What Is a Good Pay Raise Percentage?
What counts as a good raise, how cost-of-living and performance raises differ, and why employees receive different increases. With a clear FAQ.
When someone asks whether their raise is "good," they are really asking how it compares to what other people are getting. The average US pay raise percentage gives you that benchmark, but the number shifts with the economy, so it helps to know the ranges rather than a single figure.
The typical merit raise range
Mercer 2026 actual increase budgets
Bureau of Labor Statistics Consumer Price Index
Cost-of-living raises vs performance raises
Not every raise rewards the same thing, and confusing the two leads to bad comparisons. A cost-of-living raise is meant to keep your purchasing power flat as prices rise; it is an adjustment, not a reward, and it often lands near the inflation rate. A performance, or merit, raise rewards what you delivered in the role and is sized against your review and the company budget.
The practical difference: a 3% cost-of-living raise during 5% inflation leaves you behind, while a 3% merit raise during low inflation can be a perfectly good outcome. The percentage alone does not tell you which kind of raise it is, so it helps to ask your manager how the number was set.
Why employees receive different increases
Two people at the same company can get very different raises in the same year, and it is rarely personal. The main reasons pay moves differently for different employees:
- Performance ratings drive merit pay, so a stronger review earns a larger percentage.
- Promotions and role changes carry bigger jumps than merit increases because the scope of the job changed; the size varies by company and role.
- Market adjustments correct pay that fell behind the going rate for a role and city, often as a separate increase.
- Company performance sets the overall pool. When budgets are tight, even strong performers see smaller increases.
Weigh benefits alongside the cash
Also weigh benefits alongside the percentage. A 3% raise at a company that adds a strong 401(k) match and covers health premiums can beat a 6% raise at a company with thin benefits. The headline percentage is only one part of total compensation.
Sources
Frequently asked questions
What is considered a good raise?
Whether a raise is "good" depends on the comparison. For context, Mercer reported that the 756 employers in its March 2026 US compensation survey delivered an average merit increase of 3.1% and an average total increase of 3.4%; individual results vary by employer, industry, performance, promotion status, and position within a salary range. Raises well above that average usually come with a promotion, role change, or a move to a new employer.
Is a 5% raise good?
It depends on the comparison. Mercer reported a 3.1% average merit increase and 3.4% average total increase in its March 2026 US compensation survey; individual results vary. Measured against that average, 5% is above the reported average merit increase. Whether it increases your purchasing power also depends on inflation.
Is a 10% raise realistic?
A 10% raise is uncommon as a straight merit increase. It usually comes with a promotion, a significant role change, a market adjustment, or a move to a new employer. Without one of those, expect a figure closer to the average Mercer reported for March 2026 (3.1% average merit, 3.4% average total).
How much bigger is a promotion raise than a merit raise?
Promotion raises are typically larger than merit increases because they reflect a change in role scope rather than a cost-of-living adjustment. For merit increases, Mercer reported a 3.1% average and 3.4% average total increase in its March 2026 US compensation survey; promotion-increase sizes vary widely by company and role.
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