Your 2027 Raise Is Being Decided Now. How to Get Above 3.2%

Dana is an operations analyst in Columbus who makes $72,000. Last February she opened a letter from HR announcing her 2026 raise, and it said 3.5%. She was pleased for about a day, until she noticed her grocery bill had climbed faster than her paycheck. (Dana is a hypothetical, but her letter is a very common one.)

What Dana didn't know is that the number in that letter was mostly settled the previous October and November, in budget and calibration meetings she never saw. The same thing is happening right now with your 2027 raise. If you want a bigger one, the time to act is this month, months before anyone hands you a letter.

What employers are budgeting for 2027

The big compensation surveys landed this summer, and they agree with each other to within a few tenths of a point.

Mercer's July 2026 Compensation Planning Survey, covering just over 1,000 U.S. employers, projects an average merit budget of 3.2% for 2027 and a total increase budget of 3.5%. Mercer calls it the fourth year in a row of budgets that size, give or take a tenth. WTW's Salary Budget Planning Report, released July 15, 2026, pegs 2027 at 3.4%, a hair under the 3.5% companies delivered in 2026. Payscale lands at 3.5% total, with 3.0 points of that set aside for merit.

Healthcare and retail sit lower in Mercer's data: a 3.0% merit budget and 3.2% total. Consumer goods is lower still at 2.9% merit.

Lori Wisper, a senior managing director at WTW, expects raises to stay in the "land of 3%" for the foreseeable future. I think she's right.

Why 3.2% probably isn't a real raise

Now put those budgets next to prices. The Bureau of Labor Statistics reported on September 11, 2026 that consumer prices rose 3.4% in the 12 months ending August. Over that same stretch, average hourly earnings for private-sector workers rose 3.1%, which means real hourly pay fell 0.3%.

So if you land an average 3.2% merit raise in 2027 and inflation holds near where it is, you're running in place. For Dana, 3.2% is $2,304 a year, about $89 per biweekly paycheck before taxes. Just keeping up with 3.4% inflation would take $2,448.

It's possible inflation cools next year and 3.2% ends up looking fine. I wouldn't plan on it. The safer assumption is that an average raise keeps you roughly even, and anything you want beyond even has to come from somewhere other than the default.

A small pot means somebody gets less

The math gets less friendly once you remember that 3.2% is an average across a whole team.

A merit budget is a pool. If your manager has a 3.2% pool and wants to give the strongest person on the team 5.5%, someone else gets 2% or less to balance it out. Research from pay-equity firm Syndio, summarized by HRMorning in August 2026, points out that merit pools in the 1980s and 1990s often ran 8% to 10%, which gave managers room to hand a solid performer 3% and a standout 12%. With today's 3% to 4% pools, that room mostly disappears.

And employers say they want to spend the pool more selectively. WTW found only 32% of organizations plan an across-the-board, everyone-gets-the-same-raise approach for 2027, down from 36% that did it in 2026. WTW's Brittany Innes put it this way: employers are moving "toward more precise, performance-driven pay strategies that target the roles, skills and talent segments that matter most."

That cuts both ways. If you're seen as average, you're more likely to land below 3%. If you can make the case that you're one of the people the company can't afford to lose, the pool has more for you than it used to.

Run Dana's numbers at the high end. A 5.5% raise on $72,000 is $3,960, or $1,656 more than the 3.2% average. That gap compounds, too: if both versions of her salary keep growing 3.2% a year afterward, the bigger raise is worth about $19,000 in extra pay over ten years. Not bad for one well-timed conversation.

When your raise gets decided

Most people never see this part of the process. It varies by company, so treat what follows as a typical calendar-year cycle rather than a rule.

Over the summer, compensation teams pull survey data (the Mercer and WTW numbers above) and propose a budget. In July, 87% of Mercer's respondents said their 2027 projections were still preliminary. Mercer runs a second survey in October because that's when budgets get close to final.

Then comes calibration, usually in late fall or early winter. Managers bring performance ratings to a meeting with other managers and HR, compare their people side by side, and adjust ratings so the distribution fits the budget. Raises are typically tied to the rating, often through a grid that maps rating and position in the salary range to a percentage.

The letter arrives in January, February or April, depending on your company. By then it's done. Asking for more after the letter means asking your manager to reopen a budget that leadership already signed off on, which is a much harder sell than getting in early.

How to get out of the average

You don't have to be a superstar. You do need your manager to walk into calibration with a clear, specific reason to put you near the top, ideally one they've already thought about before the meeting starts.

Give your manager a one-page brag sheet before calibration

Managers in calibration rooms are often defending six or eight people from memory. Make it easy. Write a short document with three to five accomplishments from this year, each with a number attached: dollars saved, hours cut, revenue influenced, a deadline you rescued. Send it in October or early November with a note saying you'd like to be considered for an above-average increase and wanted to give them material for the review.

If your company has a self-review form, fill it out with the same specifics. Vague self-reviews ("worked collaboratively across teams") get average ratings.

Ask where you sit in your salary range

This is the question most people skip, and it matters as much as your rating. Many merit grids give bigger percentages to people in the bottom of their range and smaller ones to people near the top. If you're below the midpoint, say so and ask whether a market adjustment is possible on top of merit.

If you live in a state with a pay transparency law, you may be able to see the range for your own job in public postings. Check whether your company is advertising your role for more than you make.

Find out if a promotion is on the table this cycle

In a tight budget year, promotions are where the bigger raises come from. Payscale's survey found 69% of companies offer promotional increases, which typically come out of a different pot than merit, and Mercer says employers expect to promote 8.4% of employees on average in 2027. The usual trigger, per Mercer, is a bigger scope of responsibility plus a grade change. If you've already taken on more, ask your manager directly whether a title change is possible this cycle and what you'd need to show by year-end to get it.

Ask about the money outside the merit pool

WTW found 34% of employers are increasing their use of retention bonuses or spot awards for key employees. Those come from different budgets than merit. If your manager tells you the merit pool is tapped, a one-time bonus or a retention award is a reasonable follow-up ask.

Know your outside number

You don't need to threaten to leave, and I wouldn't. But knowing what your job pays elsewhere changes how you talk about it. Pull salary data for your title and city, or look at a few current postings. If the market rate is well above your pay, that's a fact your manager can bring to calibration as a retention risk. WTW also found 32% of employers are raising starting salary ranges, which means new hires may be coming in above you.

What if the answer is still no?

Sometimes the budget is the budget. If you get a 3% raise after making a strong case, ask your manager two things: what rating you'd need next cycle to land in the top tier, and whether you can check in on progress in six months. Write down the answers and send a short follow-up email confirming them.

Then decide whether the job is worth staying in at that pay. Some are, because of flexibility, a great manager or skills you're building. If it isn't, you'll have a clear, documented reason to start looking, and that call is easier to make in January with a raise letter in hand than it is to put off another year.

Bottom Line

Average 2027 raises of 3.2% to 3.5% will roughly match today's 3.4% inflation, which means an average raise is close to no raise at all. The people who do better get their case in before the budget closes. This week:

1. Ask your manager when your company's 2027 raise budget and calibration meetings happen, so you know your deadline.
2. Write a one-page list of three to five accomplishments from 2026, each tied to a number, and send it to your manager by early November.
3. Look up where your salary falls in your job's pay range (internal grade or public job postings) and raise it with your manager if you're below the midpoint.
4. If a promotion or bonus is a realistic possibility, ask about it directly in the same conversation, before the merit pool is spent.