With U.S. construction spending in its 14th year of growth, architecture, engineering, and construction (AEC) companies face ongoing pressures from an aging workforce, trade shortages, and unprecedented project scales. To compete for critical workers, industry leaders are treating employee pay as a strategic investment rather than an operational cost.
The 2026 Compensation Trends Study by FMI Corporation reveals key shifts in how construction firms structure base pay, incentives, and travel perks to retain talent.
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Transparency Drives Base Pay Formalization
Closed-door salary decisions are fading. Driven by evolving pay equity and transparency regulations, 78% of surveyed firms now use formal base-pay ranges, and 45% have established a formal compensation philosophy.
Highlights from base-pay trends include:
- Pay Increase Averages: Base pay budgets increased by an average of 4.3% in 2026, leveling off compared to post-pandemic spikes.
- Widespread Raises: 99% of responding companies plan to award raises this year, primarily through merit/performance increases (89%) and promotional raises (72%).
- Frequent Re-evaluations: 43% of firms update their base pay ranges annually, while 36% adjust them continuously as market conditions change.
Incentive Programs: Short-Term vs. Long-Term
While base pay remains the primary baseline for non-executives, incentive plans are essential to keeping employees engaged.
Short-Term Incentives (STI): Offered by 94% of companies, STIs are primarily structured to align with business goals (76%) and share firm success. Popular STI structures include structured/goals-based bonuses (76%), referral bonuses (66%), and discretionary bonuses (66%). Notably, all surveyed firms make superintendents, supervisors, and operations managers eligible for STIs.
Long-Term Incentives (LTI): For the first time in the study’s history, LTI adoption passed the halfway mark, with 55% of firms offering long-term plans—a sharp rise from the historical 35%–40% range. Unlike STIs, the primary goal of LTI plans is retention (63%). Long-term or deferred cash payouts dominate the market (41%), fitting an industry largely made up of private and closely held companies.
Traveling Workers Demand Flexible Support
As projects grow in distance and complexity, 58% of firms require employees to travel to jobsites. However, governance around travel compensation remains largely informal:
- Only 28% of companies have a formal written travel policy.
- 40% determine travel benefits on a case-by-case basis, while 35% vary benefits based on employee role or seniority level.
- Per diems (79% for short-term, 70% for long-term) and mileage reimbursements remain the most common travel benefits, followed by company-paid trips home and housing allowances.
The Bottom Line
With turnover leading to project delays, knowledge loss, and higher recruiting expenses, AEC leaders are prioritizing retention. Standardizing compensation frameworks and expanding incentive offerings have quickly become necessity for firms navigating complex project demands.