• Kevin Hassett forecasts a $2,500 to $3,000 real-wage increase for U.S. workers in the current year, aligning with broader expectations of moderating but positive wage growth amid economic uncertainty.
  • Recent surveys show U.S. employers planning average salary increases of 3.2-3.6% for 2026, slightly below or flat compared to 2025 actuals, as inflation stabilizes and labor competition eases.
  • Minimum wages are set to rise in 88 jurisdictions by end-2026, with 79 reaching $15 or more per hour, boosting pay for low-end workers and reflecting state and local policy shifts.

Kevin Hassett, a prominent economist and former White House advisor, projected a $2,500 to $3,000 real-wage increase for U.S. workers in the current year during a Milken Institute event, emphasizing that this aligns with broader forecasts of moderating but positive wage growth amid ongoing economic uncertainty. The nonprofit think tank, founded in 1991 by Michael Milken, focuses on economic research and policy through reports and events like this one, which highlighted key financial trends without disclosing recent financials due to its nonprofit status.

Recent surveys indicate that U.S. employers are planning average salary increases of 3.2-3.6% for 2026, slightly below or flat compared to 2025 actuals of 3.5-3.7%, reflecting tapered wage growth as inflation stabilizes and labor competition eases. Real hourly wages for lower-wage workers, specifically those in the 10th to 50th percentiles, have risen by $1.34 to $1.75 from the first quarter of 2020 to the third quarter of 2025, though these gains still lag behind pre-pandemic trends. Minimum wages will rise in 88 jurisdictions by the end of 2026, with 79 reaching $15 or more per hour, boosting low-end pay and addressing affordability issues in sectors like retail and transportation.

Wage forecasts tie into cooling inflation, shifting labor markets that increasingly favor employers, and broader economic uncertainty. Technology and professional services sectors expect higher increases, up to 4.0%, while retail lags at 3.0%. Nationally, unemployment may peak at 4.5% in 2026 with wage growth above pre-pandemic norms, and globally, Canada anticipates 3.3% raises, according to people familiar with the matter. State and local policies are driving minimum wage hikes in 22 states and 66 localities, though some rollbacks have occurred, such as Missouri repealing paid sick leave and inflation adjustments after the 2024 ballot.

Boosting living standards for low-wage workers, for example, an estimated 9,000 in Santa Fe, New Mexico, via a $17.50 floor by 2027, but 32% of employees feel underpaid relative to their performance, prompting increased scrutiny from HR departments. This affects employers, with 68% holding budgets flat, and workers, as 84% are slated to receive raises. Wage growth surged post-2020 but has tapered from 2024 peaks of 3.6-4.0%, with real gains since the pandemic lagging late-2010s trends due to prior inflation spikes, similar to post-recession forecasts tracked by the Milken Institute since 1999.

In the short term, pay budgets may adjust upward if labor shortages or inflation reemerge, with 34% of higher-budget firms citing this possibility, and 85% of exempt workers scheduled for raises. Long-term outlook suggests sustained 3-4% growth if unemployment eases in the second half of 2026, though it remains below historical peaks for bottom-half earners. Experts like Payscale's Ruth Thomas predict that plans may be revisited amid ongoing scrutiny, according to sources close to the discussions. Parallel surveys from Mercer and WTW/Gallagher confirm these trends, with J.P. Morgan forecasting labor market improvement and Milken's 2026 cities report highlighting weaknesses in high-tech job sectors.

Correction: An earlier version misstated the number of jurisdictions with minimum wage increases; it is 88, not 68.