Hired, an AI-driven marketplace matching tech and sales talent with top companies, released its annual State of Tech Salaries Report: The Tech Hiring Tightrope: Balancing the Skills & Shifts in Talent. According to data from Hired’s marketplace, the tech talent market has seen dramatic shifts from 2022 to the first half of 2023, fueling tension and misalignment between recruiter and job candidate expectations.
Following a year of record-breaking inflation and market turbulence, local salaries in the US, which include fully in-person or hybrid roles, have experienced their most significant year-over-year decline, dropping by 3% from $161,000 to $156,000. In contrast, salaries in the UK have seen a 4% increase, rising from £82,000 to £86,000.
Despite economic volatility, jobseekers in the US and UK have maintained their salary expectations at $146,000 and £82,000; however, these figures may not be as impactful as candidates would expect when accounting for current market conditions. When adjusting for inflation, Hired’s data reveals a staggering story – local US salaries have plummeted to their lowest point in the past five years, decreasing 9% from $141,000 to $129,000 from 2022 to mid-2023, while local UK salaries have dropped 3% from £73,000 to £70,000 during the same period.
Amid the rise of generative AI and tightening of corporate budgets, junior talent (those with less than four years of experience) have experienced the most significant decrease in salaries – nearly 5% year-over-year – and demand, with posted roles on the platform lowering from 45% in 2019 to 25% in the first half of 2023.
“Compared to last year, we are witnessing a seismic shift in tech employee and employer preferences. The surging demand for experienced tech talent on our platform and employers’ increasing reliance on AI tools point to an ever-growing skills gap. This challenge will only heighten as companies reduce their hiring locations amid their return to the office and limit their access to qualified talent,” said Josh Brenner, CEO at Hired, “With the future talent pipeline at risk of a deficit, companies cannot afford to disregard high-quality talent at any level. Instead, they must embrace diverse candidates with transferable skills who can adeptly address industry challenges, especially amid rapid advancements driven by emerging technologies like AI.”
With talent fleeing to lower-cost-of-living markets over the past few years, US inflation-adjusted remote salaries have been higher on average and experiencing less volatility than local inflation-adjusted salaries. These salaries dropped only 6% from $143,000 in 2022 to $134,000 in 2023, compared to local inflation-adjusted salaries, which fell 9% during the same timeframe. Employers have consequently decreased the number of open roles in high-cost-of-living markets by 19% and have nearly quadrupled the number of roles in low-cost-of-living markets to 9% since 2020.
Most notably, the San Francisco Bay Area saw the most significant decrease in role volume on Hired’s platform but continues to command the highest average salary of $178,000. Conversely, Washington D.C. has emerged as the fastest-growing market, offering competitive average salaries of $152,000. When adjusted for cost-of-living expenses, this figure equates to an earning average of $190,000 relative to the SF Bay Area.
Additional key findings from this year’s report include:
- Engineering managers came out on top in 2023: Experienced engineers with the ability to resolve issues efficiently are in high demand, particularly with the introduction of AI tools and increased cybersecurity challenges. Engineering managers earn the highest salaries at $202,000 in the US and £118,000 in the UK – a notable 10% increase from £107,000 at the end of 2022.
- Specialized engineers are the most in-demand in 2023: Employers on Hired’s marketplace have a higher demand for specialized engineers, especially for AI applications such as ML, as well as cybersecurity, data, and backend engineers.
- AI isn’t an immediate threat to job security, but it could present challenges for jobseekers in the coming years: While the majority of surveyed candidates (87%) currently do not view AI as the primary threat to their roles, a significant portion of employers (47%) project, they will leverage AI to reduce headcounts by 2029.
- Employers seeking specialized engineers have a better hiring advantage if they source from Atlanta, San Diego, Tampa, LA, or Seattle: According to platform data, these are the most opportunistic hiring markets for employers, while the most competitive markets to hire in include Washington D.C., Boston, Chicago, New York, and Columbus.
- Remote work reversals hit the enterprise the most: Enterprise and mid-sized companies are cracking down on their return-to-office plans, while eSMBs and SMBs have increased their willingness for remote talent. Subsequently, jobseekers are forgoing their preference for “remote only” to be a more favorable candidate to employers, with only 30% of jobseekers indicating this preference in June 2023, compared to 34% at the end of 2022.
- DEI continues to be threatened with return-to-office (RTO) calls: When asked if 100% of in-person employees had a better chance of promotion than remote employees, 41% of employers said yes. With 85% of surveyed women indicating a preference for fully remote roles, RTO threatens to undo the progress that expanded opportunities for diverse talent over the last few years.
These findings are based on the analysis of data from over one million interview requests and nearly 250,000 jobseekers on Hired’s marketplace from January 2019 through June 2023 inclusive. Hired also surveyed over 1,300 global tech professionals on its platform and a random sample of 200 employers to understand how the current state of tech hiring has impacted preferences for in-demand candidates and skills, salary expectations, benefits, flexible work, and more topics.
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