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

Core Insights - Employers are expected to remain cautious about major hiring, leading to limited pay increases in the upcoming year [1][2] Employment Trends - Major forecasts indicate a continuation of recent trends in the job market, with hiring slowing significantly compared to previous years [2] - Employers are hesitant to hire extensively while also avoiding mass layoffs due to economic uncertainty from unpredictable tariff policies [2] Wage Growth - U.S. employers plan to implement average raises of 3.3% in 2026, slightly lower than the previous year [3][9] - Wage growth is anticipated to be moderate, reflecting a cooling labor market, with job openings stabilizing and a slight rise in unemployment [4][9] - Wage growth has decreased over the past year, with a reported increase of 2.5% in September compared to 3.4% in January [5][6] Economic Implications - The job market is expected to remain subdued, with forecasts suggesting that wage increases will not match the significant raises seen in 2022 [4] - Some economists believe that the slowdown in the job market may exert downward pressure on wages, influencing the Federal Reserve's decisions on borrowing costs [6] Sector-Specific Insights - There is potential for wage increases in sectors like construction, which have been impacted by immigration policies, as these areas may experience tighter labor conditions [7][9] - A modest improvement in demand could stabilize and tighten the labor market, particularly in sectors affected by labor supply issues [8]