2026 Compensation Trends: Pay Budgets, Salary Structures, and What to Watch

Matt Shefchik, Assistant Vice President, Total Rewards Consulting | Cottingham & Butler

In Part 1 of our three-part compensation and total rewards series, Matt Shefchik, AVP of Total Rewards Consulting at Cottingham & Butler, breaks down the salary planning data shaping pay decisions in 2026. Most organizations entered the year planning increases in the 3.5–3.6% range — a number reinforced by the BLS Employment Cost Index at 3.4% and the Atlanta Fed Wage Tracker at 3.7%. Beyond the headline number, Matt highlights the importance of also adjusting formal salary structures, and cautions against blanket increases — different roles and career levels are moving at different rates, making a more surgical approach the smarter play.

Salary budgets have moderated from the highs of 2022 due to slower job growth, greater discipline in pay practices post-Great Resignation, and ongoing economic uncertainty. CPI sits around 3.3%, though Matt advises focusing on wage movement data rather than cost of living when making pay decisions. Parts 2 and 3 of this series will cover variable pay plan design and the impact of rising benefit costs on total compensation strategy — and Cottingham & Butler's 2026–2027 Salary Planning Survey results will be published around Labor Day.