Starbucks has been overhauling its stores by simplifying the menu and bringing back ceramic cups. It’s also been overhauling its corporate workforce. It laid off more than 1,000 workers earlier this year. And now the company said it’s switching its raise structure for salaried employees, moving from a merit-based system to an across-the-board 2% raise. It’s a shift happening at many companies.

Usually, the kind of raise a company dishes out depends on its workforce. Merit raises tend to go to white-collar employees and across-the-board raises go to blue-collar ones.

“This is strategic HR,” Burton said. “What kind of a place are we trying to create? How much competition versus cooperation do we need or want?” said Diane Burton, director of the Institute for Compensation Studies at Cornell University. 

Different raise models incentivize different behavior. You may not necessarily want to give a police officer a merit raise for handing out more tickets, but you may want to reward a salesperson for making more sales. 

Burton said the dynamic has been changing in corporate America in part because companies are more sensitive to gender and racial pay disparities. 

“You saw a lot of companies abandoning their performance evaluation system,” Burton said.

Also, merit raises are tedious. Michael Sturman, a professor of HR management at Rutgers University, said they require managers to measure employee performance and write lots of reviews. 

“It’s taking up a lot of time, causes a lot of headaches,” Sturman said. “Performance appraisals are a pain.”

Doing away with them saves time, which is money. It can also save actual money. According to Bureau of Labor Statistics data, as of June wages for private industry workers increased 3.5% for the year on average. Compare that to a flat 2% from Starbucks.

“It does make it actually a little bit easier to allocate less money and therefore perhaps keep your costs down,” Sturman said.

Limiting raises and slashing benefits is a common tactic when companies are underperforming. It’s also common when the economy at large looks shaky.

“The labor market has cooled and so companies now are starting to feel they have more leeway, more leverage with their employees,” said Barry Gerhart, a professor of management at the University of Wisconsin, Madison. 

In other words, companies know it’s getting harder for workers to find other jobs, which means it’s getting easier for companies to compete.