Tech wage growth fell behind in 2024
How do we keep the best talent when wages aren’t keeping up with reality? In 2024, tech salaries rose a mere 1.2%. That’s not just slow—it’s falling behind inflation. When inflation runs at 2-3%, it’s clear this “raise” doesn’t mean more money in anyone’s pocket. If you’re a C-suite leader thinking about retention, this is a problem. The average tech worker in 2024 earned $112,500, but there’s a twist: people with AI skills saw an 18% pay bump. What does that tell us? Simple—there’s a premium on cutting-edge skills, and AI is at the heart of it.
We’re not in the free-flowing money days of 2020-2021 anymore. Workers know this, and nearly half of tech professionals actively sought new roles in 2024, compared to just 29% the year before. What’s driving this shift? Stagnant paychecks, yes, but also the realization that their skill sets are in demand elsewhere—especially if they’ve invested in AI. Talent is looking for greener pastures, and they’re not afraid to move.
For leaders, the takeaway is clear. If you’re not rewarding skills that move the needle—AI, machine learning, automation—you’re at risk of losing your top talent. And once they walk out the door, the cost of replacing them is far higher than the cost of a meaningful salary adjustment.
“This is a moment to think strategically about compensation, not just as a cost but as an investment in staying competitive.”
The cooling tech job market is recalibrating, not collapsing
We’ve seen a shift in the tech job market, and no, it’s not doom and gloom—it’s recalibration. After the pandemic, companies went on hiring sprees, and some of that hiring was, frankly, overzealous. People were being brought on without clear roles or projects. It was “hire first, figure it out later.” That couldn’t last. What we’re seeing now is a return to a more balanced approach. As Art Zeile, CEO of DHI Group, put it, “regression to the mean.” It’s a natural adjustment after an overheated period.
In 2024, IT unemployment hit 3.7% in June—the highest in four years. That sounds alarming, but let’s put it in context. For one, unemployment in tech has always been lower than in other industries. And second, by December, we added 7,000 new tech jobs. What does that tell us? Demand for talent is still there, it’s just more selective. Companies aren’t throwing money at warm bodies anymore, and they’re targeting skills that align with their immediate and long-term priorities.
This recalibration is actually healthy for the industry. It forces businesses to focus on what matters: hiring with purpose and aligning roles with strategic goals. If you’re in the C-suite, this is your moment to reassess your workforce strategy. Are you prioritizing the right skills? Are you building for where the market is going, not just where it’s been? Lean times don’t have to mean lost opportunities, but are in fact a chance to get smarter.
Generative AI and the talent gap you can’t ignore
Generative AI has flipped the script. It’s a tidal wave, and the companies that ride it will outpace those that don’t. Generative AI refers to AI systems that create—think ChatGPT for conversations, DALL·E for images, or even models that write code. These tools are transforming how businesses operate, from customer service to product design.
Demand for AI skills is skyrocketing. In 2023, only about 10% of job postings on Dice’s platform required AI expertise. By the end of 2024, that number hit nearly 30%. Yet there’s a big problem: we don’t have enough skilled professionals to meet this demand. As Zeile said, “There’s less AI-skilled professionals than there are projects to put them on.” The gap is widening, and that creates both a challenge and an opportunity for businesses.
What should you do about it? First, recognize that AI isn’t just an IT concern—it’s a strategic imperative. Second, invest in upskilling your existing workforce. Third, think beyond traditional hiring; partner with universities, support bootcamps, or even build internal AI training programs.
“The companies that invest in bridging the GenAI talent gap will be the ones leading their industries into the next decade.”
Key takeaways for decision-makers and leaders
- Minimal salary growth: Tech salaries rose just 1.2% in 2024, barely keeping pace with inflation. This stagnation is causing increased job-seeking activity, with nearly 50% of tech professionals exploring new opportunities. Leaders should reassess compensation strategies to stay competitive and retain top talent.
- AI expertise commands premium: Workers with AI skills saw an 18% pay bump compared to their peers. Companies should prioritize investment in AI-related skill development and consider premium compensation for specialized roles to attract and retain in-demand talent.
- Hiring recalibration: After a post-pandemic hiring surge, the tech job market has cooled. The IT unemployment rate hit 3.7% in June but ended the year with 7,000 new tech jobs added. Leaders should adjust hiring practices to focus on high-value roles and ensure talent alignment with evolving business needs.
- Focus on strategic roles: Generative AI’s rise is reshaping job demands, with AI and data science expertise becoming critical. Companies should invest in upskilling existing teams or seek specialized talent to align with this growing trend.
