Tech Employers Pay Premium for AI Expertise While Laying Off Others

Single Woman Worker

Even though tech companies are racing to develop better AI mouse traps, their employees are under growing pressure when it comes to keeping their jobs.

According to CNN, AI has already led a small but growing number of the sector’s employers to lay off workers and take a fresh look at their hiring plans. The outplacement firm Challenger, Gray & Christmas reported that in May 3,900 people were laid off because of AI – all of them in tech.  

As examples: In April, the file-storage service Dropbox said it would release about 16% of its workforce, or about 500 people, because of AI, CNN said. Last month, the edtech company Chegg said it would cut 4% of its workforce (about 80 employees) to better position itself to “execute against its AI strategy and to create long-term, sustainable value for its students and investors.”  

Transformation Cometh

The tech industry’s approach may hint at how businesses will adjust their workforce planning as they adopt advanced technology. New AI tools, it seems, are leading some employers to shift their resources to account for these new solutions. At the same time, workers who know their way around AI are now at a premium.

The layoffs are taking place amid broader cuts in technology, CNN pointed out, as employers face an uncertain business environment and a decreasing demand for digital services. More than 212,000 tech workers have been laid off so far in 2023, according to, significantly outpacing the 165,000 layoffs seen in 2022.

In a blog post to Dropbox employees, CEO Drew Houston said AI has impacted the company’s business “more rapidly than any of us could have anticipated.” To keep growing, he said, “requires a different mix of skill sets, particularly in AI and early-stage product development.”

Premium Skills

Put another way, the technology industry doesn’t need fewer employees, it needs different employees. So, while one hand is cutting back, the other is investing.

Earlier this year, Microsoft said it would lay off 10,000 employees as a cost-cutting measure, even as it invested billions of dollars into ChatGPT developer OpenAI. Separately, Meta announced plans to let go of its own 10,000 workers and, in the same breath, said it would make its own notable investments in AI.

Roger Lee,’s creator and founder of the employee compensation platform, said an analysis of his data revealed that the average salary for senior software engineers who focus on AI or machine learning is 12% higher than for those who don’t. And, those salaries have also increased by about 4% since the beginning of 2023, he told CNN, while other salaries have remained flat.

Dropbox, for instance, offers exceptionally high pay for AI roles, with base salaries ranging from  $276,300 to $373,800 for a principal machine learning engineer, Lee said. The average salary for a plain old senior software engineer comes in at $171,895.

Image: iStock

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