1.9% (ADP's lowest since 2020). Forget windfalls—think "lily padding": hopping to stable spots, building skills, or sectors with investment. Job coach Colleen Paulson of Ageless Careers is blunt: "I'm open about pay cuts—it makes people feel better knowing they're not alone."

Channel commission workers' mindset: incomes fluctuate. Savor the ups, prepare for downs.

Quick stats on recent job moves (Q3-Q4 2025):