Why are companies paying so much for AI professionals?

Q:

Why are companies paying so much for AI professionals?

A:

Recent reports from sources like the New York Times show that leading technology companies are offering new employees hundreds of thousands or even millions of dollars to come on board and work on progress with artificial intelligence. The reasons have to do with classical economics as well as unique current trends that determine what rational actors will pay this type of talent.

One of the most fundamental reasons that artificial intelligence professionals are getting paid so much is that the talent pool is simply very small. Experts estimate that there are only some several thousand people worldwide who are most suited to this type of work. Even if there were many more such individuals, companies are often competing and even poaching people away from one another, and in addition, lots of this talent tends to be accumulated in specific technology hubs such as Silicon Valley.

Another big reason why these people are getting such high salaries is that the work they are doing has tremendous economic value. We see this in other areas of the work world – where the average worker receives a basic salary depending on industry median averages, sales workers often command much higher salaries, for example, a six-figure salary based on their commissions and what they are able to sell for the company.

The same principle is at work with the AI industry – if a specific artificial intelligence job and its resulting work is able to lead to a billion-dollar breakthrough in self-driving cars or some breakthrough in consumer technology, the reasoning is that the individual who contributed deserves at least some significant portion of that gain, totaling in the millions of dollars.

In addition to the idea that people working for these outsized salaries will drive future financial bonanzas for their employers, there is the idea that many of these employers have already collected enormous sums of money by being well positioned in the tech space. Prime examples include Facebook and Google, companies that are by any account flush with cash after figuring out how to offer a technology that everybody wants. Many experts argue that the technology field is remarkably monopolistic, in that instead of having many companies competing to offer the same digital service, there tends to be a single household name like Facebook or Google that not only commands the lion's share of users, but operates a virtual monopoly because there is simply no other company competing to offer the same services to the general consumer population. Industry observers have seen how Facebook is able to co-opt features from other platforms and maintain its monolithic status in the tech world – so in terms of salaries, companies with this unique kind of economic power are well-positioned to offer their workers whatever sums of money they want to keep pushing the envelope and helping them to maintain market dominance.

Although there is a consensus that the talent pool for artificial intelligence work is small, there is a reasonable debate to be had about exactly how small it is. Some of the skills and experience needed are significantly abstract to the point that it can be difficult to really value what an individual offers. The idea of the “10x programmer” or rare unicorn IT wizard is relevant here. What's less debatable is that an individual with significant coding skills, knowledge of machine learning algorithms and the mathematical background to handle progress in this field is worth significant amounts of money compared to any other kind of skilled labor in a modern economy.

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Written by Justin Stoltzfus
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Justin Stoltzfus is a freelance writer for various Web and print publications. His work has appeared in online magazines including Preservation Online, a project of the National Historic Trust, and many other venues.
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