Florida Construction News staff writer
With U.S. construction spending now in its 14th year of growth, architecture, engineering and construction companies are increasingly treating employee compensation as a strategic priority to attract and retain workers.
A new report, the 2026 FMI Compensation Study, surveyed 218 firms across 40 states and found that construction and engineering compensation is extremely dynamic. An aging workforce, fewer people entering the trades and unprecedented project scales are compounding the pressure on companies to secure high-quality employees.
“Managing talent in this environment requires a shift in perspective — considering compensation as an investment rather than a cost,” the report states.
Cash compensation and transparency Cash compensation is continuing to rise, with 99% of respondents planning to give raises this year. The median base pay increases for 2026 are about 4%, leveling off after the heightened raises driven by record inflation and post-COVID hiring. The average increase budget sits at 4.3%, while the average most recent increase was 4.0%.
Merit and performance increases remain the most popular at 89%, followed by promotional raises (74%), market adjustments (64%) and cost-of-living adjustments (51%). Commercial general contractors and specialty trades reported the highest base pay increases.
To improve clarity, 78% of companies have established formal base-pay ranges to serve as a practical guide for setting pay, and 45% of firms now have a formalized compensation philosophy. Jurisdictions with pay equity and transparency regulations are driving firms to establish these frameworks at a faster rate.
Despite these steps toward transparency, 68% of companies still limit conversations about compensation to once per year during annual reviews.
Short- and long-term incentives Base pay isn’t the only factor; incentive opportunities are still expected. Short-term incentives (STI) are nearly universal, offered by 94% of participating firms, with 59% rating them as effective or very effective. Goals-based and structured plans are the most common, utilized by 76% of firms offering STIs. More than three-quarters of respondents tie their STI programs to corporate goals or business plans.
Meanwhile, long-term incentive (LTI) applications continue to expand. For the first time since FMI launched the survey, more than half of companies (55%) offer LTI plans. Unlike STI programs, which focus on performance and sharing success, the primary objective of an LTI program is retaining employees (63%). Long-term and deferred cash programs dominate the market, reflecting privately held companies’ reduced preference for equity grants.
Mobility and travel pay As projects grow in complexity, 58% of surveyed firms have employees who are required to travel. However, only 28% have established formal written policies for travel or assignment benefits.
Currently, 35% of firms differentiate benefits based on role or level, while 40% handle travel requests on a case-by-case basis. The most frequently offered travel benefits are per diems, included in 79% of short-term assignments and 70% of long-term assignments, followed by mileage reimbursement.
“When owners and leaders first consider market norms and then think creatively and strategically, they can establish compelling compensation and benefits programs that enable them to compete for and keep top talent,” the report noted.
FMI’s survey was conducted in February 2026. The average annual revenue across the survey group is $1 billion, and more than two-thirds of the participating firms are closely held.
