AI Engineering offer values drop 24%

But offers still carry massive premiums over software engineering roles

Source: Compa Index

AI engineering offers command big premiums over software engineering, but that gap is shrinking.

Check out the above chart showing data from Compa.

Methodology:

• Total offer (think TDC + one-time pay elements), first year value to isolate vesting differences

• All individual contributor levels

• Quarterly average over the last two years

• United States offers

Over this period, SWE offers dropped 9% while AIE offers dropped 18%. Amazingly, you can see a bulge form exactly when ChatGPT launched in November 2022 — SWE dropped 5% amid layoffs while AIE jumped 10%.

This is even more visible when you just look at the premium, calculated as AIE/SWE year one total offer value for each quarter:

Source: Compa Index

Is this a real trend or just a spike in the data?

I stress-tested the findings across several level groupings. In every case the lines are getting closer to each other: the AI premium is shrinking.

Source: Compa Index

So what is going on?

I suspect a couple things are happening:

1. Big tech “land grab” has ended: When AI hype exploded in late 2022, every big tech company realized it needed to get into the AI race. They quickly recruited the world’s best talent, who carry bigger price tags.

2. Wall Street has a say now: AI is expensive, and in the post-ZIRP era we can’t write blank checks forever. The Wall Street push for efficiency worked, so offer exceptions aren’t getting through like they used to, even for AI engineering

3. Supply is beginning to catch demand: Feels like everybody is an AI engineer right now. I say that tongue-in-cheek, but in all seriousness, many software engineers have shipped AI projects over the past few months. Now they can go out to the market and credibly compete for AI roles. The market skillset for AI is growing, increasing supply

Where does this go from here?

Well, looking at this data so far it seems like my 2024 prediction #3 from last month isn’t aging well after only a month. 😂

But really, I expect the trend to stabilize, if not reverse, throughout this year. Only about half of tech companies have carved out a separate AI Engineering job family in their career architectures. As more do, the premiums will institutionalize.

And in the “Year of Efficiency,” which is looking more like an era than a year, companies will only increase precision in compensation to focus investment in their high-growth, high-leverage bets.

Only possible with Compa

I love looking at AI Engineering data in Compa because it’s only possible with offers-based market data.

Compa matches against both job codes and job titles, meaning the software can peer through the noise of transitioning job architectures to discover emerging trends like this one. And offers track purely market float — perfect for navigating rapid change in real-time.

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