AI is increasing the value of leadership

• Employers are prioritizing leadership roles during the current hiring slowdown. Demand for jobs requiring leadership skills has deteriorated much less than for other jobs, with the share of US job postings mentioning leadership ticking up last year.

• Leadership skills are becoming more valuable in the labor market. In the last two years, the salary premium associated with leadership skills has increased to 40%.

• Middle management roles and occupations with high AI exposure have seen the greatest increases in leadership skill requirements. This is consistent with a growing need for coordination and oversight as firms integrate AI into workflows.

For most of the past two years, the labor market narrative has centered on the lack of dynamism and the no-hire, no-fire environment. Job postings have plummeted since 2022, especially for entry-level roles. In an increasingly uncertain labor market, employers are looking for more certainty in hiring, requiring increased leadership and experience.

At a time when firms are posting fewer jobs overall, they appear to be placing greater emphasis on the types of skills associated with managing and mentoring people, coordinating work, and guiding decision-making. After declining after the 2022 hiring boom, the share of job postings requiring leadership skills has been on the rise since the beginning of 2025. Now over 36% of all job postings require workers to have leadership skills.

We are careful to distinguish keywords surrounding the requirement to exhibit leadership skills from the existence of leadership at the firm (e.g. ‘present to leadership’ is excluded here).

The divergence becomes even clearer when looking at posting volumes. Postings that mention leadership requirements have fallen far less than without: The number of job postings for leadership jobs have declined by 8% year-over-year, relative to a 20% decline for jobs without leadership requirements.

One way to interpret this pattern is through simple organizational economics. When firms reduce hiring, they become more selective about which roles they fill. Positions that help coordinate teams, allocate work, and maintain productivity across a larger set of employees tend to become more valuable when resources are constrained.

This is also reflected in pay. The salary premium associated with leadership requirements has increased substantially over the past two years. Controlling for seniority, postings mentioning leadership now offer around 40% higher salaries than those that do not. Given that this premium hovered around zero from 2022 to mid-2023, this is a remarkable increase.

A growing pay premium is often a sign of scarcity. If employers increasingly require leadership skills but the supply of workers with those skills does not expand at the same pace, wages adjust to clear the market. In that sense, the compensation data reinforces what the hiring patterns already suggest: leadership is becoming more valuable.

The increase in leadership demand is not evenly distributed across the organizational hierarchy. Job postings for middle management positions have seen the greatest year-over-year increase, with the share of postings with leadership requirements rising 3.2 percentage points. Senior executive and junior roles have also seen increases, but smaller ones.

Middle managers play a critical role in translating strategy into execution. They coordinate across teams, monitor performance, and increasingly act as the interface between human workers and automated systems. As firms adopt AI tools across different parts of their workflows, the need for this type of coordination may actually increase rather than decline.

The connection becomes even clearer when comparing occupations by AI exposure. Roles with higher AI exposure have experienced larger increases in the share of postings mentioning leadership.

This pattern may appear counterintuitive at first. If AI automates tasks, one might expect less need for leadership. But automation rarely removes the need for coordination. Instead, it often changes where coordination happens.

When routine work becomes automated, human labor shifts toward tasks that involve oversight, judgment, and integration across systems. Workers spend less time executing individual steps and more time reviewing outputs, resolving exceptions, and guiding workflows. These activities rely heavily on leadership-related capabilities, even when they occur outside traditional management roles.

Seen through this lens, the rise in leadership demand makes a lot of sense. As firms reorganize work around AI-assisted production, the value of workers who can coordinate people, processes, and increasingly automated tools will grow.

The labor market may be cooling, but the premium on leadership is heating up.