AI may not only be putting jobs at risk.
As companies invest heavily in technology and top AI talent, layoffs are not the only option to offset those costs. At least one survey of U.S. business leaders suggests that some companies are planning to cut workers’ compensation.
“They’re going to have to pay for AI somehow,” said Rocky Lee DeWitt, a management professor at the University of Vermont’s Grossman School of Business. “It’s not cheap.”
Based on a global analysis, companies with 1,000 or more employees are expected to spend an average of $13.7 million on AI hardware, cloud infrastructure, software and services this year, a 78% increase from 2025, according to research firm IDC.
Nvidia CEO Jensen Huang said on a recent episode of the “All In Podcast” that he would be “very wary” if one of the semiconductor giant’s top engineers spent too little on AI tokens. In another episode of the same show, venture capitalist Chamath Palihapitiya expressed concern about the inflated bill for AI at his startup.
However, despite this spending, 95% of organizations reported no measurable ROI from AI in the first half of 2025, according to an MIT study based on a review of publicly available AI initiatives and executive interviews.
Companies may need to rein in other expenses until they see tangible returns from their AI investments, especially since tariffs, high inflation, and other factors are also straining budgets.
Cost reduction options
In recent months, several companies have announced AI-related layoffs, including Block and Atlassian. — Business Insider previously reported that other companies may be tempted to do the same. HP said in its November earnings call that it plans to cut 4,000 to 6,000 jobs by the end of 2028, saving about $1 billion.
Reductions in employee compensation may be next.
In a survey of 866 executives and senior managers conducted by ResumeBuilder.com earlier this month, more than half (58%) said they planned to reduce employee compensation by the end of this year to fund investments in AI. The survey results show that bonuses and stock-based compensation are the most affected, followed by raises, benefits and base pay.
Jessica Kriegel, chief strategy officer at Culture Partners, a workplace consulting firm in Sacramento, Calif., said such layoffs can hurt morale, but with a tight job market, “employees have no leverage.” “They will accept small price increases to reduce the backlash and avoid any perceived risks.”
Although ResumeBuilder does not mention the size of the companies respondents work for, Kriegel said small businesses are most likely to reduce employee pay and benefits in lieu of layoffs.
“If you have, say, 20 employees and everyone is dabbling in a million different pots, you can’t just fire 10% of the organization,” she said.
Another option for companies grappling with AI and other costs is to keep compensation stable. The Conference Board, a nonprofit organization that provides data and insights for business leaders, expects average salary increases to remain at 3.4% this year, the same as in 2025.
Get a raise anyway
Chris Erickson, co-founder of consulting firm Workforce Science Associates in Lincoln, Nebraska, said workers can still advocate for higher wages amid the AI boom.
“When budgets are tight and the economy is uncertain, you need to be in sales mode to get a successful raise,” she says. “You have to make yourself irreplaceable.”
Think about how much money companies are spending on AI to improve productivity, and highlight what you’ve noticed by using AI. Saying “I know how to use AI” isn’t enough, says David Gaspin, a human resources expert and executive coach in New York.
“Ask for a raise just because you’re skilled at AI is not a strategy,” he said. “Right now, that proficiency is the name of the game.”
It’s also important to show why AI can’t replace your job.
“The key differentiator today is what can technology do that cannot be replaced, and where can your experience, judgment, and unique perspective bring tangible, quantifiable value to the business?” Gaspin said. “Because companies think there’s a risk in you leaving.”