AI Pay: How High Can It Go?

The market for AI talent is starting to look a lot like free agency for quarterbacks in the NFL: Every new contract resets the bar for compensation.

In an unusual twist, experts say, the combination of high demand for AI talent and the amorphous nature of AI roles means that firms don’t have a clear benchmark to evaluate salaries. The result is a flurry of spending: salary offers to bring people in, on the one hand, and big increases to retain existing talent, on the other. And it isn’t just the big tech firms making headlines with nine-figure pay packages—the salary tide is rising for firms of all sizes. “When the largest AI firms start spending on hiring, it creates a massive spike in the market for an already small population of potential hires,” says Paul Fogel, sector leader for professional search in the Software practice at Korn Ferry.

Nowhere is that more evident than in the pay increases for junior employees. A new study found that salaries for AI roles requiring zero to less than three years of experience have grown 12% year-over-year. By comparison, Korn Ferry data shows salaries and raises overall are only expected to grow by 3.5% in 2025. Don Lowman, leader of Korn Ferry’s Global Total Rewards practice, says the high premiums underscore how urgently firms are seeking to adapt to the technology—and the vulnerability they’ll face if they don’t. “The fear of the unknown is causing them to pay a premium for scarce skills that they lack,” Lowman says.

What’s more, AI talent is in such short supply that the threat of losing it to a competitor is omnipresent, say experts. “The reality is that firms will need to pay what they need to pay to bring in relevant talent,” says Tom McMullen, leader of Korn Ferry’s North America Total Rewards expertise group.

The current situation is not unlike the pay flurry of the pandemic, when firms were offering salary and pay bumps of 20% or more. But experts caution that the impact of paying such large premiums to a select group of employees will have ripple effects, both for compensation and the workforce overall. “There will likely be pressure from staff to offset the premiums being paid,” says McMullen.

Jeff Constable, co-leader of the Global Financial Officers practice at Korn Ferry, says compensation always skews higher initially when a new field or discipline emerges: No established peer groups or market data exists to benchmark salary ranges, bonuses and incentives, and other compensation. Typically, Constable says, though pay does spike in the near term, cost structures tend to balance out over the long term, as compensation aligns more closely with return on investment. “At some point, the premiums will go down,” he says.

Not every firm can pay top dollar at the outset, of course, and with demand for AI talent only growing more voracious, experts say firms will need to get more creative with their recruiting and retention efforts. This could include delaying compensation via equity or offering retention bonuses and profit-sharing options with vesting periods until the market normalizes. There are other levers managers could pull, says Fogel, such as emphasizing career development and advancement, flexibility, work-life balance, and brand reputation instead of pay. AI talent is also drawn to firms with experimental and innovative cultures, he adds, as well as those with strong missions and values. Opportunities to pursue passion projects or test new concepts—via hackathons, moonshot labs, incubators, and the like—are other ways firms can attract AI talent. “Offering outlets for AI talent to pursue their creativity is a big draw,” says Fogel.

Learn more about Korn Ferry’s Total Rewards capabilities.

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