In the wake of a year marked by record-breaking inflation and market turbulence, local tech salaries in the US have experienced their most significant year-over-year decline, dropping by a staggering 3 percent, from an average of $161,000 to $156,000, according to a recent report by AI-driven marketplace Hired. When adjusted for inflation, this data reveals an even more concerning trend, with US salaries hitting their lowest point in five years, plummeting by a shocking 9 percent from $141,000 to $129,000 from 2022 to mid-2023.
Contrastingly, salaries in the UK have seen a 4 percent increase year-on-year, rising from £82,000 to £86,000. Surprisingly, despite economic uncertainty, job seekers in both the US and the UK have maintained their salary expectations, at an average of $146,000 and £82,000 per year, respectively.
However, the report cautions that these figures may not reflect the true impact when considering current market conditions.
As the tech industry witnesses the rise of generative AI and companies tighten their corporate budgets, junior talent, particularly those with less than four years of experience, have faced the most significant decrease in salaries, nearly 5 percent year-over-year. The demand for such roles has also seen a sharp decline, with posted positions on tech hiring platforms dropping from 45 percent in 2019 to 25 percent in the first half of 2023.
Josh Brenner, CEO at Hired, commented on the significant shift in tech employee and employer preferences compared to the previous year. The surge in demand for experienced tech talent and increased reliance on AI tools highlights a growing skills gap in the industry.
This challenge is expected to intensify as companies reduce their hiring locations and limit access to qualified talent amidst their return to the office. Employers have consequently reduced the number of open roles in high-cost-of-living markets by 19 percent and increased the number of roles in low-cost-of-living markets to 9 percent since 2020, according to the findings.
Experienced engineers with efficient problem-solving abilities are in high demand, particularly with the introduction of AI tools and rising cybersecurity challenges, the report emphasized.
In conclusion, the tech industry is undergoing a significant transformation in employee expectations and employer hiring strategies, with salary fluctuations reflecting broader market trends and ongoing changes in the industry landscape.