2026 Merit Cycle Report: AI Talent Premium Grows as Raise Budgets Tighten
Merit Cycle Scorecard: Median raise for eligible employees fell to 3.4% in H1 2026, while promotion rates held steady at 8.6%. Source: Pave analysis
Raise Amounts by Country, 2026: India leads global merit raises at 9.9% — nearly 3x the U.S. median of 3.6%. Data spans 23 countries and 231K+ employees. Source: Pave analysis
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Median raises fell to 3.4%, AI/ML engineers earn 19% above R&D peers, and equity — not cash — is how companies reward top performers, per Pave's 2026 data.
SAN FRANCISCO, CA, UNITED STATES, May 28, 2026 /EINPresswire.com/ -- Pave, the AI compensation platform, has released the third edition of its Merit Cycle State of the Union report, offering the most comprehensive analysis of how companies allocate raises, promotions, and equity. The 2026 data shows organizations are making more targeted compensation decisions, with AI and technical talent commanding an increasing premium.Key findings from Pave's 2026 analysis include:
1. A median salary increase of 3.4% for eligible employees;
2. Promotion rates remain steady at 8.6%;
3. AI and ML engineering job families received the largest raises in R&D roles, with 4.4%
4. India saw the largest median raises at 9.9%, nearly three times the U.S. rate of 3.6%.
What are the average merit raises in 2026?
The median salary increase for eligible employees fell to 3.4% in H1 2026, down from 3.5% in 2025 and 3.6% in 2024. For employees who received a raise, the median was 4.9%, compared to 5.2% two years ago. The total salary increase across all employees remained flat at 2.5%.
How are AI and machine learning engineers being rewarded?
AI and machine learning engineers received a median 4.4% non-promoted raise in H1 2026, 19% higher than the broader R&D median of 3.7%. This premium reflects a shift in how companies compete for technical talent.
How do merit raises vary by country?
Pave's 2026 report covers 23 countries, its broadest geographic scope to date. India leads with a median non-promoted raise of 9.9%, nearly three times the U.S. rate of 3.6%, driven by strong demand for technical talent, ongoing inflation, and increased local competition for AI and engineering professionals. The U.S. median is now below that of Canada, Australia, Israel, and most of Western Europe, highlighting the need for companies with global teams to tailor merit budgets by market rather than apply a uniform increase.
In a market with limited budget growth, the quality of compensation decisions is more important than the budget size. Pave's three years of data show that organizations best positioned to retain top talent are not those spending the most, but those spending most deliberately.
The full report is available for download at https://explore.pave.com/2026-merit-cycle-state-of-union-report.html
About Pave
Pave is the AI compensation platform that helps companies plan, communicate, and benchmark compensation. Pave's dataset draws on insights from approximately 9,000 integrated customers. To learn more, visit pave.com.
Charles Knuth
Pave
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