Salary Budget 2026: A Steady Metric in a Rocky Climate

Author: Victoria Kelleher 

Several metrics from 2025 point to an unsteady job climate in the United States this year. Corresponding with a rising unemployment rate and dwindling job openings, metrics for October indicate that 2025 has been the worst year for layoffs since 2009. 

These outcomes are likely driven by a flurry of macroeconomic pressures, including stubborn elevated inflation rates and the long-term effects of abnormal hiring trends and interest rate fluctuations. Data shows that employers are facing unusually strong budget pressures due to the sustained costs of an unpredictable economy.  

2026 Salary Budget Projections

Employers often respond to increasing costs or uncertain economic trends by identifying opportunities to cut costs. Overall salary budget is often on the table, since employee compensation is usually the highest operating expense for businesses across sectors. 

A recent pulse survey from Brightmine found that the average projected change for total salary budgets from 2025 to 2026 is an increase of 2.8%. This rate is only slightly lower than in previous years, where the metric has typically hovered at or above 3 percent. 

Despite the slight decrease in percentage relative to last year, more than half of companies reported that they intend to increase their budgets at least slightly (see Chart 1). However, nearly a third of companies indicated that there are no intended changes. Additionally, 10% of companies indicated an intent to decrease the salary budget, in contrast to only 4% of companies in last year's survey. 

Chart 1: Expected Changes to 2026 Overall Salary Budget

HR representatives indicated that there are a variety of factors exerting pressure on salary budget decisions this year. The most cited pressures were their company's financial performance (at 51% of companies) and the cost of living (49% of companies; see Chart 2). 

Chart 2: Factors Influencing Changes in 2026 Salary Budget

Other Methods of Cutting Costs

A steady salary budget doesn't necessarily mean that employers are not adjusting how budget is allocated toward employees. Employee salaries are only one portion of the total labor cost. Companies may still cut labor-related costs by cutting budgets for employee benefits or bonuses. 

On the other hand, some companies may conduct layoffs or hiring freezes that allow for the redistribution of costs to provide employees with raises without the need to boost the overall budget. Recent labor data suggests that many companies may be taking this route; job cuts this October have surged 175% since the same month a year ago.

Takeaway

The unique combination of labor metrics this year paints a picture of a uniquely uncertain job climate. Employers who find it difficult to balance budgets and manage costs this year can be assured that this challenge is presenting itself across the job market.