Good morning. Salary increases for employees are expected to remain similar next year amid a flatter, but potentially, volatile economic outlook.For U.S. companies, the average salary increase budget is projected to hold steady at 3.5% in 2026, matching the actual increases seen in 2025, according to the Salary Budget Planning Report by Willis Towers Watson (WTW).About 31% of respondents plan to lower their salary increase budgets compared to last year, mainly due to concerns about a possible recession, weaker financial performance, and the need for tighter cost control. In contrast, the few organizations planning to raise their budgets cite a competitive labor market and inflationary pressures as key reasons. The global survey, conducted from April to June, included responses from 1,569 U.S. organizations.Employers are no longer simply reacting to economic signals regarding pay allocation, according to WTW. They’re accounting for other labor factors.“Just as they do with any other investment, the most forward-thinking CFOs that we speak with are looking holistically at all aspects of pay and benefits to better understand which programs resonate most with employees and provide the highest return on investment,” John Bremen, managing director and chief innovation and acceleration officer at WTW, told me.They treat “total rewards” as a portfolio, which makes sense given that the largest companies spend billions on them, Bremen explained. CFOs reduce spending on the programs that have less impact and further invest in the ones that have the highest impact, he said.Another key finding of the report: Despite limited pay growth, employee turnover remains low. Fewer organizations now report challenges with employee stability compared to the past two years. Only 30% of surveyed organizations find it difficult to attract or retain employees, down 11 percentage points from 2023, WTW finds.More employees want to stay with their current employers (62% in 2024 vs. 49% in 2022), and fewer are open to offers (11% vs. 22%)—yet nearly 30% are still actively job hunting, Bremen said.Other reasons employees stay are structural, he said. U.S. Bureau of Labor Statistics (BLS) data shows that fewer job opportunities are available today compared with previous years, he explained. “Even though there are still millions of open jobs in the U.S., there are far fewer available to potential job changers,” Bremen said. “And the premium for changing jobs is lower today than it was in previous years.”In June, the unemployment rate dipped to 4.1% from 4.2%. While 147,000 new jobs were added, private sector job growth was the slowest in eight months, according to BLS. Additionally, 130,000 people left the labor force, and the unemployed are staying out of work longer, Fortune reported.In response to this stable yet challenging labor market, in which turnover is relatively low and burnout and disengagement remain concerns, WTW finds that companies are taking steps to support their workforce, including:—Improving the employee experience (47%)—Enhancing health and wellness benefits (43%)—Expanding training opportunities (40%)A commitment to employee well-being and engagement is essential.Sheryl Estradasheryl.estrada@fortune.comThis story was originally featured on Fortune.com